It's been a difficult year for rental owners. While the industry’s attention has been focused on rental payment rates in the properties where there’s a lot of data (large professionally managed apartment buildings), many owners of small rental properties have been quietly struggling.
We're over a year into the COVID-19 pandemic and financial crisis, and finally, a clearer picture is emerging from the difficulties that property owners have weathered since March 2020. The resiliency of many property owners is truly inspiring. A new study shows that 2 in 5 investment property owners plan to add new properties to their portfolios in the near future. That being said, many rental owners are still facing the negative impact of COVID-19.
In this blog, we'll discuss the struggles of both renters and owners over the past year, what property owners are saying about their experience, and how property management companies have helped rental owners get through these challenging times.
A Top Stressor For Property Owners
Vacancies are a consistent source of stress for 1 in 3 rental owners each year. This number is more significant than it might seem at first glance, considering that many owners of small rental properties may not have a single vacancy in any given year. However, 22% of rental owners report that the occupancy rate of their properties has suffered during COVID-19; and it’s this shift that we believe is responsible for an uptick in the number of owners who selected this as a top stressor in 2021.
What Are Property Owners Saying About The Matter?
"It is a rough time right now. We depend on these rentals for our retirement. They give tenants help with rent, but what about the owners? We still have expenses to pay." (Pittsburgh, PA)
"My renters could not pay total rent for a while. Have reduced rent so they can make ends meet. Not generating revenue." (Huntsville, AL)
"I am a retired nurse who is single; my units carry a mortgage, so if the laws don't allow evictions of non-paying tenants, I will not be able to cover my mortgage with other funds." (Albuquerque, NM)
Property owners all across the United States have been dealing with unprecedented issues during COVID-19. Hiring a reputable property management company during uncertain times can help.
Residents Living in Small Muli-Family Properties
31% of residents living in single-family rentals and 29% in small multifamily properties have seen a decrease in income during COVID-19. In comparison, this was the case for just 18% of residents of large apartment buildings—likely because so many of the properties in this category that were built over the previous decade were priced for higher-income renters.
Residents of small multifamily properties are also more likely to be living paycheck-to-paycheck. When they lose their source of income, they’re less likely than residents of larger properties to be able to gather the funds to pay their rent in full by 8 percentage points.
More than half of renters whose income has been threatened by the pandemic live in small rental properties. However, because they’re less likely to have federally backed mortgages, only 12% of units located in small rental properties were covered by the protections of the CARES Act, in comparison with half of apartment building units.
How Have Property Management Companies Helped Owners?
31% of rental owners reported that COVID-19 had a negative impact on their residents’ ability to pay rent, with 13% of owners having worked out a payment plan with at least one resident. All of a sudden, the number of rental owners who wanted an expert’s help in facilitating the collections process jumped from 78% in 2019 to 90% in 2020.
There’s clear evidence of the difference that property managers make on the collections process compared to property owners without the services of a property management company. Rental owners with property managers on their side had a 6% higher payment record during COVID-19 from their tenants than those who did not use the services of a property manager. Much of this has to do with the tenant screening process and the constant communication between tenant and property manager.
Property managers can make a big difference by implementing consistent processes and providing individual investors with clear, simple statements each month to help them understand where their money has been allocated. Which will help them keep track of missing payments, partial payments, rising property taxes, or maintenance expenses.
At Reed Property Management, we're here to help investment property owners thrive in uncertain times such as COVID-19. Our goal is to ensure both the tenant and property owner are happy with the arrangement. If there are any payment or maintenance issues, we have the knowledge, experience, and communication skills to streamline an effective plan to resolve said problem.
Don't wait until another unexpected crisis hits to hire a property management company, contact Reed Property Management today!