Getting Ahead of the Rental Market for Landlords During the COVID Crisis
Today we’re talking to our Foundation Homes family about the crazy times we are all experiencing right now with COVID-19 taking over the world. If you’re like us, you’re getting used to a new normal. Your kids are at home and trying to learn how to go to school online and you’re working from home trying to concentrate while everything is changing around you.
At Foundation Homes, there are two important issues that we’re facing and addressing:
- The acute issue of how we physically show your vacant properties and maintain your homes.
- Preparing our clients for the long haul and the recession that’s sure to come.
First: The Good News
The good news for our clients is that Foundation Homes was actually birthed during a recession. We have been through a bad economic climate, and that has given us some experience and a professional sense of calm. We have a playbook that allows us to rent out homes for our clients for as much as the market will bear. Our processes still allow for well-qualified tenants that are placed as soon as possible.
We know what to do when things get harried because as a company, we have been through this before.
Bad News: Rental Prices and Vacancies
In the long term, you’re going to have to prepare for a drop in rental prices.
The drop will be significant.
In the last recession, we saw the average rental price go down about 20 percent, and even as much as 40 percent during the worst times.
Get ahead of the curve. Tenants are losing their jobs, and they will continue to lose their jobs. We are getting a lot of those phone calls right now. Try to keep your tenants in place. If you have to price your property a bit lower or offer incentives or rent concessions, make your plans and do what you can to avoid a vacancy. Consider these things now, before you have to take action. Keeping your Marin rental property occupied, even at a lower rental rate, is better than having it empty.
You also have to prepare for vacancies. In a normal market, the data we track shows that in Marin County, the average wait for a new tenant is 60 days. So, you’ll need to prepare financially for a vacancy period that’s at least 60 days and probably more like 90 days or longer.
The main reason for vacancies during the last recession was lease breaks. People couldn’t afford to live where they were because they lost their jobs, so they moved out. This is challenging for our clients, and preparation is the key to surviving the storm.
We have some specific recommendations:
- Create a contingency plan.
- Save your money.
- Get creative as things continue to change around you.
Making Investment Property Decisions
This is a lot of bad news, but please remember we’re here for you. This is literally why you pay us.
We have been through this before and while no one has a crystal ball, we have a good idea of what’s coming and how to handle it.
During any times of uncertainty, you have to make difficult decisions and tough choices. This can be challenging, even for the most experienced real estate investor.
We started Foundation Homes during one of the worst economic periods, and everyone told us it was a bad time to start a business. We did it anyway, and it’s paid off. It’s paid off for our clients, for the people who work for us, and for our entire Marin County community.
If you’re on the fence about making tough decision regarding rent concessions or you have any concerns about your property that you’d like to discuss, please contact us at Foundation Homes.
Stay healthy and well.