What Property Managers Need to Know Amid the Coronavirus Crisis
We have certainly entered into uncharted waters. The coronavirus has sent the Dow Jones into a free fall and has set off a wave of uncertainty that has only just begun to impact the economy. As cities and states limit group gatherings, close restaurants to dine-in customers, and order residents to shelter in place, the full health and financial impacts of the pandemic have yet to be seen.
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For the time being, we will all have to find a way to manage. And while real estate has not been trounced like the stock market has (at least yet), we are dealing with an enormous amount of uncertainty, particularly in regard to buy-and-hold investors and property managers.
Navigating Uncertain Times
Here, I would like to give my recommendations to all of the property managers out there on how to proceed in the coming months. First and foremost, the goal should be to keep yourself and any staff you might have safe by following the CDC’s health and safety guidelines. Here are a few precautions that by now are familiar:
- Wash your hands frequently
- Cover coughs and sneezes
- Stay home if you feel sick (and let those you’ve been near know you’re feeling sick, as they should isolate themselves too in such cases)
- Practice social distancing
After that, things get a bit more complicated. Here’s how I would recommend preparing for the stormy seas ahead.
First and foremost, it is critical to stay in communication with your employees, partners, vendors, and most of all, your tenants. I’ve received an email from virtually every organization I’ve ever been in contact with in my entire life over the past two weeks about the coronavirus.
And while the vast majority of those go unread, a tenant will be most interested in an email from their property manager. If you only have a few tenants, a phone call would be a good idea. Let them know you're on top of things and not just some abstraction they'll have to find a way to pay by the 5th next month.
Reaching out directly will help put their mind at ease and make whatever problems come up seem more solvable.
Don’t assume your tenants and those you work with already know what’s going on. Make sure you communicate it. And since this situation is changing rapidly, you should be prepared to contact them on a routine basis for the duration of this pandemic.
Everyone needs a place to live and, so far, we have not seen any slowdown in showings. That being said, routinely showing properties to strangers is risky during a time when social distancing is key to containing the pandemic.
Thus, this is a great time to use ShowMojo or Rently lock boxes for showings. These lock boxes are relatively inexpensive and allow tenants to view the property without anyone walking them through it.
We use a combination of ShowMojo and leasing agents. For leasing agents—or yourself if you choose to continue showing properties—we have asked agents to:
- Not shake hands with the prospect
- Not accompany the prospect through the property
Instead, meet the prospect outside and remain six feet away from one another throughout the meeting—COVID-19 is transmittable up to that distance—and answer any questions they may have. Then, let them view the property themselves and answer any further questions when they step outside.
Afterwards, the agent can go back in and make sure the lights are off and doors locked. Make sure to emphasize they should not touch their face while inside and use hand sanitizer after leaving. If you don't have any hand sanitizer (good luck finding any right now!), you can make it yourself with rubbing alcohol and aloe vera.
If you can’t find those products either (and you probably can’t), wash your hands. You can even bring a jug of water and some soap with you to do it outside after locking the unit. Unfortunately, the virus can survive on metal surfaces such as door knobs for up to nine days, making it imperative to practice good hygiene in all circumstances.
Showing currently leased units is something that should be postponed for the time being to reduce social contact and risk between current and prospective tenants.
Unfortunately, maintenance isn’t something that can be put on lock down for months on end. Maintenance requests for inessential fixes (i.e., peeling paint in one room) can and probably should be postponed until after the crisis has dissipated.
Make sure to let tenants know if this is your policy. If you have a limited supply of hand sanitizer, disposable gloves or masks—although if you have any N95 masks, you should instead donate them to medical professionals facing a dire shortage of supply—your maintenance technicians should be the first ones to get them and appropriate cleaning supplies.
Make it clear with your maintenance technicians and residents that they are not to be in the same room with the maintenance technician while work is being performed. Have the maintenance technician wash their hands before and after doing any work—and preferably in the middle, too—and stress the importance of social distancing while such work is being performed.
After a job is done, the maintenance technician should wipe down any tools they used with Lysol or Clorox or another EPA-approved disinfectant.
The same goes for picking up supplies from hardware stores and the like—practice social distancing and consolidate trips if at all possible. It’s always better to get what you need in one trip than to have to go back several times. But it’s especially more important now. The degree to which social distancing is critical cannot be overstated.
Office Tasks and Lease Signings
One major advantage we have today over previous pandemics like the Spanish Flu is that technology allows us to work offsite. In our office, we asked our bookkeeper and receptionist to work from home, for example.
We also told our maintenance technicians, leasing agents, rehab/turnover coordinator, and construction staff to not come to the office and to work at home when not in the field.
This way we have a skeleton crew at the office. This makes it very easy to maintain social distancing. Also, make sure to routinely wipe down surfaces with Lysol or similar disinfectants and wash your hands regularly. If you have a common kitchen area, it is wise to close it for the time being. And, of course, if anyone feels sick, they should stay home.
Many of the tools to work remotely are easily available and can be implemented quickly. Property management software programs and accounting programs can be accessed remotely. Key documents can be uploaded to Google Drive or Dropbox and shared with any staff members that need them.
Zoom or other such services can be used for video conferencing, and GoToMyPC is also available. Office landline phone systems can be rerouted to your cell phone—if you’re unaware of how to do this, just contact your provider. Make sure employees are fully aware of your policies, and keep in communication with them regularly.
One thing I would definitely recommend is to close your office to outside visitors. DocuSign is your friend here!
We have very long lease signings where we go over every clause in detail to make sure the tenant understands the rules of our lease. But there's no reason this can't be done over the phone and the lease signed with DocuSign or another similar program. Other things, such as rent checks, applications, etc., can simply be dropped off at the office or emailed.
What About the Rent?
Humans do not deal well with uncertainty. I suspect if we all knew with absolute certainty that the worst-case scenarios being discussed endlessly in the media were to come true, that would actually calm people down. At least then we would know what we were dealing with. It’s the not knowing that drives us crazy.
Unfortunately, there is no way to know precisely what’s coming, and we just have to find ways to deal with that uncertainty. Some forecasts estimate the unemployment rate could hit as high as 20 percent (levels not seen since the Great Depression) and particularly devastate service sector and restaurant jobs.
What effect this will have on rent payments in April and beyond is simply unknowable at this point. But it won’t be good.
The government just announced a freeze on foreclosures and evictions for homes with FHA loans and many cities and states have been doing the same. The Trump administration is also proposing a $1.2 trillion stimulus package that would include $1,000 checks being mailed directly to Americans.
If this happens, that would make it much easier for tenants to pay in April. But we cannot solely rely on the government to bail us out, especially since we do not know how long this crisis will last.
Again, it’s uncertain—this is something we just have to accept. This situation is dynamic and will change rapidly, so be prepared to routinely review and update your plans, procedures, and contingencies. What course the government takes, as well as the impact of the virus, is simply unknowable, so you will need to reassess the situation frequently.
While I can’t give any hard-and-fast answers that fit everyone, I can offer some recommendations to consider. First, it would be worth reading through this thread on the BiggerPockets Forums, where multiple landlords have given their feedback and advice.
Next, it would be a good idea to contact your tenants and ask them to give you a heads up if there will be a problem. Also, provide them with a list of each of the organizations that help with rent (such as The Salvation Army). Many cities will have a list like that online—for example, here is Kansas City’s list and here’s a list of national-based organizations. An hour on Google should wield some good local results.
That being said, don’t make any promises to your tenants until you have made a decision as to your course of action. And you should probably not make any firm decisions until we see what the government does and what effect it has. Here are some ideas to consider if things turn out badly next month and beyond:
- Forgive April late fees
- Postpone when rent is late
- Offer additional payment plans (we, like some other management companies, usually only allow one payment plan per lease)
- For tenants who have lost their job, consider applying part or all of their deposit to the rent (under normal conditions, you should never do this)
- Consider restructuring leases if you can afford to, as banks have done in the past (take the April rent or part of it and spread it out over the remaining course of the lease)
If you do make any special agreements with your tenants, get it in writing (hint: DocuSign), and ask them to provide proof they lost their job or had their hours cut.
If you are well off, can afford it, and only have a few rentals, you could even consider forgiving all or part of the rent for April, although that's not an option many of us have.
If you do offer any form of hardship relief, make sure to write down clear criteria for it (i.e., must show proof of job loss or reduced hours, etc.) and apply it equally to each resident to stay in compliance with fair housing laws. This would be worth speaking to an attorney about.
As for things in May and beyond, the situation is changing too rapidly to make such long-term plans with any certainty. Again, you will need to revisit your plan consistently over the coming months as things change. For now, the important thing to do is to stay calm and be proactive.
As for those who are struggling to deal with such uncertainty, I would highly recommend reading Dale Carnegie’s How to Stop Worrying and Start Living and taking up meditation.
Guided meditation apps such as HeadSpace and Simple Habit can be found on both iOS and Android and are very affordable. I’ve found daily meditation to be a great benefit to my life. And that was before this mess started!
They key thing is to be proactive and communicate with your tenants and everyone else you work with and for. There’s only so much we can do, but we should do those things as well as we can.
Thinking of contingencies now will also help cool your nerves, as the best way to face uncertainty is to figure out how you would deal with the worst-case scenarios. Hopefully, no such worst-case scenarios will come to pass. But it’s best to prepare for them in case they do.
What measures have you put in place to protect your staff and business?
Join the conversation in the comments below.