Multifamily housing is known as a recession-resilient investment. However, during black swan events like the Covid-19 pandemic, landlords across the country are nervous about the potential for an influx of late payments. It’s estimated that 11% of renters across the country fell behind on rent in June 2020. That’s an improvement from April, when the National Multifamily Housing Council reported 15% of renters were behind on payments. However, even in this time of crisis, there are things property management companies can do to make sure payments are collected while remaining empathetic toward residents.
Strategic communication with direct intention is key. For example, despite new regulations in many cities that allow more leniency for late payments, it’s a good idea to send out a letter reminding tenants that rent is due. Regardless of how you phrase it, the bottom line is that rent is still due. Phrasing you might like to use is, “We know times are hard, but rent will still be due on August 1, 2020.”
After your first initial communication, follow up. In your next letter, explain that if your residents have an outstanding balance and do not follow up about a payment plan, an eviction will happen within a certain amount of days. Make sure to check your local laws associated with the CARES Act. Here in Texas, for instance, evictions are currently not allowed for 60 days, but under normal circumstances, evictions could happen as soon as three days.
The second letter will likely be effective, and most residents will likely follow up and request payment plans. This strategy works for numerous reasons. First, it’s best not to immediately divulge information about payment plans. Be firm about rent, and then be flexible and clear about your intention to collect rent. Flexible payment plans offer residents hope and allow them enough time to set goals to catch up on payments before the end of the year.
Another factor in receiving your rental payments on time is the location of your property. In cities like Austin and Seattle with higher volumes of educated professionals who work at corporations that are able to quickly pivot operations to work-from-home, the number of layoffs among renters is less severe. For example, Seattle is the only U.S. city that saw job growth in May 2020. In addition to location, the type of properties you invest in makes a difference. For example, luxury properties that are higher dollar typically attract white-collar professionals who are more likely to be able to work from home.
Online payments, which have grown in popularity over the last decade, are also helpful. Having residents utilize payment portals helps automate payments at a certain date or time each month. It also allows residents the option to pay via credit card, in the event they fall short due to personal emergency.
Lastly, reward your responsible tenants. Pivoting your amenities during the coronavirus crisis is a great practice. You may not be able to host a resident mixer due to social distancing guidelines, but you can hire a food truck to take individual orders for residents to bring food back to their homes. Or, you can create a customized amenity bag to drop by their doorsteps. For example, create gift packets of toilet paper, paper towels and bottled water to drop off on residents’ doorsteps along with a warm greeting card.
Another nice gesture is to pivot your day-to-day tasks to offer temporary services for residents. For example, during the height of stay-at-home orders, some property managers had a little more flexibility in their schedules, so they called residents to see if they needed anything. You could offer to run errands, within reason, for high-risk individuals or those with children. Kind gestures build loyalty, and loyalty results in long-term cost savings, along with an increased likelihood of on-time payments and positive word of mouth about your property.
Implementing strong communication practices, while showcasing kindness and empathy, can go a long way in your property management strategies. Not only will you build resident loyalty and a positive community, but you will increase your profits. These strategies will require a little pivoting during the Covid-19 pandemic, but overall, for the majority of your residents, the strategies will work in virtually any climate.