Dog Days of a Landlord Summer
Today is the first Monday of a new month set in the dog days of summer. This means that as apartment offices open, or ‘virtually open’, owners are going to be getting a look at the tea leaves for what the month’s collections will look like. With the pandemic still a threat to residents, and federal stimulus funds running out, owners are hand-wringingly wondering … what’s next? To date, the data shows multifamily rental revenue collections have been better than many anticipated as the shutdown commenced. The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker demonstrated that more than 93 percent of apartment households made a full or partial rent payment by July 27.
This is a 2% decrease from the data posted July 27, 2019 and compares to almost 95% that had paid by June 27, 2020.
Rents were paid and, therefore mortgages were paid. Owners and lenders have been content, though concerned. Those rents were paid during a time when unemployment benefits were augmented by federal stimulus, and other funds were distributed to those that may have been hard hit, or not.
But what is next? Windsor Turner anticipates that modest slides will continue in multifamily rents. The good news is, in areas that have had significant decreases in Covid-19 cases, economies will continue to reopen, and individuals will be increasingly active in the consumer marketplace, holding back significant fall offs. Windsor Turner strongly cautions owners to continue to operate in a cash conservative mode. As weather patterns shift with the seasons, and people are forced back indoors, there is a real risk of widespread return of Covid-19 and the economic conditions that followed in the past Spring.
What can owners do now?
1. Be zealous about monitoring your rents and doing critical monthly deep dives into the conditions you see now, and the conditions that existed last month and last year at this time. Data is that friend you need, but may not really like.
2. Protect your rights as a property owner to collect rents. Being empathetic in your actions is vital during these times, but by no means do you want to have an error in communications with a resident that rent deferrals, are abatements. And if you’re not sure about the difference yourself, contact us immediately. Communicate with your residents clearly, and record, in writing, everything as it relates to rental payments.
3. Protect your cash flow. Examine your budget for items that can be cut, while not sacrificing the quality and conditions of your property. Perhaps you intended to do a beautification project or were reserving some units for a capital improvement project. This may be the year to reduce your beautification plan to planting some mums, and instead of giving any units a full facelift, keep it to paint and flooring for this turn.
Continue to be vigilant and do not let your eye off the numbers, or your foot off the gas as it relates to vigilance in social distancing, cleaning, and utilization of protective equipment.
Cheers!
WT
