Aside from fretting over the past, we humans constantly worry about the future for fear of the unknown, unseen and uncertain. Although uncertainty means, change and “change is the only constant” is what they always taught and isn’t a novel quote to us. It has always been like that, but the current times are truly unprecedented. If anything, the unexampled Covid-19 has brought for us in abundance is uncertainty.
Hence, the worry is justified, especially for businesses, as uncertainty is directly proportional to business risk. The global pandemic has led the masses to lose employment, gain health sensitivities, and a lot of anxiety, which has drastically lowered their spending power.
What Will Real Estate Companies And Property Managers Face?
The risk gets even higher for businesses not involved in fast-moving consumer goods. Real estate and property managers business is one prominent example of that. People are likely to avoid moving out into new places to avoid incremental rents, shifting costs, and other side expenses involved. On the other hand, tenants are likely to delay rent payments to their landlords for fair and obvious reasons off course. Moreover, builders and construction projects will incur holding costs as the demand for real estate property is at the lowest.
How Can Property Managers Prepare And Respond To This Situation?
In such volatile times that pose alarming business risks each day, real estate professionals and property managers must make effective plans to sustain their business and living. Here are a few things they can begin with:
Revise Your Payment/Repayment Plans
Since many of your clients and existing tenants are very likely to be unable to pay the monthly rent or the mortgage money due to lost income, you don’t want to lose your customers due to inflexibility. To keep your business going, you must retain your existing clients and tenants. Develop a repayment plan having three to four options based on installment value and timeline so that every client can pay the rent and other liabilities without having to cancel a deal or backing out.
Ask For A Formal Proof For Authenticity
To safeguard your right to receive payments and make sure no one’s taking advantage of the situation in bad faith by pretending to have lost income, ask your tenants for a formal document that proves their legitimacy. A formal letter from their employer to authenticate trimmed and cut work hours or layoffs and a document of employment insurance from the provider should be enough to prove your tenant’s good faith.
Demand Payment Proof From New Tenants
If you’re entertaining new tenants for your rentals, make sure to perform a background check. To avoid the risk of fraud and bad faith, demand from them a formal proof of payment to their existing or previous landlord so that you can be sure of not letting defaulters in your property.
Property Managers Should Avoid Investing In Giant Projects
Avoid investing in builders’ residential projects as these investments are gigantic, and the current uncertainties don’t ensure the best returns on investment as real estate is a high-involvement trade. Stick to current projects and, if you can, suspend the existing ones that may not serve your best interests in the coming times.
The Bottom Line
As the real estate business is highly vulnerable to volatile customer decisions, just like the prevalent times, it’s sane to be prepared for the worse to sustain your business in the long run and not make huge moves. Stay lowkey and keep an eye on the headlines before making any business decision.