There is no denying that COVID-19 or the ongoing pandemic has affected us all. With millions of people unemployed and the economy still struggling to come back, many people in the real estate industry are wondering what's next? Of course, over these last nine months, people have been making predictions about how this will all affect the industry in the long run, but no one really knows for sure. That said, tenant behavior in multifamily housing may be a sign that things are potentially looking up. Nevertheless, landlords and property managers still need to protect their assets and their business. As a result, many people in the industry are wondering what exactly they could do to ensure that their current tenants and their prospective tenants are able to afford rent along with their other living expenses.

For tenants, many multifamily housing owners are trying to instill stricter, if not more comprehensive screening standards to ensure that their assets will be protected in the long run. 

Pre-COVID-19 Screening Rules

Prior to COVID-19, landlords or property managers would screen their tenants by asking a series of questions, run a credit check, and have prospective tenants fill out an application. Typically, an ideal tenant would have a clean eviction report, an above-average or good credit score, steady employment, and positive references. Though these things still obviously matter, the ongoing pandemic has changed how tenants are screened, and rightly so. Now more than ever, it is in everyone’s best interest to ensure that people are not a health risk to the community and that they can afford rent given possible employment issues, and so on. 

Current Screening Requirements

For the last several months, property managers have had to rethink schools, renter interactions, evictions procedures, and the list goes on. When it comes to new screening requirements, many apartments and manufactured or mobile homes now have to ask themselves if renting to a new tenant is worth it. Sadly, the truth is that new tenants may not be able to pay rent, and with the current housing laws in place, evictions are not a viable option during the ongoing pandemic. Thus, now, in addition to pre-COVID-19 screening procedures, now landlords have to ask if individuals have been laid off during the shutdown, are able to pay rent still, or are currently receiving unemployment. It is also important to know whether or not the prospective tenant has a solid job that will allow them to pay rent and meet their living expenses for the next 12 months or longer.

Leasing or Selling in the Grand Scheme of Things

Though it may be an uncomfortable line of questioning, it is necessary because at the end of the day, renting apartment homes or offering manufactured or mobile homes for sale is still a business. And, just like everyone else, landlords and property managers cannot afford to hemorrhage money or cover rental/mortgage payments for people who are unemployed for the foreseeable future. As a result, it is only fair to ask for this information from prospective tenants or renters. If an individual is unwilling to provide this additional information or produce supporting documentation, then it is best to let them go.

Though this may seem like a loss, especially when things are tight for property managers and landlords, it is better to be safe than sorry.

The Landlord Perspective

Moreover, for current tenants, who are in the midst of economic hardships, property managers and landlords need to find a way to make the necessary arrangements, which can already be taxing when a large number of individuals are not able to pay rent. Yet, having additional tenants that may shortly be facing comparable circumstances may not be something that can be successfully managed. Of course, everyone needs a roof over their head, but with millions still unemployed, multifamily housing is still in the midst of a comeback. The good news is that many people are hopeful that 2021 will offer better opportunities for employment, and the economy will begin to rebound as well.

Landlord-Tenant Negotiations

That said, at the moment, both landlords and tenants need to be able to find common ground during these uncertain times. One way landlords or property managers have attempted to bridge the gap is by offering tenants reasonable relief packages for short periods of time. Typically, these packages deferred rent and can be repaid generally over the remainder of the lease. However, financial documentation is usually required to show that a tenant is in need of COVID-19 related assistance.

Landlord or Property Manager Assistance

While providing assistance to tenants, many property owners seek their own assistance from their lenders. This allows them to pay the overhead expenses, maintenance, insurance, taxes, and more while tenants' rent payments are deferred. The only caveat here is that you have to be able to prove you can maintain the property if you are going to defer principal payments for your multifamily housing community.

Prospective and Current Tenant Behavior

Both prospective and current tenants expect multifamily apartment communities and manufactured mobile home parks to have standard health safety protocols in place. Additional safety features in common areas such as touch-less or automatic doors, hand sanitizer, masks, and frequent cleaning are great ways to ensure the health and safety of your multifamily housing. What’s more, prospective tenants are following CDC guidelines and participating in virtual tours, and making appointments to check out their potential future apartments and mobile homes. Thus, this is a strong indication that people, despite unemployment, COVID-19, or economic hardship, are still going to find a way to rent an apartment, lease a mobile home, or purchase a manufactured residence.

Responding to Tenants that Do Not Pay Rent

That said, responding to tenants that do not pay rent when they can, is a different situation. The easier course of action is to send a letter requesting proof that the tenant is experiencing economic hardship due to COVID-19. If the tenant cannot provide proof, then you may need to consider other actions that are currently permitted. Note, you should still reach out to the tenant or renter to see if you can both agree to a payment arrangement or some sort of negotiations.

Predictions for the Future

Even with a small percentage of tenants not paying rent, there is still a large number of tenants across the board that are still meeting their rental and mortgage obligations, despite what is going on in the world right now. Thus, the predictions for the future, in spite of COVID-19, are rather optimistic. So, even if you are a smaller property or multifamily community, there still appears to be some light at the end of the tunnel. Last but not least, with unbelievably low mortgage rates, people are jumping at the opportunity to become homeowners or move into new spaces. As a result, the real estate and housing market, in general, seems poised for a comeback.

Final Note 

Ultimately, tenant behaviors during COVID-19 are a clear indication that all hope is not lost. Though many prospective renters or tenants are not too excited about the new or more comprehensive tenant screening requirements, there is still a strong likelihood that the housing and real estate markets will survive the ongoing pandemic. Moreover, if property managers and landlords can hang in there for just a little while longer, things will more than likely turn around, and existing tenants and homeowners will once again get back on their feet—ready to make their rental/mortgage payments.