Across the globe, multi-family markets of all types have been impacted by the COVID-19 pandemic of 2020 – having a varied impact on occupancy levels. With restricted amenities, online universities, and the option to work remotely, city centers are simply no longer able to demand the premium they historically did. With the desire for more space, and lower costs, we are seeing an increase in demand and renters in suburban areas with a departure and softening of the urban market. However, real estate professionals are struggling to fill vacant buildings now and are no longer in a position to wait for the future normal to arrive – they need to address today’s normal now.

Here are some steps that real estate professionals can take today in order to minimize losses and turn a struggling balance sheet into a healthy financial reflection:

1.Leverage Proptech. One of the biggest advantages real estate professionals can capitalize on when utilizing proptech is the reduction of in person meetings to view/assess a property or a rental unit. By incorporating proptech into your business models you will be a step ahead of the game by having access to more potential tenants at any given moment in time. For example, instead of allocating one appointment slot to provide a tenant with a tour of a property, property managers can incorporate proptech such as VR (virtual reality) technology which provides access to multiple floorplan tours for various tenants at any given time without requiring the property manager to be on site each time. This enhancement provides ease of accessibility for all parties due to the current environment and also yields potential tenant leads at a quicker rate. 

2.Take advantage of vacancies to complete renovations. If you’ve properly allocated reserves for a “rainy day”, now would be a good time to consider enacting economical renovations that will help upkeep and increase the value of the property. It will also elevate your property above the competition – showing that you as a landlord still care to provide quality housing when the economy is not conducive to providing the best profit margin. Ultimately, you’ll have a better chance at landing a quality tenant versus the alternative which can come by not addressing any repairs, maintenance, or keeping up curb appeal.

3.Get creative with short term leases.  Provide multiple options such as month to month, 3 month, or 6 month leases. It is better to bring in a quality tenant who is looking for a short term lease than to try and hold out for a long term lease tenant. With some states enforcing an eviction moratorium, you want to make sure you have a good tenant in place before offering a long term lease because it may get exponentially tough to remove a bad apple from your tenant base. If you’re hold out for long term lease tenant, you may be waiting a while, and the odds are not in your favor in the current economic situation, so be open to creatively working with a tenant on lease terms and providing concessions. 

4.Consider turning your vacant units into short term storage or a remote work space for those trying to get out of their house. Market it as a vacation work from home space. Maybe spruce it up with furniture and amenities that remind them of a home away from home. 

5.Use Federal and state assistance programs to buy time. An example of such programs include the PPP (Paycheck Protection Program). Some lenders are also providing mortgage deferment plans - if you are in a bind and can show proof of financial hardship, they will work with you. Have your property managers provide resources to tenants who are in a financial bind and connect them with unemployment assistance resources. Also, consider working with your local city to see what local grants or financial assistance is being provided to tenants and possibly landlords. The key is to stay on top of the available resources and to proactively communicate with tenants and help connect them with those resources. 

6.Reset your expectations. Complete market research to see what others are asking. Remember that there is a demand, it’s just lower than what you were used to in years past.

In conclusion, keep in mind that real estate markets are cyclical. It just so happens that the pandemic has exacerbated the downturn cycle in a much more aggressive and unpredictable way for different asset groups. Fortunately, real estate investing is always in a cycle and what goes down must go up. The up cycle is in sight and the key is to ride it out with strategic decisions until the recovery is realized.