As an expert Orlando realty & property management company, we know that proactivity is always preferable to reactivity. Whether it's investing in new properties or protecting the Orlando rentals you already have, a proactive approach leads to sustainable solutions.
One proactive way to react to the frustrating, uncertain times related to the novel Coronavirus pandemic is to create a crisis plan. Ideally, you would create such a plan before a crisis appears—so that you can quickly implement it when the time arrives. However, we know that many property investors and their renters were caught unawares by this crisis—which means there's no better time to develop a plan that can address the future as well as the present.
As an Orlando realty & property management company, we've seen how COVID-19 has impacted both sides of the rental industry: not only have your renters and fellow property owners been affected financially, but it's challenging to close on any new investments when showings have been curtailed.
What we've learned from this virus as a community is that you have to be prepared for everything. One way to be ready for everything is to understand what your crisis plan would look like, even if you are writing it as you respond at the moment. Here are a few things to consider.
Please note: This blog is not intended as legal counsel. When you need to develop a crisis plan with hands-on legal guidance, speak with a competent attorney or your Orlando realty & property management partner!
Recognize Your Needs—and Plan Accordingly
Let's be clear; right now, in the midst of the novel Coronavirus pandemic, it isn't hard to imagine the usefulness of a crisis management plan. However, as we emerge from this context, it's essential for new landlords to recognize that tough times can arrive unexpectedly from anywhere. This makes targeting your core needs with your plan essential if you want it to fit a wide variety of disaster scenarios.
As Floridians, we know our problems can easily extend beyond the viral. A crisis can be local in nature, such as a massive hurricane or global, like our current economic downturn. By creating a crisis management plan, you may feel like you are thinking about "worst-case scenarios," which can feel negative—but remember that planning for it now protects you down the road.
To do this successfully, you need to identify some of the pain points you've experienced from our current crisis that could be extrapolated to any future disaster. This will help you cover more of your bases and optimize the resources you have available to tackle the problem at hand.
1. What Will You Do If You Need to Evict a Tenant?
- One feature of your crisis management plan should address how to handle the need for eviction.
- Part of making sure that you aren't caught in a bad place regarding your stance on eviction is to have a consistent procedure.
- Even outside of a crisis scenario, you can follow this every time a renter has fallen too far behind on payments or has damaged your property and broken the contract they've signed.
When you have this plan in place, you can proceed using a standard rather than accidentally giving a particular tenant extra leniency and ending up on the wrong side of a discrimination lawsuit.
Even with this plan in place, you might find it challenging to evict during a crisis. Do the research now: how would the local court system want you to contact them, and what procedures change during an emergency? Learn whatever you can and compile it. Documentation is always crucial when you operate Orlando rentals.
2. What Will You Do in a Sudden Downturn That Causes Job Loss?
Another important consideration is what you will do to communicate and collaborate with your renters who have experienced sudden job loss through no apparent fault of their own.
With more than 10% of the working population laid off or furloughed, and that number only expected to rise before things improve, many landlords found themselves thrust into a financial crisis of their own. Come up with an approach to work with your renters for how you'd construct payment plans, offer leniency in timing, or other potential concessions that don't completely deprive you of the rental income you need to keep providing safe housing.
3. How Much Will You Keep in Savings to Buffer a Major Downturn?
It's very frightening to have cashflow issues during a time of economic distress, since your renters may also experience financial struggles that force them to prioritize something other than paying their rent. Having some savings can help buffer your properties and your overhead while you give your tenants time to pay.
- Consider how much liquid savings you want to keep available during a difficult circumstance like an economic recession.
- These savings should be significant enough to float your bills and keep your stress away, but not so large that you aren't entirely investing your capital into worthy causes.
- As an Orlando realty & property management expert, we usually recommend investors maintain a three to six-month financial buffer for each property to tap into.
- Finding the right cushion for you and your needs is essential. Write it into your crisis plan as a way to keep it in mind as you move forward.
4. Will You Handle a Crisis Alone or Bring in a Trusted Partner?
Your Orlando realty & property management partner is an excellent guide to bring in when you are constructing a crisis plan. It's likely they have already developed and put contingencies in place to protect the property owners they serve by the time many DIY investors are just starting to react.
They may be able to think about other things you should plan for as well, including which kinds of crises might be more likely to impact your area and special considerations and costs you might be subject to. They can also help you communicate clearly (and professionally) with tenants about your policies. Failure in this department is rapidly becoming a major point of contention in the wake of COVID-19.
Professionalism and compassion in communicating with your renters are especially crucial concerning rent collection. You need to be able to collect rent to continue providing a safe Orlando rental home: maintenance isn't free. However, doing this in a tactful way is a must during a time of crisis.
If you want to learn more about how to approach this as a property owner during a time of financial distress for many renters, you need our Collecting Rent in a Crisis Handbook! To help support struggling property owners during this time, we are offering it to you completely free.