As landlords we know these are crazy times and we may not be near the end, so here are 5 critical resources landlords should use in these crazy landlord times from veteran real estate investor and property manager David Pickron.
Like many of you, I was blessed to experience the ‘80s as a teenager. The hair, the movies, and most of all the music, were iconic. One of my favorite bands was Journey, and I knew all their lyrics (and air-guitar solos) by heart. Just hearing Steve Perry hit the notes that only he could reach brings the memories flooding back. Unfortunately, he left the band in 1987 and through changes and challenges, things were never really the same for the band.
Similarly, our own industry was riding high in 2019, when we all looked like rock-star investors with a solid, proven rental base. Then COVID-19 hit (a real low note) and things just haven’t been the same.
Hoping to return to form, here is what we have seen over the last month:
- The CDC extended the eviction moratorium to July 31, 2021 and alluded to the fact that there was no intention to renew it.
- A few days later the Supreme Court refused to take a case involving the moratorium, stating it would be expiring within 30 days and therefore there was no need to rule.
- The Consumer Financial Protection Bureau let credit-reporting agencies know that they better report evictions and delinquencies correctly or they will get sued. This was seen as a “shot across the bow” letting us know they will be watching closely; a scare tactic often used by Fair Housing and other government agencies.
- Several states passed legislation saying companies like ours cannot report evictions through 2022.
- Recently a congressional House panel went after four large corporate-housing providers, asking them to produce documentation on how they were able to evict 5,000 residents while there was an active eviction moratorium.
While we may be seeing the light at the end of the tunnel for the eviction moratorium, we are far from “business as usual.” Our industry, and landlords specifically, will continue to be a target as this so called ”housing crisis” is figured out. Notice I intentionally did not say until COVID is figured out. It’s no longer about COVID-19, it’s about a bigger problem that is not going away anytime soon.
Within this ever-changing landscape, every landlord can and must protect themselves by utilizing these five critical resources:
- Turn to and trust professional attorneys for any issues between you and your tenants. As investors we like to save money and handle situations by ourselves. While that is fine most of the time, in today’s environment an attorney could save you money, time and aggravation. Their knowledge of federal, state, and local laws is something we can’t possibly keep up with. City councils and state legislatures are passing laws to protect the tenant at breakneck speeds. For example, in Chicago, you cannot ask about criminal history until you have made a conditional offer of approval. Asking about criminal history on the initial application is a violation of a Cook County law and could cost you thousands of dollars. Your local landlord attorney will help you navigate these types of changes and save you money.
- Take a fair-housing class. The industry has seen more protected classes added this year around the country than any other year in the past. Know what you can and can’t say in your online ads, over the phone, and in person. Make sure you understand the importance of a detailed written criteria and how to properly use an adverse-action letter. (We can provide you a sample if you email email@example.com). Some states now protect “source of income,” so landlords now are required to take Section 8 housing and inherit the government as a business partner whether they like it or not.
- Join a local REIA to learn about changes in law. Most Real Estate Investment Associations (REIA) have attorneys and professionals that educate the association to ensure its members are up to date in their practices. If you do not have a local REIA in your area, search for investing or property-management podcasts. There are many professionals around the country who publish something weekly to help keep landlords up to date. Our Rent Perfect podcast drops every Tuesday and covers topics from top attorneys, tricks of the trade, solutions to current problems, and general management topics. You can find us wherever you get your podcasts.
- Review your onboarding processes. Are you getting the information you need to identify the tenant who will stay there for the next five years or longer?
- With so few evictions last year, consider requiring your potential tenants to provide 12 months’ worth of bank statements to prove rent was paid to the current landlord ,and look for deposits that match the check stubs and income amounts on the application.
- Always talk to the previous landlord (or two if possible). Sadly, some current landlords will lie to get a bad tenant out, so talking to another prior landlord is beneficial.
- Review your move-in procedure and ensure that it allows you to document the condition of the property at time of possession so you can prove whether damage was already existing or was caused by your tenant.
- Determine if it is time to accept rent online and have it deposited directly into your bank account. No more waiting for a check in the mail or partial payments.
- Explore new industry technology to see if you can eliminate any of those time-consuming tasks.
- Take care of your current tenants who have paid you over the last year; they are worth keeping. The tenant pool after the eviction moratorium ends will be teeming with risks you would rather avoid. A big game of musical chairs, or better yet, musical homes, is about to start. Retaining good tenants might mean upgrading your rental with new countertops or discounting the rent for a year. In the end, this strategy will pay for itself. Congratulations on having that great tenant, not everyone had that luxury.
Every investor is asking this question right now: Will we ever get back to normal? In those immortal lyrics from Journey, “Don’t Stop Believin’.” Believe that it might be a while. Believe that we might need to create and accept a “new” normal. Believe that even with new COVID variants you will survive. Believe that you are still working in the greatest business in the world and controlling your destiny. Believe and focus on what you have and what you know. Believe that there will be more surprises through 2021 and moving forward. Most of all, believe that together we can weather any storm.
About the author
David Pickron is president of Rent Perfect, a private investigator, and a fellow landlord who manages several short- and long-term rentals. Subscribe to his weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.