Real estate investors from Houston are experiencing difficult times thanks to the coronavirus pandemic. Although property values remain stable, the rental market has changed dramatically.
Investors with rental properties are struggling to fill vacancies at a time when many are unemployed. Many investors have tenants who can't pay their rent and eviction moratoriums are preventing them from turning over their units.
On top of these new challenges, landlords still have to deal with all the usual landlord duties. For many, it's overwhelming and they're turning to property management companies for help.
Landlords need help managing new challenges
Being a landlord has always been challenging. It's not easy filling vacancies, collecting rent, performing repairs, and managing relationships with tenants. However, in light of the COVID-19 crisis, landlords are facing a new set of challenges. The main challenge stems from eviction moratoriums, two of which have been federally enacted.
The first moratorium only applied to federally funded housing, but the second moratorium applies to just about everyone and is in effect until the end of 2020. Protection under this order applies only to coronavirus-related inability to pay rent and is based on income; renters are protected if they received an economic impact payment through the CARES act. An estimated 40 million people will be protected by this order.
Here's how Houston property management companies are helping landlords manage these new challenges.
1. Relieving administrative burden
Managing a rental property requires plenty of administrative work from running background checks on applicants to providing rent receipts and documenting emergency repairs in individual tenant files. All of these tasks can quickly become an overwhelming burden.
Houston landlords who are trying to find ways to mitigate their financial losses from the pandemic don't have time for administrative work; having a secretary or personal assistant isn't enough.
Landlords need a full team of people to manage every aspect of being a landlord. While a property management company handles all the standard landlord duties, property investors have time to explore additional investment opportunities to recoup some of their losses from unpaid rent.
2. Managing evictions according to the law
Property management companies know Houston's eviction laws inside and out. That includes the new rules governing eviction moratoriums. For landlords who have never had to deal with an eviction, the process is time-consuming, frustrating, and the chances of making a mistake are huge.
By managing evictions for landlords during this time, property management companies are making sure every law is followed to the letter.
Since some tenants are covered by the eviction moratorium through the end of 2020, property management companies know exactly how to find out (and verify) who is covered and who isn't without violating the law. Since evictions unrelated to the coronavirus are still legal, tenants can be evicted for things like property damage, creating a nuisance, and various lease violations.
Perhaps the most important task property management companies are doing for Houston landlords is making sure to provide the eviction protection application with every legal eviction. The Texas Supreme Court ruled that all Texans facing eviction must be provided with information on how to get protection from eviction under the moratorium. It doesn't matter if the tenant qualifies for protection or not - the information must be provided.
3. Making and following up with payment arrangements
Although many are covered by the eviction moratorium, they will still owe back rent at the end of 2020 when the moratorium ends. Many landlords are allowing tenants to pay a discounted monthly rent, while others are entering into payment arrangement agreements with their tenants.
No matter what kind of modifications are made to the rental agreement, property management companies are helping landlords by negotiating, revising contracts, and following up with tenants to collect on new payment arrangements.
4. Making lease modifications
With permission from the landlord, property management companies are making lease modifications for tenants wherever necessary. For instance, tenants who can't make rent are being allowed to sublet a room where it was previously prohibited. This allows the landlord to collect at least some rent as opposed to none.
Other lease modifications include allowing pets and increasing the occupancy limit (while staying within state requirements). Some tenants are asking friends or family to move in to help pay rent, and for those who can only afford partial rent, it's a good deal. Some of those people have pets; property management companies make it legal by making modifications to the lease.
Houston landlords need all the help they can get
Property investors who didn't mind performing landlord duties are now experiencing the benefits of outsourcing those duties to a property management company. In light of the rapidly changing and overwhelming state of the COVID-19 pandemic, all landlords would be wise to follow suit.