As the world weathers the pandemic, landlords are left wondering how the market will continue to be impacted and what will become of their investments. Investors across the real estate industry are unsure of what their rights and responsibilities are—as well as the future of their businesses. We've never seen uncertainty quite like this before in our role as Maryland property management professionals. However, we have braved other crises in the past; this has helped us prepare and respond appropriately to the present.
While we are undoubtedly in uncertain times, this is not the first time history has seen a crisis. At Renters Warehouse, we have the unique opportunity as a professional property manager in the Baltimore area to provide advice to the landlords we serve. This includes insight on how to build crisis plans that can carry you through any disaster.
Every landlord in Baltimore to have a crisis plan that is both rigid enough to provide structure when you need it and flexible enough to help you adapt to any disaster scenario. Consider all the possibilities—even if they sound like they will never happen. Having a plan in place before any problems arise will lighten the load and reduce stress should you be faced with a crisis as a Baltimore landlord.
Here are some of our insights concerning what you should be working on as your expert in Maryland property management.
Please note: This article is not intended to be used as direct legal counsel. When in doubt, you should always reach out to your attorney or your Maryland property management partner!
Managing Evictions in a Crisis
Eviction is probably one of the most tumultuous tasks that landlords are faced with, and even in an everyday environment, we consider it a worst-case outcome.
While it is not a topic most enjoy discussing, it is sometimes a tool that landlords have to use to protect their properties from malicious damage and unpaid rent or to protect other renters from danger. It is important to understand the proper steps should the need for an eviction occur during a crisis.
It is also worth knowing that your usual avenues to pursue eviction may be cut off or suspended during an extreme crisis. This makes having alternative and proactive measures in place to address these issues critical.
- Understand eviction law in Baltimore: Such laws vary as you move across state lines, and we know this is especially relevant in the DMV area. This makes it vital to conduct thorough research to make sure you even have grounds to evict. You should also be aware of these laws when creating your lease agreement. Your lease is your first line of defense, so it's worth analyzing it to see if it's in top shape and adequately protecting your interests.
- Have a valid reason: You are uprooting someone from his or her home, so it is important that you have a valid reason for doing so. Reasons generally include nonpayment of rent, extreme property damage, lease expirations with no renewal, violated lease agreements, or engaging in illegal conduct.
- Reason with your renters: As mentioned above, you may be blocked from beginning eviction procedures during a crisis. It better serves landlords in this scenario to take a proactive approach and try to work with your renters. It is important to genuinely listen to your renter if they communicate with you and try to develop solutions. It is ideal to have these types of conversations in some format you can document, such as by email. If the tenant is not cooperative, do not try and take matters into your own hands.
Addressing Job Loss
There is a pretty heavy burden on both renters and landlords right now in the wake of the COVID-19 crisis. Many otherwise-reliable renters have found themselves unemployed due to the virus and strong social distancing measures. Many of those who lost their jobs may face difficulty when it comes to rental payments. This makes addressing potential job loss as part of your crisis plan essential for keeping your rental properties afloat.
The key here is balancing your needs as the property investor and the needs of the tenant:
- If you come across as lacking empathy, tenants may get defensive and not be willing to work with you.
- If you don't employ enough firmness, your less scrupulous renters will use this as an opportunity in their favor.
For the majority of your renters who see no gain in an economic downturn, this is a scary and confusing time. Often, providing structure and solutions like payment plans is enough to soothe fears and keep everyone housed.
You Should Have Savings
When purchasing an investment property, there are many costs involved. If you became a landlord by circumstance rather than choice, you may not have known that the expenses of a rental property would expand beyond the down payment, mortgage, and basic maintenance expenses of your residence.
As a Maryland property management expert, we see these 'routine' costs trip landlords up all the time. The reality is that rental properties incur more expenses than the home you live in—even when they are generating far more income. When your renters cannot pay their full rent, these expenses come knocking on your door—and you should always have a savings reserve to meet them head-on.
We typically suggest that every landlord has, at a minimum, three months' worth of savings per property. This equates to about three months' worth of rent for each Baltimore rental you own and operate. A better figure to shoot for is six months' rent, but we understand that's out of reach for many landlords. Regardless, use this time to start saving for the next crisis.
Rely on the Right Property Manager
Hiring a property manager as a property investor can ease a lot of pressure when it comes to the day-to-day tasks and responsibilities of being a landlord. Your property manager is responsible for filling vacancies, responding to maintenance requests, screening tenants, collecting rent, and any other duties as they come up related to your property. This can save a landlord the headache and time of having to learn how to successfully run a Baltimore rental property in a trial by fire.
Being prepared for a crisis is really step one of handling the crisis. While unfortunate events are not always foreseen, a knowledgeable landlord can successfully plan for the unpredictable when they take advantage of insights offered by a professional. Get in touch with your team at Renters Warehouse BW Metro to put our insight to work for you!