Coronavirus has taken the world by storm, and the government has chosen drastic measures to prevent the excessive spreading of the illness.
The widespread “shelter-in-place” rules have restricted most people to their homes. While there are still exceptions, property managers are left wondering how it affects them and the people residing on their property. With many cities, counties, and states extending their stay at home orders into May, we are looking at least another month away from work.
To get a better understanding of the property management landscape, I hopped on the phone with Paul Worcester, CEO/Founder of Simplifyy, a tech startup that helps savvy multi-family owners boost their NOI by bundling costs and delivering property care. Worcester has also scaled an investment company from 0 to 4000 apartment units scattered around the Kansas City area.
When I asked Paul about the effects on the multifamily industry, he said, “property management has been completely uprooted in the last 30 days. The gravity of this is unfolding by the hour.”
Every day that offices remain closed is another unknown. Not only are residents losing their jobs, but multi-family communities can house thousands of people in one tight area. This type of proximity is scary for property managers, largely because they want to protect their residents. If a resident gets sick, property managers need to inform and keep their residents safe without causing a panic.
Prevention is key for properties, which can be achieved by closing down public areas, encouraging (or requiring) safe social distancing, property sanitization, and reducing traffic in hallways and stairways.
That brings us to the big question that property managers are asking, “what if my residents can’t pay?“
On Monday, March 23rd, the FHFA (Federal Housing Finance Agency) announced that they would be providing eviction suspension relief for renters in multifamily properties.
Here’s what the news release on the FHFA website had to say, “to keep renters in multifamily properties in their home and to support multifamily property owners during the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) is announcing that Fannie Mae and Freddie Mac (the Enterprises) will offer multifamily property owners mortgage forbearance with the condition that they suspend all evictions for renters unable to pay rent due to the impact of coronavirus.”
This should come as a relief for both renters and property managers. A lot of people are losing their jobs right now, making it hard for them to keep up with their rent payments. When renters can’t pay, property managers struggle as well.
Many property managers will agree that one of the worst aspects of their job is handling nonpaying residents and having to carry out evictions. The eviction process is even more emotionally taxing when financial hardship is involved. They don’t want to evict families who have lost hours and jobs due to the virus.
When I asked Paul about this, he said, “this is the very first month in the U.S. that we are seeing the effects of this. There have been predictions ranging from 5% to 30% delinquency. But the answer is we don’t know.”
Over the next few weeks, we may start to see more late and missed payments. Right now, evictions are getting delayed, which is a good thing for residents who have lost their jobs due to the virus.
Paul went on to describe how this type of situation is unprecedented. “You have to go back 100 years to the Spanish Flu to see anything like this, and, of course, our industry wasn’t even born yet.”
Although a lot of the uncertainty surrounding these times has a lot of property managers nervous, Paul has another take.
“Multifamily property management is one of the last industries to embrace large scale or disruptive technology investment.”
Almost every process in the property management world has been forced to evolve in the last month. Rent collection, maintenance requests, and contacting residents are a few of the prominent changes. Paul thinks that this could be the type of thing that pushes property managers to permanently adapt to a more efficient, technological approach. The technology is available and ready to use.
There are countless technologies available to property managers that would drastically alter the landscape of property management. Before this pandemic, many old-school managers chose the route of, “but this is the way it has always been done.”
Many people in the industry would agree that the old way of doing things wasn’t wrong, but it wasn’t always efficient. Communication, leasing, maintenance, and payments are all examples of processes that are currently being replaced by technology and automation.
“There are pent up profits that have been wasted with inefficiencies and a lack of innovation.”
Even though this is a suffocating time for everyone, property managers in the industry are being forced to step up. It a crucial season for a lot of leaders, and the resilient ones are finally opening their doors to innovation.
The weight of this pandemic is setting in for a lot of industries, but there is always a silver lining.
“Some of the world’s best minds have more time than they’ve had in years. Just imagine the type of innovation that’s going to come out on the other side.” – Josh Matteson (and probably a bunch of other people).
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