As we have covered in many of our recent blogs, COVID-19 has created unique challenges for property managers, who’ve been forced to reckon with sudden economic and social disruptions, along with whatever struggles they were already dealing with before the pandemic was underway. It’s been a mutually frustrating and financially devastating situation nationwide for both property managers and their tenants, and it is unlikely to be fully resolved any time soon.1
In these difficult times, the best way for landlords and other property managers to navigate the coronavirus crisis is to consider their tenants’ perspectives and work with them regarding how to approach their continued tenancy. During these unprecedented circumstances, it is important to consider what has been done and is currently being done to address the situation, and the most successful responses have shown one thing: health communication and negotiation with tenants is far more effective than coming at them with an “Us vs. Them” mentality.
The Reality of the Real Estate Situation
The most important thing to recognize going into any communications with tenants is that all parties are going to be on edge.2 The real estate market has been stagnant and is now declining,3 making it difficult to find a new place to stay unless you have the luxury of moving in with family members. On top of this, local businesses are struggling to pay rent, which means that even those who still have work right now are likely not going to be doing as well as they were even a year ago.4
Yet while tenants have certainly been impacted by the pandemic, property managers are also facing their own difficulties. In fact, some argue that, for the first time, renters actually have an advantage over their landlords.5 Due to the financial strain brought by the pandemic, apartments that rented within days are now sitting on the market for weeks or even months. The result is that renters have more time to consider their options and negotiate on prices based on market conditions.6 Also, for all of the tenants that are moving in, there are even more who are moving out, often at a much faster rate than one would typically expect. This is especially true of millennial renters, many of whom have alternative housing options.7
What this adds up to is that landlords are often desperate to keep the tenants they have, even if their leases are up for renewal. Landlords are offering big discounts, paying broker’s fees, or even offering months of free rent to keep their tenants from leaving. With vacancy rates on the rise and apartment sizes shrinking, the truth is that in the pandemic-era real estate market, “renters, not apartments, are in demand.”8
The Best Approach
Given the chaos and unpredictability that landlords are dealing with right now, they should mitigate the negative effects of the pandemic as soon as possible. The best way to accomplish this is to work closely with tenants, negotiating with them in order to work towards the best interests of both parties. Though some landlords might be tempted to play tough in this situation, the fact is that this will only lead to unnecessary conflict.
Besides, property managers are not alone in their COVID-19 financial struggles: despite having some advantages, tenants must figure out a way to sustain themselves during a time when millions of jobs have dried up due to the pandemic. Everyone has their struggles right now, so it is only logical that landlords opt to work with tenants instead of working against them. Understanding the tenant’s perspective, developing an approach to the situation based on the tenant’s approach, and coming to the negotiating table with pragmatism, preparedness, and open-mindedness can ensure that a reasonable and mutually beneficial agreement can be reached between these two parties.
In our next blog, we’ll discuss how to communicate and negotiate with tenants in order to deliver the best outcome for both sides!
1. See our previous blog series COVID-19 and the Eviction Moratorium and Millennial Renters & COVID-19.
2. Hirschfeld, A. (2020, August 3). How I lowered my rent by 20% during Covid-19-and what experts say about negotiating with your landlord. CNBC. https://www.cnbc.com/2020/08/03/i-lowered-my-rent-by-200-what-experts-say-when-negotiating-with-landlord-during-covid-19.html.
3. Kaysen, R. (2020, September 27). How to negotiate with your landlord during covid pandemic. The Economic Times. https://economictimes.indiatimes.com/news/international/world-news/how-to-negotiate-with-your-landlord-during-covid-pandemic/articleshow/78344028.cms.
4. Novick, S. (2020, August 5). How to negotiate rent for your small business during COVID-19. MSN. https://www.msn.com/en-us/money/personalfinance/how-to-negotiate-rent-for-your-small-business-during-covid-19/ar-BB13Nj5Q.
5. Kaysen, R.
6. Kaysen, R.
7. See our earlier blog series Millennial Renters & COVID-19, starting here: https://iicarr.com/2020/11/millennial-renters-covid-19-part-one-understanding-millennial-renters/
8. Kaysen, R.