If Plano property owners have learned anything in recent months, it's that we have to be prepared for the unexpected! When a crisis comes seemingly out of nowhere, and the economy suffers, investors face challenges and uncertainty when collecting the rent and managing residents.
- What should be a routine part of owning and managing rental properties becomes a significant obstacle and risk to your rental income.
- There are always renters who miss a payment or experience financial challenges that delay the rent. However, when a widespread crisis affects multiple renters, investors must have a plan to adapt and minimize the impact on their investment income.
If the recent recession threatened to ruin your rental property business, make sure that's not the case when another crisis hits. We can't predict when the economy will impact your renters' abilities to pay the rent—but we can prepare for it! RentHub is here to help: use our experience as the experts in Plano property management and follow this guide to collecting rent in a crisis.
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Plan for It
One crisis is enough to help investors realize they need to be prepared to navigate less-than-ideal rental property owner conditions. While real estate investing in Plano is one of the most stable ways to build investment income, a quick downturn in the economy can quickly impact your short-term returns. When your short-term suffers for too long, it's hard to recover and rebuild your long-term wealth—if you don't have a plan.
- Maintaining your success through a crisis is possible—but it won't happen by accident.
- Success in real estate requires playing the long game.
If a few months into a recession is all it takes to go through your cash reserves and default on the mortgages for your properties, your long game is over.
Expect a Crisis to Happen
We don't mean to be 'doom and gloom,' but investors can't expect everything to go well all the time. When dealing with properties and people (your renters), there are plenty of factors that must work together to maintain your investment income momentum. Something will inevitably go wrong—eventually.
Successful investors don't let a disruption catch them off guard. A Plano property management partner can tell you that having a crisis plan in your back pocket is smart! You don't have to operate your business from a perspective that every day is the last 'good' day you'll ever have. However, knowing what to do when a recession or another type of crisis comes along is one of the best ways to protect your business.
When renters suffer through an economic downturn, property investors must:
- Be proactive
- Put a crisis plan into action
- Know how to manage renters and payment issues
- Have savings tucked away to offset rental income loss.
The faster and more effectively you put your crisis plan into action, the better you and your renters will weather a crisis. When you minimize the financial impact to your bottom line during the tough times, you'll see a quicker recovery as the crisis ends.
What do investors need when planning for success despite a crisis? Check out these resources for creating your emergency plans.
Prioritize Your Renters
How you handle your renters during a crisis will either help you build better relationships with them or encourage them to leave. While no one wants a crisis to happen, Plano property investors can use challenging times as an opportunity to rise to the occasion and impress your residents.
Dealing with difficult renters who refuse to pay the rent (especially when they can, even in a crisis) is one thing. Managing renters who genuinely struggle to pay the rent and other bills when the economy also struggles requires property investors to balance empathy with practical solutions.
There will always be renters who take advantage of a crisis and decide they 'can't' pay the rent. As a property owner, your job is to help struggling renters pay what they can while maintaining positive relationships. When a crisis ends, you'll have the opportunity to deal with bad renters who chose not to honor the terms of their lease by withholding rent.
Communication Comes First
One of your first tasks is to reach out to your residents. A crisis can catch everyone off guard, but your proactive communication will help reassure renters that you're all in this together.
Even if you don't have the details of a crisis plan in place right away, let residents know:
- You realize there is a situation
- You're here for them
- How to reach you
- You have a plan to maintain operations with adjustments as the crisis allows
- You'll be in touch again with more details (soon).
Ignoring the onset of a crisis or prolonging your first communications can cause residents to panic. As a smart investor in Plano, you set the stage for success in a crisis by taking the lead and assuring your renters that you have a plan and the resources or contacts to help everyone get through a financial crisis.
Payment Plans Help Struggling Renters (and Investors)
After an initial all-resident message, reach out individually to your renters. This helps set the stage for your residents to feel comfortable letting you know that they are struggling to pay the rent.
- Be careful about offering payment plans until you've connected with each resident.
- Not every renter will need help to pay the rent during a crisis.
- If they don't need help, don't offer to adjust their rental payments.
However, for residents who are in good standing—but quickly find themselves experiencing job or income loss—offering a payment plan is appropriate. Payment plans help:
- Residents feel like they are more than 'just' a rental payment check
- Struggling renters adjust what they pay in the short term until they can replace lost income
- Investors keep some income coming in until full rental payments resume.
As a Plano property management professional, we know that payment plans help investors work with struggling residents while minimizing the impact on their monthly income during a crisis. Pre-plan the types of payment options you'll offer to make it easier on yourself and your renters in the middle of a crisis.
When renters can't pay the rent, investors struggle to pay mortgages and other rental property expenses. Use these resources to communicate well with renters and develop payment plans to residents who need help during a crisis.
Think Beyond the Crisis to Maintain Relationships
Renters might drive you crazy during a crisis, but investors must think beyond the immediate upside-down situation to maintain positive resident relationships.
- The crisis will end.
- Renters should want to stay for the long haul.
- Payment plans and operational changes are temporary.
Successful investors know that long-term relationships with renters help them make more money! Even when tensions or frustrations are high in the chaos of a crisis, these short-term challenges can either improve your resident relationships or send your renters looking for new homes at the end of their lease terms.
Even in a crisis, the Plano property management pros at RentHub recommend:
- Finding ways to show appreciation for your renters
- Being available (even if it's virtually)
- Checking-in with residents regularly
- Enforcing the rules as appropriate while also exercising empathy
- Responding to maintenance requests promptly (and make arrangements that work within crisis protocols).
When residents feel like you are working with them through a crisis, that goes a long way toward building positive, lasting relationships—and lease renewals!
Never Skip Screening
What's worse than struggling through a crisis? Placing a bad renter in your rental who refuses to pay the rent and causes expensive property damage!
If a crisis affects your ability to keep a resident in your property, property investors must stick to your standard protocols. A month or two without rental income can cause investors to panic, but never skip the screening process when placing a new renter in your property—no matter your financial situation.
'Professional Tenants' and scammers love a crisis! They prey on struggling property owners and take advantage of their need to find a paying renter fast. Even if you lose another week or month of rental income, protecting your investment property must be a priority in a crisis.
Screen as thoroughly as when you have the time and resources to wait for the right new renter. When the crisis ends, you'll be glad you placed a quality resident with long-term potential in your property!
Good renter relationships start with maintaining your screening protocols, even during a crisis. Click these links to learn more about maintaining positive relationships with residents to weather a crisis—and beyond!