There is a lot of uncertainty floating around right now and it's leading a lot of rental investors to start asking questions about what their next move should be. What does the future look like? What's the smartest move to make? Here are 5 simple things that every investment property owner should be thinking about:
1. What should I do if my tenant lost their job?
Communication in a time of crisis is really the key here. It is important to know the situation of your tenant and to make sure that you work with them, not against them. If they lost their job and are confined to their homes, a plan that works for both parties should be worked out together. For example, it could be a payment plan, a grace period, a lower charge, or even something else. It really is important to make sure that everything discussed is well documented and any agreements that have been established are in writing.
2. Should I hire a Property Management Company?
A property management company is there to support you and your tenants. During times such as these, a property management company will stay up-to date on local ordinances and have set procedures in place to protect your investment. They should have an online payment system in place that allows you to receive your payments and allows the tenant to make payments as well.
3. Will I be able to get a tenant into my vacant home?
From the information we have gathered, it looks like physical showings have slowed but online home search has remained steady. This means that having your home on every rental website is vital. Keep in mind that you may have to be flexible as this is uncharted territory for everyone involved. The important thing is to make sure that your home does not stay vacant as we do not know what changes lie ahead of us during this COVID-19 transition.
4. Is it time for me to sell my home?
With all the uncertainty that comes with a crisis like COVID-19, you may be thinking it is time to sell your assets and remain liquid. People will argue both sides of the coin but the only one that matters is the one that you and your advisors decide on. There are many things to consider when it comes to deciding to sell your investment:
- Although interest rates are still low, will you get any viewings on your property if everyone is confined to their homes?
- Pricing always plays a big factor when putting your home on the market. Now more than ever it is important not to shoot too high and aim for a reasonable listing price. Be sure to consult with your Realtor and make sure your neighborhood is not oversupplied with competition.
- If you have some equity in your home and it is in a good neighborhood, it may be a good idea to just hold on tight and put a tenant in place until there is more clarity in the marketplace.
There is an abundance of other things to consider but we will save that for a future post.
5. Is it time for me to buy?
The only person that can really decide this is YOU! If you have the capital needed to purchase, then by all means, purchase, but the real recommendation is to buy smart. Buying in a time like this requires there to be a plan in place before the home is even purchased. Like a General going into combat, you need to make sure you have an exit strategy in place in case things don’t go as expected – buy only the great deals and increase your holding cost assumptions. OPENDOOR, one of the largest I-buyers in the market, has paused on buying so if someone is trying to sell their home, they will need offers from you! Do not get discouraged that I-buyers are pausing their purchasing. Their models were created to work off volume and accurate valuations so when there is uncertainty, small margin buying is not a smart move.
Whether you are looking to retain your tenants, cash out, or buy more properties there is something extremely important that will make your decision go a lot smoother and enhance your ability to be successful. A good property management company will take care of repairs and collect rent payments but a great property management company will guide you from the start of your first investment purchase to helping you strategize for times of crisis.
At Homeriver San Antonio we will help you succeed from the very beginning of the process to the very end. Set and appointment to speak to our Business Development Manager and see how we can help you even now.