While hopes are high that the economy in the Gulf Coast will restart soon as Governor Ron DeSantis has drawn together a task force to work on reopening business in the state of Florida, the COVID-19 crisis is far from over across the nation. Orange county is reporting some good news: with the number of cases dropping daily, it appears they've reached their peak. In Sarasota and Manatee Counties as of late April, the outlook was still negative—even as curfew was lifted.
As a Bradenton property management expert, we know that it's only a matter of time before this pandemic passes by our community, and life will continue on—even if it might never be the same way again. However, this is not the only storm that property owners can expect to face in the course of owning an investment portfolio. If you were a property owner during the 2007 recession, you already know this to be true. This is exactly why we want to ask the following question with today's article: Have you created your crisis plan yet?
If you haven't taken the time to sit down and develop a plan now in the middle of the pandemic we're currently facing; there's never been a better time. As a Bradenton property management professional, we know that every property owner should have a plan on how they will protect their portfolio during a crisis. We know that for many property owners, your portfolio is your vehicle to financial freedom and independence; you may even be relying on your properties in Bradenton for the security of your retirement.
These issues—among others—are exactly why having a crisis plan before the next crisis appears is crucial. Let's go over some of the details we think that every investor should include in their crisis plan from the perspective of a Bradenton property management company.
A quick note: The following article is not a substitute for legal counsel. If you need immediate help with a pressing issue concerning your tenants, turn to a competent attorney or Gulf Coast Property Management for real-time assistance!
Addressing the Potential for Job Loss
COVID-19 has certainly hit this point home—and hard. Whether it's the loss of work for your renters or yourself, your crisis plan should always include ways to address this factor when sheltering your portfolio from hardship following any kind of disaster. While a recession, pandemic, or natural disaster don't always manifest with the same kind of impact, hoping for the best while planning for the worst is generally a safe strategy.
- Document your approach for how you will tackle job loss among your residents by offering pre-emptive solutions for how they can pay their rent in the event of such loss.
- Have a list of resources on hand that you and your residents can turn to during a crisis to receive financial support.
- Develop a savings contingency for the expenses of your properties in the event that other methods fall through.
Having Enough Savings
It's an unfortunate financial reality that many DIY landlords are living on razor-thin margins. The same is true of the majority of your renters. When a crisis directly impacts your much-needed rental income, this becomes more apparent than ever before as you're hit with the mounting costs of property taxes, insurance, and other demands on your finances.
This is why we recommend as Bradenton property management professionals that investors and property owners also have a set amount of savings put aside for their properties to help shelter themselves and their assets during a time of uncertainty.
- Generally, it's a smart move to have, at minimum, a buffer of three months' rent per property.
- Six months' worth of rent would effectively shelter you through most crises until your current residents can get back on their feet or your new residents move in.
- Your buffer is designed to protect your own finances from taking a hit in the event that your renters cannot pay rent, or your property is vacant for longer than you expected.
COVID-19 has given investors an excellent example as to why having a savings buffer can be a saving grace when your rental income is at risk—or when your own career is. Moving forward, this should be one of the first things you try to build to safeguard your rental properties and your credit.
Addressing the Possibility of Eviction
As an expert in Bradenton property management, we always consider an eviction as the last outcome possible in scenarios where renters don't stick to what they agreed to in the lease. However, it's a possible eventuality worth preparing for as part of your crisis plan—especially if you have a renter putting other residents at risk by violating the terms outlined in the lease.
We've heard stories of bravery about those who have responded to the COVID-19 crisis with the interests of their community and neighbors at heart. We've also heard of those who have done the exact opposite. Including a component in your plan that addresses the possibility is a smart way to keep yourself prepared as an investor—and protect your investment properties.
- Work with a trusted partner in Bradenton property management or a skilled attorney who can help you navigate the legalities of a necessary eviction during a crisis.
- Your property manager can provide both insight for your plan and help you carry it out in the event of an emergency that requires you to be proactive.
- During a crisis, eviction law may not operate as usual across county and state lines. Working with your Bradenton property manager or attorney when acting on your crisis plan will ensure you don't accidentally land yourself in hot water as a property owner.
How You Plan to Collect Rent
One of the key purposes for your crisis plan is to help protect and preserve your income. If you're not considering your approach for how you'll continue to collect rent as outlined by your lease during a crisis, then it will seem overwhelming once you reach this point—especially as a DIY property owner.
As your Bradenton property management expert, we've put together a guide for property owners to address this exact issue! When you download your free copy of the Collecting Rent in a Crisis Handbook, you'll gain access to the insight you need to carefully craft this component of your crisis plan.