If one thing has become obvious of late, it is that the world is changing. From the running of businesses to the running of households – it seems like everyone is adapting to a ‘new norm’.
This is just as true for property investors, who have had to make big changes to the management of their rental properties. So, how should landlords navigate the COVID-19 crisis and what can they do to ensure the pandemic doesn’t get the best of them?
We chatted to a leading real estate figure – Katherine Kyriakou (Principal at McGrath Blackburn Property Management) – to get some guidance on how landlords can manage investments through to the other side of this global issue...
What do you see as being the biggest challenges facing landlords during (and on the back of) the COVID-19 pandemic?
Instability and insecurity are the two adjectives that spring to mind. I do not think that tenants necessarily understand the impacts of COVID-19 do not just rest with them, but also with the landlord. I liken it to a domino effect… Many landlords are heavily mortgaged and rely on this income to support their investments. If tenants default on their rent, so too do many landlords on their mortgages. COVID-19 may have also affected a landlord’s employment, which sees them unable to support their investments. This may mean mortgage default. It is a very hard situation, but it’s worth remembering that we’re all in this together; everyone in the rental system: tenants, landlords and agents. We all feel the impacts of the pandemic.
And, what advice do you have for landlords to tackle these challenges?
- Determine your financial position and where you stand as a landlord. Can you afford to assist your tenants by way of a potential deferred payment plan and talk to your bank about this? Also understand the implications of potentially delaying your mortgage.
- Keep the lines of communication open between your tenants and your agent. Get your agent to check in with your tenants regularly to ensure they can still pay their rent and work out a way in which to move forward that is mutually agreeable.
- Think laterally and remember what it was like to be a tenant. If your tenants cannot pay their rent, you may need to consider a deferred payment option from them with an open-mind. With the new COVID-19 amendments to all legislation surrounding this pandemic, it has been made very clear by our government and presiding bodies that we all must ‘negotiate.’
- Educate tenants on government incentives and provide them with the avenues that are available to them. Many tenants do not understand these, so point them in the right direction, while at the same time suggesting that they must be proactive themselves and not rely on the agent or landlord. There is help out there, you just need to find it.
It appears we are living through a time where everyone has to embrace a ‘new normal’ – how is McGrath adapting to a new way of property management to support its clients?
We were fortunate enough to have adopted a cloud-based software package 15 months ago and this has allowed us to work remotely. Not all of us have done this, however we currently have 50 per cent of our staff working remotely, while the rest of us are working from the office and adhering to the social distancing policy. We are also piloting a virtual routine inspection package that we have created ourselves to ensure that we are best taking care of our landlords’ investments and ensuring our tenants are safe.
We have also conducted welfare checks on all of our tenants, and as we speak, we are engaging with landlords with feedback as to the status of their tenants so that we can predict stress points for clients (and within our business).
Of course, in addition, we have modified and implemented COVID-19 policies and procedures within our business which we are ‘tweaking’ daily.
Finally, McGrath Corporate has been wonderful with its online learning, and assisting us with everything from legislation, to inspiring us with health and wellbeing regimes to assist during this stressful time.
What guidance would you give to landlords who have tenants that are doing it tough during this time (e.g. facing a job loss)?
Be empathic, be an active listener and exercise mindfulness. Allow your agent to THOROUGHLY investigate your tenants’ situation on your behalf. Like most progressive businesses, we have established a process to determine rental hardship, which once completed, we refer back to the landlord with discussion and with our recommendations. Each case is different and not all outcomes are the same.
There is so much misinformation out there about how landlords should respond during this time. Do you have any go-to resources to help landlords source reliable information on the evolving situation?
The Consumer Affairs website and VCAT (for those in VIC) are perhaps the best go-tos for landlords. It is up to date and comprehensive. We are dealing with state legislation and we must go directly to the source in this space.
Are there any silver linings you can see that will stem from this issue and impact the real estate industry?
In life we have two choices: fear change or embrace it. COVID-19 is unprecedented, it is challenging and it is unknown. It is ever-evolving for the government and for the legislature. Change is inevitable BUT growth can be optimal. Out of adversity comes strength of character. I do not believe that we will ever do business the same after COVID-19. Through necessity, we have changed the way we do business overnight, from our engagement with the consumer, to virtual tours, to becoming paperless. The victors in this climate will be those who embrace change and are prepared to navigate uncharted waters by stepping forward with courage. We must be adaptable.
I am proud of the team and the support that I have in our business and I’m honoured to witness the way our staff have rallied and worked to ensure we are doing our best for our clients. There have been some casualties along the way, but I am honoured to be working alongside an amazing team who have adapted, embraced and stepped forward with courage. This is my legacy; to witness their growth and their adaptability. We are all in this together and are working to ensure that we all have the best outcome, both professionally and personally.
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Read on for an update on where things stand with COVID-19 and landlord insurance…