Author Topic: Landlording during a recession  (Read 1289 times)

Villanelle

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Landlording during a recession
« on: March 20, 2020, 04:23:10 PM »
I was invested in 2008 and had no issues staying the course, and I'm not stressing the stock market this time, either.  But this is my first downturn as a landlord.

Our current tenant's lease is up in a couple months.  in January, the tenant indicated to the PM that they wanted to stay, but who knows if that is still the case.

I'm wondering if there is anything I should know or take in to account during this upheaval?  We'd planned an rent increase based on the market, but clearly we will have to take another look at that. 

Tips or tricks from those who have BTDT?

fishnfool

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Re: Landlording during a recession
« Reply #1 on: March 20, 2020, 04:52:58 PM »
        I had section 8 tenants during the last crash. One in one unit for 8 years, the other 6. It worked out pretty well with stable payments every month. I would not go seeking out section 8 tenants but sometimes it works. 

Right now there is a section 8 tenant in my smaller unit. I am waiting to here if my other tenant (not section 8) will be affected by the layoffs? 

Good luck!

Another Reader

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Re: Landlording during a recession
« Reply #2 on: March 20, 2020, 05:30:09 PM »
I was invested in 2008 and had no issues staying the course, and I'm not stressing the stock market this time, either.  But this is my first downturn as a landlord.

Our current tenant's lease is up in a couple months.  in January, the tenant indicated to the PM that they wanted to stay, but who knows if that is still the case.

I'm wondering if there is anything I should know or take in to account during this upheaval?  We'd planned an rent increase based on the market, but clearly we will have to take another look at that. 

Tips or tricks from those who have BTDT?

The market just changed and you haven't seen it yet.  Look at listings in your area - Zillow, Hot Pads, MLS, etc.  See how fast they are leased and if there are price reductions.  Ask property managers in the area what they see and how they are reacting.  We will be offering renewals without increases.  The market is still tight, but that will change if unemployment skyrockets. If the downturn continues, we will offer reductions in line with the market.

Wrenchturner

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Re: Landlording during a recession
« Reply #3 on: March 20, 2020, 06:25:32 PM »
My lease is up at the end of April(tenant).  I haven't checked the laws yet but I don't think I have to give 30 days notice to renew.  I have a fixed tenancy that will end at the end of April if nothing is agreed upon(unlike some Canadian arrangements where the lease moves to month-to-month, which I would probably prefer).  My landlord will almost assuredly prefer to renew.

I'm not really eager to move and even if I get laid off I can weather the storm and manage just fine with Employment Insurance.  Just not in a hurry to sign another six month lease with some post-dated cheques right now...  I'll read up on my options and wait another week.  I suspect Canada will be considering a mandatory shutdown in a week or so(the UK is nine days ahead of us statistically and just instated one).


Villanelle

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Re: Landlording during a recession
« Reply #4 on: March 20, 2020, 08:08:38 PM »
I was invested in 2008 and had no issues staying the course, and I'm not stressing the stock market this time, either.  But this is my first downturn as a landlord.

Our current tenant's lease is up in a couple months.  in January, the tenant indicated to the PM that they wanted to stay, but who knows if that is still the case.

I'm wondering if there is anything I should know or take in to account during this upheaval?  We'd planned an rent increase based on the market, but clearly we will have to take another look at that. 

Tips or tricks from those who have BTDT?

The market just changed and you haven't seen it yet.  Look at listings in your area - Zillow, Hot Pads, MLS, etc.  See how fast they are leased and if there are price reductions.  Ask property managers in the area what they see and how they are reacting.  We will be offering renewals without increases.  The market is still tight, but that will change if unemployment skyrockets. If the downturn continues, we will offer reductions in line with the market.

I've definitely given up hope of an increase.  I'm wondering if we need to offer a decrease.  Or if we should somehow be touching base with tenants to see if paying is going to be an issue, to see if we can work with them (I don't know exactly what that would look like, but I know some rent is better than none, especially with an eviction moratorium.)

waltworks

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Re: Landlording during a recession
« Reply #5 on: March 21, 2020, 08:40:33 AM »
It'll depend on your tenants and how affected they are. If this is a B- or lower type place (ie low end white collar or blue collar) I'd assume you are going to have to cut the rent. Your goal for the next year or two should be to have the place pay for it's upkeep and stay in good shape, not to make a profit. So sitting down and carefully figuring out your expenses on the property is step 1. Then you can watch the local rental market and job market with your particular tenants in mind and proactively offer a rent reduction if you think it's necessary.

-W

Dicey

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Re: Landlording during a recession
« Reply #6 on: March 25, 2020, 04:29:14 PM »
I just posted this on another thread, but it might be useful here:


During the 2008 Recession, renters were losing their homes because landlords were collecting rents but not making house payments. The tenants were oblivious until the sheriff turned up at their door. At the time, I had a single rental in a senior community. My darling tenant was terminally ill, had lost a shitload of money in the stock market and was worried about losing his home. I used to call him every month to let him know that I'd made the mortgage payment. We had the best conversations and he lived for another year or so. RIP, Jack.

This time around, we have three houses in the same community. We have contacted all three tenants to make sure they're okay and to reassure them that we are, too. One of them just asked if we would renew their lease for three years. Um, yeah, sure we will. Done. He's also the guy who voluntarily raised his rent $100 bucks a month, as I have mentioned elsewhere.

My advice is to treat your tenants like people you give a rip about. If they were good tenants before, they will probably continue to be. Turnover is expensive, so taking a few easy steps to avoid it is cheap insurance.


Bloop Bloop

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Re: Landlording during a recession
« Reply #7 on: March 26, 2020, 11:51:40 PM »
My best advice is to accept families with children and dual-income adults (but who can pay the rent off one income). Having kids attached to a school gives them (and you) more incentive to find a long-term harmonious rental relationship.  Having the security of 1.5 or 2 incomes gives the tenants more flexibility in case of a downturn. Prevention is better than cure.

Villanelle

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Re: Landlording during a recession
« Reply #8 on: March 27, 2020, 12:19:29 AM »
My best advice is to accept families with children and dual-income adults (but who can pay the rent off one income). Having kids attached to a school gives them (and you) more incentive to find a long-term harmonious rental relationship.  Having the security of 1.5 or 2 incomes gives the tenants more flexibility in case of a downturn. Prevention is better than cure.

I'm hoping the current tenants stay but I'll keep that in mind.  Although it seems like people without kids will have lower expenses and thus might be more able to keep up with rent, perhaps?  Also, if that a question I can legally even ask?  (We use a PM, so I don't ever actually interact with tenants, but she does run any potential tenants past me if/when we turnover.  Current tenants have been in for 2 years and I'm hoping for a third!)

Bloop Bloop

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Re: Landlording during a recession
« Reply #9 on: March 27, 2020, 12:45:15 AM »
It would depend on your state laws and also how you talk to your PM. Where I live it is illegal to discriminate on the basis of marital status, parental status or employment type. So you can't say "I only want married couples, no de factos or single parents" or "I only want/don't want families with children" or "I don't want hospitality workers who work unsociable hours". And for good reason - those considerations are arbitrary and unfair. However, you can say "I want tenants with a solid income stream and preferably dual income", "I want tenants who have a solid earning history of X years" or "I want tenants who are likely to have an attachment to the neighbourhood/nearby schools" etc.

SwordGuy

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Re: Landlording during a recession
« Reply #10 on: March 27, 2020, 09:53:48 AM »
Just found out that one of our section-8 tenants lost their section 8 status for "being noncompliant".

I have no idea what that means in terms of whether to expect rent money in April.   But my guess is I won't be getting paid.

zinethstache

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Re: Landlording during a recession
« Reply #11 on: March 27, 2020, 11:24:59 PM »
We have lived 100% on rental income since FIRE. We own one property outright (duplex), and have a small mortgage on the other (also a duplex). Four total units with dual incomes in a HCOL area. Our PM is not charging late fees, evictions have been outlawed here for now and there will be no new leases until things settle down. We sold our larger, boat anchor property two years ago and are so glad we did! Proceeds allowed us to pay off one property which makes this far less stressful than it would be if we had three mortgages!

It will be interesting to see how things play out. We have cash on hand for personal expenses of at least 2 years IF we get enough rents to cover the rental unit costs - quick head math says...we need 1 unit to pay full rent (or any combination to equal one unit's rent) to cover all rental expenses. Rents are close to the same for all four units.  We've kept up on maintenance and can defer a few things. One tenant has an ongoing issue that will have to be tabled for now.

Properties are in Washington state, and unfortunately (or fortunately) so are we. Our health insurance only covers us in network, so we are staying put as who knows what might happen health-wise.

The good news is our basic living expenses are just about free. We camp in the Thousand Trails system (we do pay a total of $83/mo for all campground memberships combined), and if that fails we have family property we can camp at (alas, poor internet and no dump which could be a big issue if rest areas are closed).

I also have my IRA which is riding a roller-coaster right now. I do have 30% in bonds and if we need to pull some out down the road, we will.

We have cancelled our major travel plans through June. We are so glad we didn't start as planned in February.