Some of the most asked questions we are receiving are from landlords wanting to know how rent collection is going during this pandemic and what they can expect. Instead of relaying the information third hand, we’ve decided to interview four property management companies to get the information straight from the source. While the COVID-19 pandemic is going on, the plan is to do a monthly Property Management Market Update, so we all know what’s going on.
Overall, the numbers are better than I was expecting!
We will be focusing on a few key questions to each property manager:
- How has rent collection been in the last 2 months?
- Has not being able to evict or charge late fees increased the number of non-payments of rent? Or what other issues are you seeing with tenants?
- How has leasing been in the last 2 months?
- Is it still a good time for investors to get involved or be active in this current market?
- What do landlords and investors need to know about the current market situation?
The interviews with each property manager are below. You will see that no matter how many properties these companies manage and no matter what type of property, these managers are seeing roughly the same results across the board.
Interview with Gray Hall, GK Houses
Website: GKHouses.com
GK Houses manages properties in 5 national markets. Specifically in Colorado, they manage properties in Denver, Boulder, and Fort Collins. They have a portfolio in Colorado of about 700 doors that range from single family homes to small multi units and apartment buildings up to 49 doors.
- Rent collections
- March 2020: collected 98% of total rents
- April 2020: collected 97.5% of total rents
- May 8th 2020: collected 93.5% so far and expect to end between 96-97% of total rents by end of the month
- Overall this is about a 1% drop from total rents collected each month in 2019
- Rents may be delayed, but tenants are communicating well and doing what they can. Some are paying 1/2 on the 1st and 1/2 on the 15th
- Tenant Issues or Concerns
- Tenants have been good about communicating if they can’t pay. Property managers are working with those tenants on payment plans.
- Only 1 or 2 people have pulled the “I’m not going to pay and you can’t evict me!” out of all 700 units managed. This is the same as non-COVID times. Always a few “bad apples.”
- Has seen a drop off in maintenance requests. People don’t want anyone in their homes unless it’s absolutely needed.
- GK expects that as the “stay-at-home” order softens, they will see a backlog of these maintenance requests going into late summer
- Leasing
- Numbers really dropped off in March as there were no showings for any occupied properties, only vacant units
- Past 3 weeks it has felt like summer again as applications have doubled!
- Leased 6 properties that were occupied just this week
- Basically summer has come early with kids not being in school and campuses being shut down. Seeing June activity now!
- Still seeing high number of out of state moving into CO and need homes
- Biggest adjustment has come from moving everything to virtual and doing almost everything remotely. Needed to be able to adapt and be agile
- Not concerned about major rent drops or landlords needing to offer rent concessions
- Advising landlords to be aggressive but not drastic. So maybe decrease rents by $50 or $100
- Better to drop now and get someone in the unit than wait for the higher rent
- GK Homes manages properties in southern markets across the nation and says that compared to Denver
- Stay in place orders are less strict
- They are seeing more maintenance requests
- Leasing rates and showing rates have been about the same as Denver
- Overall rent collections are about the same as well, 1% drop over this time last year
- Need to know!
- COVID has forced the property management industry to adapt to new ways of showings and getting leases done which is not necessarily a bad thing
- Moving forward, there will be more virtual showings and the process will be more hands-off even after we go back to our “new normal”
YouTube Video Interview with Gray
Interview with Ellie and Devin Reimer – Aerowood Property Management
Website: rentawpm.com
Aerowood manages 300 doors in the Denver metro area. Their portfolio consists of mainly condos, townhomes, and single family homes. They also manage a few small multi family units.
- Rent collections
- April 2020: collected about 97.5% (only 5-7 people didn’t pay out of the 300 units)
- Overall seeing a 1% drop from this time last year
- May 2020: only about 60% of rents collected so far.
- Ellie thinks June will be much like May, hard to get rents
- April 2020: collected about 97.5% (only 5-7 people didn’t pay out of the 300 units)
- Tenant Issues or Concerns
- Good news is tenants are communicating well if they can’t pay. Most pro-active market seems to be tenants who pay $1200 and under each month
- Dealing with a lot of renters who are in the hospitality, restaurant, 1099 and cosmetic industries who haven’t gotten their unemployment yet and can’t make 50% payments
- Becoming more of a therapist to these tenants to try and help them get all the info about payment assistance and work out payment plans
- 20-30 properties are on payment plans as of now. They are doing what they can and some are even paying $25 every other day as “good faith”
- Ellie has had about 25% of tenants inquire about not paying rent and the biggest thing is you have to PROVE you are unemployed.
- 5 properties have just broken the lease, left the keys on the counter and messaged Ellie saying they are out. While this is a shock and not ideal, Ellie would rather they do this than have to “snowball their rent” and have them stay only to be evicted eventually. Allows managers to get new tenants in.
- Leasing
- 17 leased in April 2020
- Not overwhelmed but seeing good numbers and highly qualified applicants.
- Seeing a lot of out of state people moving in
- Beware! – They are seeing highest number of forged applications than ever before. Bogus references and paystubs
- All properties have been video recorded to do virtual tours. All leases that they’ve signed in last 2 months have been from video tours, no in-person
- As long as the place is priced right and is clean, it will rent
- Starting to do more calls. Once an application comes in, they are calling the applicant to get to know them as there’s a good chance they may never meet in person before the lease is signed.
- Taking signed lease and security deposit before anyone can see a property in person to avoid scams and squatters
- Learning to adapt and become a little more hands-off with all remote/virtual
- No rent concessions being offered as of now. However, they are being more flexible with move in dates
- How does it look for Investors
- Rental market is still there! Still good time to buy. You just need to be more cautious when screening potential tenants
- Section 8 looking better and better. The approvals and inspections are moving quicker than ever. Guaranteed rent.
- If Section 8 tenant pays a portion of their rent and has now lost job or been furloughed, easy to send letter to housing department and have tenants on “Full Voucher” until they get their job back.
- Need to know!
- If you self manage, you need to be screening very carefully. Tighten up qualifications and be aware of scams
- Triple check references and employment
- Don’t use Craig’s List to advertise – Too many scams
YouTube Video Interview with Ellie and Devin
Interview with Annemarie Sunde – Legacy Property Management
Website: Legacypmco.com
Legacy has been in business for about 6 years and focuses on single family homes. They also have a few condos and small multi family units in their portfolio. They have properties as far south as Castle Rock and as far north as Broomfield and Thornton. The majority of their properties are located in Highlands Ranch, Parker, Littleton, and Golden. They offer leasing and full property management services
- Rent collections
- April 2020: they collected 100% of total rents
- May 2020: they have collected 100% of total rents
- Annemarie says it’s been crazy since February and if COVID hadn’t happened, they would not be able to handle the amount of requests they received for new property management
- Majority of their portfolio are properties paying $2,500+ in rent each month
- Tenant Issues or Concerns
- Communication is key. They have the ability to do a payment plan, but so far only had 1 person requested rent relief
- Stimulus check has helped several people
- Tenants need to remember that if you are in a dual income household, and only 1 of you get’s furloughed, you are still responsible for rent. You do not qualify for rent assistance
- Market where she has seen more of a struggle are properties where rent is under $2,300/month
- Will be sending out letter this month to all tenants letting them know that eviction moratorium has been extended through end of July. Required to do this by HUD
- Maintenance requests seem steady. Just communicating to tenants that due to COVID, may take longer as contractors aren’t willing to go into homes and prioritizing requests absolutely needed for health and safety
- Leasing
- Overall really good
- Leased 12 properties in last month
- Added 12 properties to their portfolio in the last month which mostly came from people who were going to place their house on the market, didn’t want to deal with people coming through for showings, so decided to get lease in place for 1 year instead
- Still seeing lots of out of town people coming into Denver
- Have had to adapt to a remote workflow which has ultimately made their company more efficient and effective as there’s less time out showing property (with virtual tours) and more getting deals done
- How does it look for Investors
- Great time to buy!
- Low interest rates and small window of opportunity to get a property from owners who are in worse situations and can’t hold onto their properties
- Denver will recover! Real Estate and Property Management are “Essential Business” and they will keep going.
- Still low inventory, so renters are staying instead of buying
- Need to know!
- COVID STINKS! But there are opportunities even in this time. Market is still good from property manager and investor point of view
- Rents might not be as high but still very strong
- The ability to do more virtually will allow property managers to take on more
YouTube Video Interview with Annemarie
Interview with Marc Cunningham – Grace Property Management
Website: rentgrace.com
Grace Property Management started in 1978 and has grown to manage just under 1,000 doors. They range from single family to small multi family and also some commercial property.
- Rent collections
- April 2020: 98% of total rents collected
- May 2020: expect to be about the same
- The overall day to day collection comparison from 2019 is down about 10-15%. Rents are “delayed” but still come in to end in the high 90s for collection percentage
- Also seeing a delay in unemployment payments which is directly affecting this
- Typical month (non-COVID): they collect 99% by last day of the month. Seeing about a 1% drop from last year for end of month numbers
- In 40 years of data, the month with absolute highest rents was October 2001. The month following 9/11. Marc contributes that and this time of high rents to the fact that “in times of chaos, people want stability.” Their home (or paying their rent) is part of that stability.
- Tenant Issues or Concerns
- No legal recourse for landlords right now, so it’s important to build relationships with the tenants and practice good communication
- By and large, most tenants want to pay and do pay rent.
- Always will be a few who try to take advantage of the system if they can, but luckily very small percentage
- Leasing
- Best leasing week in 12 months
- Seeing more renewals of leases as people are wanting to stay put instead of moving right now
- If a vacant property is not renting, it’s not because of COVID. It’s the price and condition of that property that’s unattractive
- Not seeing any rent concessions yet
- Owners/Landlords have been very generous. Over the last month, $25,000 has been adjusted to the rents of their 1000 properties by owners saying “let’s give $50 discount this month, or free rent next month.”
- Historically there is a 4%-6% increase in rent each year. With COVID, Grace is advising owners to keep rents the same or do month to month leases instead of increasing rents
- The month to month option allows the owners to have a commitment without locking in a lower rate for 12 months. We will wait it out for a few months, hopefully until rents and the COVID situation stabilize a bit, then lock in rates.
- How does it look for Investors
- If rents haven’t fallen out by now, they aren’t going to = Still a good time to be an investor and buy property
- Take advantage of the low interest rates
- Need to be diligent on screening process. Not worth getting “average” tenant. In times like this, that’s when waiting for the “Good/Great” tenant will matter
- Pay attention to legislation changes. If new government regulations say that landlords cannot evict or charge late fees, there may be a decrease in investors who can’t take on that amount of risk. That means there will be an opportunity to buy some properties but also means there may be less rentals in the market (less competition) for a short period of time
- Need to know!
- Follow the opportunity that comes from all of this
- Make sure your screening processes for potential tenants are in place and adequate
- Know and follow showing rules. This is the new normal
YouTube Video Interview with Marc
Key Takeaways
Overall, you can see that just about all the property managers are seeing the same results through the Denver market. It doesn’t matter the area or type of property. In general, we are seeing about 1% decrease in total rents collected from last year. Not as bad as we thought!
Communication is key when dealing with tenants and getting rents paid on time. Be willing to pick up the phone and have those conversations to work something out. Most tenants WANT to make their payments. Make sure you are being a resource for how you can work together to get this done.
Leasing numbers, while a little stale at first due to no showings, have come back full force. With Property Management companies utilizing the remote resources and virtual tours, leases are predicted to be just as busy this year as the previous years and may even lead into late summer with all the pent up demand. If a property is in good condition and priced right, there’s no reason it should sit for long.
Investors, now is as good a time as any to get into the game or acquire a new property. Interest rates are probably the lowest they will ever be, and based on rent collection stats there should be no reason to hold back. Also be openminded to the possibility of Section 8. Can’t beat guaranteed rent! The key thing to remember as an investor is to make sure you or your property management company are screening for well-qualified applicants.
Let us know if you have questions you want asked for our next property managers interview!
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