Even as Utah health commissioners are currently reviewing our state's progress in the battle against COVID-19, we are still advising caution as the word-of-the-day for property owners here at Reeder Asset Management. As Salt Lake property management providers, we evaluate the potential move from the yellow “low risk” phase into the green “new normal risk” phase considered by our health professionals at face value.
It's worth noting that Salt Lake City still falls into the "moderate risk" category. We're not out of the woods yet. Experts are also quick to point out that green does not imply pre-COVID-19 safety levels, merely a lower level of risk than we currently exist in.
It’s because we exist now in this “new normal” level of risk as a post-COVID world that we want to emphasize the importance of developing a crisis plan—whether you’re a small-scale property owner or a large-scale property investor. The position that you approach residential rental ownership from in the Salt Lake area will determine the depth of the plan you need to develop. However, there are a few pillars that form the foundation of every excellent crisis plan—and it’s these you should be considering when you begin to draft such plans.
As your local expert in Salt Lake property management, we know it’s only a matter of time before we exit this current crisis as a community. Utah is strong, and we look out for one another. However, this isn’t the first—and it won’t be the last—crisis we have to face in The Beehive State. With this in mind, we urge you not to wait to develop a plan for how you intend to preserve the safety of your family, your renters, your properties, and your income moving forward.
Let’s go over some of the critical details we think property owners should be targeting as their pillars in a crisis management plan from the perspective of professional Salt Lake property management.
Please note: This article is not intended as a substitute for the great legal advice of a skilled attorney. It's designed just to help property owners get a little footing during these troubling times for our community. If you need direct legal counsel, reach out to your allies at Reeder Asset Management.
The First Pillar: Addressing Job Loss
The numbers are in, and they’re chilling for property owners and renters alike: 42% of the job losses caused by the impact of the COVID-19 crisis on our economy are expected to be permanent. When you’re developing your crisis plan to include how you plan to address potential job loss—and how it will impact your renters, your properties, and your income—it’s no longer a hypothetical. This is a heavy statistic, and it’s one worth grappling with.
While this point has become close to home as a result of COVID-19, this is not the first time as a nation that we have suffered through this kind of unemployment. Protecting your family and your income from hardship means acknowledging the potential for your renters to be out of work, not for one or two months but three or four. While each disaster won’t always present the same, this is one element that is often a recurring theme—making it our first pillar.
- Take time to write how you plan to approach widespread job loss among your residents, including any solutions you may have prepared in advance for how they can pay their rent during such a time.
- Prepare a list of resources on hand that both you and your residents can turn to during a crisis to receive much-needed aid (we have an example of this you can turn to for ideas).
- Prepare your savings now to deal with financial difficulties later. You should always have savings in reserve as a contingency plan if your early solutions fall through.
The Second Pillar: Preparing Savings
As local Salt Lake property management founded by property owners for property owners, we’re often saddened and startled by statistics highlighting just how many Americans are living paycheck to paycheck. For many property owners, your rental income is not just a “nice bonus” added on to the end of your regular take-home pay; your property income may be your only source of income. If you haven’t been storing up your acorns for winter, you were probably caught entirely by surprise financially when the full force of COVID-19 came to bear.
For many of your renters, the lack of a safety net in the form of savings is also a widespread and concerning reality. If your residents don’t have savings they can fall back on in times of crisis, then you must be prepared to rely on your funds as necessary to float your mortgage payments if push comes to shove.
- As Salt Lake property management, we recommend you have a minimum of three months’ rent to cover your expenses. Ideally, you should push for six to shelter your properties long term.
- This buffer is your in-built protection from suffering personal financial loss when your renters have nothing to fall back on, or you find yourself struggling through a long-term vacancy. This could be due to being unable to show your property during a crisis or having trouble finding renters.
Alarmingly, the most significant predictor for how long you or your renters might be unemployed isn’t the type of job you work, how much you earn, or what your level of education might be: it comes down to when you lost your job.
If you can’t control how long unemployment might be a reality for you or your renters in Salt Lake, then you should be prepared to have a firm grip on factors within your control (like your finances). Make creating a nest egg for your investments a priority moving forward as your second pillar.
The Third Pillar: Collection and Eviction
The first two pillars prepare you for how to approach the third. One of the key functions of the first pillar is to prepare yourself for the potential for job loss on a massive scale—and, unfortunately, for the possibility of evictions in the wake of a crisis. No property owner wants to be the one to tell a renter they have to leave in the middle of a pandemic.
Plus, it may even be illegal to try and enforce evictions during a time of panic—just like we saw with COVID-19. This third pillar should be used to help yourself plan how to approach renter relationships when eviction is not an option—and that you focus on excellent recordkeeping until the crisis passes by.
The majority of renters in this world are good people who will always strive to keep the promises they made when they signed their lease with you—but even during a crisis, there are scammers who seek to take advantage of others for their gain. Knowing how you plan to address this now while it’s only a possibility will protect you down the road if it happens for real.
Another primary function of the third pillar is to mobilize on how you plan to collect rent during a disaster. While pillar two helps preserve and prepare you if you have no active cash flow, that should only be a failsafe. Take time to develop a rent collection plan—including payment plan options—for when a crisis hits.
If you need additional guidance, you can turn to our free resources as your expert in Salt Lake property management! We’ve put together our free Collecting Rent in a Crisis Handbook with tips to help you round off your crisis plan. Download your copy and get in touch with us if we can support you during this time. We’re in this together, Utah!