It appears landlords and tenants will continue to be impacted by the COVID-19 pandemic for several more months. As the end of the year approaches, it’s important to consider strategies needed to adapt to today’s challenges:
Tenant Screening in the Age of COVID-19
Eviction moratoriums or no, at some point soon there is going to be an onslaught of evictions for nonpayment of rent. Evicted tenants will be back in the market alongside those applicants who have been making rent payments. Your tenant screening policies need to keep pace:
Watch for more self-employed applicants and review how to screen these tenants. See our previous post, How to Verify Self-Employment Income.
More tenants will be receiving government assistance. Find out if your city or state prohibits rejecting tenants based on source of income. Requiring one or two years of continuous employment in the rental application may be illegal. And it may be unrealistic in today’s market.
Tenants facing the reality of eviction or those who have not made it right with the current landlord are more prone to commit tenant fraud. Examples of fraud might include inflating income, leaving out previous addresses, and fake references. Be vigilant and avoid becoming a victim.
Although many tenants are going to be affected by the pandemic and resulting unemployment or business closures, landlords still need to run tenant screening reports to catch tenant fraud and flag applicants with bad payment history that began before the pandemic.
Spiking the Rent
As tempting as it may be to spike up rent at the next vacancy to make up for income lost during the pandemic, landlords first need to consider two issues.
The market is softening. High rents could price the property out of the market. A prolonged vacancy will eat any potential profits, and overmarket rent attracts only bad tenants — those who are being rejected from other properties. Good tenants will look elsewhere. A viable alternative is to offer a shorter term lease and reevaluate the market in six to nine months.
The pandemic is not the only crisis facing tenants. Recent storms and wildfires have forced evacuations and business closures, exacerbating unemployment, and straining the housing markets. Check to see if your state or city is under an emergency order that would preclude significant rent increases as “price gouging” for as long as the order is in place.
Annual Rent Increases
Before enforcing rent increases provided for in the lease, it’s a good idea to check for local COVID-19 emergency orders. In some cases, rent increases are prohibited for a specified period or time or for as long as the order is in place.
The same orders that prohibit rent increases also may prohibit the accrual of late fees. Landlords may attempt to recover lost profits by tacking on some fees to balance the numbers. That strategy has the potential to backfire if tenant retention dwindles and the best tenants move on. New fees likely would be considered illegal unless the tenant agrees or renews the lease agreement.
Companies that provide platforms for video tours are touting the popularity of virtual tours with tenants. Landlords who were forced to adopt this strategy during stay-at-home orders are finding that video tours are a significant time-saver. This method helps tenants narrow down their search without wasting valuable leasing staff time. The video tour also is popular with tenants who are planning their moves by allowing a quick visual reminder of the space without revisiting in person.
Tenants always have listed safety as a top concern when choosing a rental property. Today, that means COVID-19 appropriate measures.
When thinking of updating amenities, focus on in-suite laundry. This could range from simple washer and dryer hookups or supplying washers and dryers to adding more machines in shared laundry spaces to speed up laundry day. Package lockers that can be accessed individually address the uptick in online shopping. Keep aisles as wide as possible and allow extended hours so tenants don’t need to pack together to collect their packages. More tenants will be working from home. That may require top-tier internet and cable connectivity. That’s also appealing for tenants who are entertaining themselves at home. And because tenants likely will be home more often, consider preempting noise complaints by reminding tenants to be considerate of their neighbors.
And don’t let up yet on the all-important hand sanitizer stations — outside of elevators, in the leasing office, and in common areas.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.