Washington D.C. Property Management Blog | EJF Real Estate

Investors: Create Crisis Plans Now | Insight From Property Management, D.C.

Written by EJF Real Estate Services | May 28, 2020 11:15:00 AM

Even at the heart of our nation, a crisis can come out of nowhere—with uncertainty about when it will end. If this pandemic has taught us anything as professional property management, D.C. investors, it's that property owners should have a plan in place to address an overarching financial crisis before it happens.

To successfully maintain your properties and your relationships with renters during a crisis, crafting solutions in advance is not only a desire but a need. When tenants withhold their rent, it becomes difficult for property owners to pay the bills associated with a portfolio of holdings. While this may not be an issue every investor struggles with, a majority of property owners live on thin margins.

As your expert in property management, D.C. investors, we recommend considering how deeply you've been impacted by the COVID-19 pandemic. If you weren't ready for the current health crisis, it's understandable: the last crisis we faced as a nation of this magnitude was the 2008 recession.

Still, it's not too late to get a plan together as you continue to navigate the current economic situation. Documenting a plan now prepares you for the duration of the COVID crisis—and the event of a future crisis. Use our insight as property management, D.C. investors, to craft your plan moving forward.

As a note: This post is not a substitute for proper legal counsel. When in doubt, it's best to reach out to the best property management D.C. offers investors or to obtain guidance from a skilled attorney.

Every Investor Should Have One

Before COVID-19, we hoped that the property owners we served would never have to develop or use a crisis plan. However, it's better to be prepared than not know how to proceed when your investment property business can't operate as usual.

A crisis plan doesn't mean you expect things to go wrong. Instead, it shows you're a professional with a solution to succeed if a crisis hits. 

A property owner with a crisis plan:

  • Instills confidence in their tenants
  • Can manage cash flow when income drops
  • Provides room for flexibility and compassion to renters
  • Survives a crisis better than a property owner without an emergency plan.

Taking the time to put a plan in place before you need one is designed to help you survive a crisis across each of your properties, generate goodwill, and preserve the income you need to continue securing your holdings.

What Should Your Plan Include?

As the best property management D.C. offers, we know that a property without a plan is doomed in an emergency. Your plan should include crisis protocols for every aspect of your investment property business, including managing tenants, collecting rent, handling inspections, and having funds in reserve.

What to Do in a Severe Recession

When the economy sinks into a recession, your tenants might lose their jobs or see a reduction in overall income. When tenants can't earn what they need to meet their living expenses, they struggle to pay the rent.

Often, their first priority becomes putting food on the table and paying the bills they can afford. If rent becomes a lower priority for your renters, you'll go unpaid when you might be experiencing a reduction in your earnings as well.

Compassion and flexibility go a long way in a recession. When tenants struggle to pay the rent, put a proactive plan in place to address their needs while maintaining collections.

  • Remind them that the rent is still due: Tenants sign a lease that requires a monthly rental payment. Even in a crisis, the lease rules hold true.
  • Offer payment options: As a result of the COVID-19 crisis, D.C. landlords must now offer payment plans to struggling tenants. Having a plan in place helps you follow temporary requirements and respond with empathy but without undue emotion.

When a crisis plan already includes a pre-set crisis payment option, property owners don't have to stress about the limits of how flexible you can be. You'll feel prepared to offer solutions—rather than frustrated or taken advantage of when a tenant withholds the rent. 

What to Do If You Need to Evict

Even with a plan in place to help tenants through a recession, you still might have a renter that refuses to play ball. Whether they neglect to work with you on a payment option or they damage your property, your crisis plan should include how to handle renters that renounce their lease.

  • Know if you need to pause evictions until the crisis ends.
  • If temporary regulations won't allow evictions, document the incidents, and stay professional.
  • Consult your legal counsel if the behavior in question continues and eviction needs to happen.

Don't let tenants take advantage of a moratorium on evictions. Consult a Washington D.C. Property Management expert to protect yourself and your property while fielding renter relationships.

Know How Much Money to Keep in Reserves

Every landlord needs a "rainy day" fund—but how much do you need? In an economic crisis, your cash reserves can help you cover your expenses while you work with tenants on reduced rent payment plans. 

  • Know the value of each investment property and your expenses every month.
  • Calculate about 1% of the value of each property to keep in reserves.
  • With the right amount of cash in savings, you can temporarily offset a drop in rental income. 

Trust Property Management, D.C. Investors, Before a Crisis

Hiring an expert Washington D.C. Property Management company is the best plan to have in place before (and during) any real estate crisis. EJF Real Estate Services has been assisting property investors in the D.C. area for over 20 years. We know how to prepare for and manage operations during a crisis. Planning for the worst should always take place when hoping for the best.

When a disaster happens, prepared landlords can depend on our property managers to manage your tenants, properties, and bottom line. Learn additional tips for how to handle rent collection during a crisis! Get your free copy of our Collecting Rent in a Crisis Handbook.