The US Economy is Reopening
Despite big opposition from some political groups, the media, medical experts, along with the fears of big Covid 19 outbreaks, US businesses are officially reopening. Here in the US, it’s an anxious but wonderful feeling for many Americans.
Even if it’s a phased reopening, it has to happen now because the financial and psychological fallout from the stay in place order was becoming too much to bear.
Open For Business Again
Being able to work again allows everyone to regain their financial security, bring focus back to their lives, and get everyone back on track to achieve their personal and business goals. And it’s always nice when tenants can pay their rent.
For landlords, the restart is the best news possible. Property taxes, unpaid rent, staff salaries, mortgage and bill payments, along with maintenance and repair bills were mounting. Now we have hope that small portfolio landlords and rental property investors might get through this okay. Property management companies too are likely breathing easier.
Frustration, mounting bill payments, and long term economic damage are perhaps the main driver of the drive to reopen businesses. And this reopening reflects a new attitude about keeping business going and managing persistent health threats such as Covid 19.
Work at home is one such example of major business changes to affect landlords. Another example is the common daily use of PPE protection in the workplace.
US Chamber of Commerce — Reopening for All States
You can visit the Chamber of Commerce’s own widget which has updates on business reopenings.
Why Reopen Business Now?
- no cash flow means bill payments delayed with fines and interest accumulating
- avoid further damaging government debt
- avoid falling behind other countries economically who have come out of the pandemic
- vital maintenance work not being done
- vital repairs not being done
- utility bills, energy, and HOA fees not being paid
- expected wave of eviction filings and court appearances
- delayed wave of maintenance requests in Q3
- property management staff being laid off
- property taxes not being paid
- tenants getting into trouble with multiple missed rent payments
- tenants moving out created more hard to fill vacancies
- everyone is simply tired of the shutdown
The CDC has issued its guidance on workplace reopening planning and for cleaning and disinfecting.
Businesses that want to be open are beginning to take the advice seriously. However, workers without masks are still a common site.
According to Yahoo Finance in their latest update on May 1st, shows these states reopening.
Do Landlords Still Need a Bailout?
For some landlords, the big reopening of America, can’t come soon enough. In fact, there is much talk of landlords needing a financial bailout.
Property Tax Debt is Feared
In one widely cited news report, Jan Lee, a commercial property landlord in New York is quoted as saying he may lose his family-generated property portfolio because of low revenue and property taxes due. There is no moratorium on property taxes. He fears the local, state and Federal governments will seize his properties for non non payment of taxes.
This one factor of unpaid property taxes could be the greatest threat posed to landlords, who have been offered no protections by new laws and Federal bailout programs. Although loans are offered, not all landlords may qualify for them. And then if the shutdown were to continue, many landlords would have minimal resources and little power to help themselves in this environment.
Even as reports about 80% rent payment levels some landlords are reporting high rates of tenant rent payment delays or non payment. It’s perhaps the June rent payments that are of concern because the workers who are returning slowly will not earn much for May and what they earn might go to food and other pressing bills such as transportation.
How Long Before you Can Balance the Books?
One helpful service in your property management software is your balance sheet report. I’m sure you’re looking over it and projecting how long it might take to get back to breakeven.
Of course, the answer is all over the place, because each landlord has a unique situation. And most states are unsure of how they’ll handle eviction moratoriums going forward. Some will extend them.
Additional Federal Aid Will Shore Up Tenant Income
However, if another round of Federal aid is distributed, and if employment returns to near normal (despite some job losses) October might be the month. If the Covid 19 outbreaks can be controlled during the fall season (and you should have excellent, active disinfection measures for your buildings), then 2021 should be a great year.
Will you be lowering rent, avoiding evictions, cutting maintenance costs, and holding off on rent demands beyond the mandated moratorium end date? New York has extended their moratorium date to August.
That’s big trouble for New York’s office landlords who are seeing a transition to work at home. Office space availability could rocket upward, while landlords struggle to collect back rent owed.
The same situation could play out in Chicago, Los Angeles, San Francisco, and other cities where employers are taking work at home seriously. That generates more costs and administration for residential landlords.
Is your property management up to the new standards? A big part of achieving outstanding performance is through a property management software platform. Check out ManageCasa now and discover it can help manage better in the post Corona Virus shutdown period.
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