Impact of COVID-19 on the U.S. Property Managers
A new RealEstateBees.com survey of over 2,000 active property managers found that despite the negative impact on their business caused by the COVID-19, more than 70% are seeing new opportunities opened by the pandemic.
The following segmented report provides results of a large scale survey—Impact of the Coronavirus on the U.S. Real Estate Businesses—conducted by the Real Estate Bees research team, leading real estate platform for real estate professionals.
The following statistics reflect the situation among the US real estate managers. We reached out to over 2,000 active property management companies from all the 50 U.S. states and Washington D.C. to collect their insight on the impact of the COVID-19 pandemic on the industry in general and their businesses in particular.
The report is divided into the following two parts.
1. Multiple choice questions where the professionals had to choose one of the suggested answers to each question:
1.1 Is there a negative impact the pandemic is having on property managers?
1.2 Has the pandemic opened any unexpected opportunities for property managers?
1.3 How are you adjusting your marketing budget?
1.4 Are you transferring your business to a “work from home” basis?
1.5 Have you noticed any benefits of transferring your business processes to a “work from home” basis?
1.6 Have you noticed any drawbacks of transferring your business to a “work from home” basis?
1.7 Will you keep your business processes transferred to a “work from home” basis after the pandemic is over?
2. Open questions that allowed the experts to share their insights on various aspects of the impact of the coronavirus pandemic on the U.S. real estate managers:
2.1 What are the specific negative impacts the pandemic is having on property managers?
2.2 What unexpected opportunities have the pandemic opened for property managers?
2.3 If you knew the impact of this situation on your business in advance, how would you prepare your business to mitigate your losses or even profit from it?
2.4 What marketing channels do you prefer to use during the pandemic over the rest and why?
Is there a negative impact the pandemic is having on property managers?
Has the pandemic opened any unexpected opportunities for real estate management companies?
How are you adjusting your marketing budget?
Are you transferring your business to a “work from home” basis?
Have you noticed any benefits of transferring your business processes to a “work from home” basis?
Have you noticed any drawbacks of transferring your business to a “work from home” basis?
Will you keep your business processes transferred to a “work from home” basis after the pandemic is over?
What are the specific negative impacts the pandemic is having on property managers?
Key takeaways from the property managers’ answers:
- The biggest negative impact for property managers is the inability to conduct maintenance and repairs, as tenants don’t want to put their health at risk.
- Since many tenants are refusing access, this has proven to be a challenge in selling tenant-occupied properties.
- Due to physical distancing protocols, property management companies have chosen to suspend annual renewal evaluations of properties. Some have scaled back by conducting only urgent or critical repairs and maintenance.
- In-person showings have been suspended, making it harder for property managers to show properties, which in turn reduces leasing opportunities. Some tenants cannot commit to specific lease terms and choose to go month-on-month. Property managers expect loss of tenants in the summer when lease renewals take place.
- Property managers leasing to students are experiencing reduction in preleased properties as students worry classes won’t be back to normal in the fall.
- Some renters have lost their jobs, which, in turn, affected their ability to pay rent.
In some states, a moratorium on evictions has been put in place. This prohibits property managers to evict tenants who are unable to pay rent. - Additional financial burden for property managers is the cancellation of vacationers of their bookings of vacation rental properties.
- Some tenants who aren’t impacted financially are taking advantage of the pandemic by choosing not to pay their rent but still expecting repairs and maintenance when they don’t even want to pay at least a reduced amount of rent.
- As tenants couldn’t pay their rent, property managers are also affected financially.
- Commercial retail tenants couldn’t pay their dues as well when businesses were ordered closed by the state. To compensate for this, property managers have reduced their rental fees to at least earn.
- Property managers see the pandemic as a challenge on how to adjust current policies, process, and procedure to continuously care for the needs of their staff, clients, and tenants.
Laura Nichols, Landmark Resources, LLC
A number of tenants are electing to just not pay their rent due to COVID-19, even though their financial situation has not been impacted significantly and some not at all. Tenants, however, still want the property owners to perform any maintenance and repairs, but they don’t feel any responsibility to even pay a reduced amount of rent.
Most tenants know that they can’t be evicted, and they are attempting to take advantage of the pandemic and the government’s attempt to assist those that have lost their jobs or have reduced working hours. This puts additional burdens on property owners that have mortgages, insurance, and other expenses.
Anne McCawley, Bennett Property Management
In Arizona, there is a 120-day moratorium on evictions, with multiple other qualifiers too; i.e. federally backed loan, filing for non-compliance issues, etc. We are conducting essential-only maintenance issues. PMs are working longer hours to work with tenants regarding rent collections.
We have multiple tenants who have been furloughed, so their source of income is compromised. Fees like late fees are disallowed, so the PM incomes have changed also. At the end of the eviction moratorium, the backlog of court appearances is going to be epic.
Tony Chinnici, Real Property Management Corazon
In Nevada, there are significant restrictions on access to properties. This means vendors are wary of certain interactions with tenant-occupied properties. Many non-emergency maintenance issues are being deferred by management and tenants, both of whom would prefer to reduce risky personal interactions.
At this time, tenants may simply refuse access – this is a challenge for selling tenant-occupied properties. Imagine trying to purchase a multifamily property where some of the tenants will not allow you access to do your investment property due diligence.
Darryl High, High Properties
The current situation has slowed the inbound traffic for leasing. The residential payment stream has been relatively unaffected to date, but we anticipate a fallout and loss of tenants as the lease renewals take place in the summer.
The commercial retail and office has been affected specifically when businesses are ordered closed by the state. We have worked with reduced rents and offsets with this group to attempt to provide release during the closures.
Justin Riapos, Brix Management
Some negative impacts on our business during this pandemic have been the ability to do in-person showings and completing work orders submitted by tenants. During all of this, we’ve been only doing emergency work orders and keeping showings all virtual.
Luckily, leasing has been pretty consistent and we’ve done well leasing properties virtually. It’s not the personal touch we like to have with prospective tenants but I’m proud of our team’s adaptability throughout this.
Kim Stovall, Rent Athens, LLC
We have a higher delinquency rate, especially with our commercial tenants. We also specialize in student leases, which follow the academic calendar (so we’re currently preleasing for August). We’re roughly 10% less preleased than we were this time last year as students worry classes won’t return to campus in the fall.
Michael Francis, Rollingwood Management, Inc.
The impact has been more about how we adjust our policies, process, and procedure to continue to take care of our staff, our clients, and our tenants. Yes, rent collection, maintenance, and communication (owners, tenants, vendors, staff) have been a challenge, but not insurmountable.
Mike Khesin, Intempus
We are not able to have face-to-face interaction with tenants and owners. We are not able to fix less urgent maintenance issues because tenants are afraid of additional risks despite the fact that our staff wears masks and gloves when performing work. Some tenants are not able to pay rent.
Alex Yoder, Dorman Real Estate Management
In our market, we’re seeing a .05%-1.50% increase in delinquency at the beginning of the month. Also, tenants cannot always commit to specific lease terms. Lots of folks are going month-to-month until they know when this will end so they can plan their lives.
Dana Kern, Lokahi Properties
Our property managers are struggling with renters who have been laid off and are unable to pay their rent, owners who are stressed out about not receiving rent, and vacation rentals that are empty, as all vacationers have canceled their bookings.
Jeremy Tallman, T&H Realty Services, Inc.
Probably the biggest negative impact we’ve faced is how limited we are to physically visit occupied properties. For obvious reasons, we’ve stopped our annual renewal evaluations and we’ve scaled back to conduct only critical maintenance.
What unexpected opportunities has the pandemic opened for property managers?
Key takeaways from the property managers’ answers:
- The pandemic has given property managers the time and opportunity to assess their business and check which areas need to be enhanced through the help of technology. This way, property management companies are able to reduce operating cost while improving service and production.
- More and more property managers are switching to virtual operations: video meetings, remote showings and move-ins, as well as establishing their online presence that encourages clients to turn online as well to pay their rent and sign electronic leases. This has reduced the amount of time for some employees to drive to their clients and focus more on other job responsibilities.
- As the majority of property managers are doing business online, it is expected that virtual operations will become the norm even after the pandemic to serve more clients.
- Property managers are communicating more with clients to reinforce relationships. They are going out of their way to empower clients in these trying times through informative videos that advise them about updated processes as well as the latest news about state and local government restrictions. This allowed property managers to work cohesively as a company.
- The uncertainty of the times has rendered commercial property owners unable to pay their dues and leaving their commercial units behind. This has led to the availability of many mixed use investment properties that investors may find appealing.
- Property managers are using the time to communicate better with their clients, tenants, and landlords to have a deeper understanding of each other’s needs.
- Property managers believe that the pandemic will cause their clients to recognize the importance of property management services now more than ever, and this leads to property management firms assessing their own businesses to see where they can innovate more to deliver better services.
Ash St. Gelais, Fusion Property Management @ The #REfreedom Realty Group
I do believe that the pandemic is making our services even more valuable to our clients, as clients come to understand that in some ways, the pandemic is making it harder for us to operate as usual and that the idea of owners taking care of their own property management needs becomes less and less attractive.
It will be interesting to see over time how the economy will change, which may lead to the need to innovate around our services and pricing and, of course, how we deliver our services while also keeping everyone safe (contactless leasing and move-ins and outs.)
Michelle Prince, Accent Property Management Services, Inc.
With social distancing a must for the protection of our tenants and employees, we have begun doing videos and posting online. Prospective tenants then review the video; if they are interested in seeing, they must apply and be approved. Once approved, we schedule a showing and if they confirm their interest, they then pay the deposit to hold.
This has reduced the amount of driving on behalf of our marketing specialist, which also reduces mileage paid out and gives her more time to focus on other job duties.
Salvatore Friscia, San Diego Premier Property Management
The silver lining from a business perspective may be the opportunity to evaluate your business and identify areas where technology may enhance overall service and production while reducing operating cost.
The COVID-19 pandemic has taught us that Zoom meetings, video showings, electronic lease, and property management contractual signings are acceptable forms of communication with the public. While many property management companies were already using these measures in-house, now they may become more mainstream to serve a larger audience of clientele.
Gregory J. Rice, Nexus Property Management
Unfortunately for many, they have lost their businesses and their income, leaving their mortgages unpaid and their commercial units unoccupied. This is leading to an influx of mixed use investment properties hitting the market. In some cases there are properties with commercial units (like restaurants) that have fully stocked bars and even place settings on the table.
Many businesses literally had to just pick up and leave with no notice. This creates an opportunity for investors to come and scoop up properties that never intended to be sold so quickly.
Mike Khesin, Intempus
The pandemic encouraged us to think out of the box and come up with new processes and infrastructure improvements to allow us to scale in these difficult times. One example would be the implementation of a secure process for unattended showings to minimize interaction with potential tenants. We do check on properties that were shown daily in the evening to make sure everything is in order.
Jeremy Tallman, T&H Realty Services, Inc.
We’ve used this pandemic to really huddle around our clients. We’re producing weekly video messages for our clients to inform them of various processes we’ve changed, as well as the many state and local government restrictions. COVID-19 has really required us to be very cohesive as a company and ensure we’re operating the right way.
Julie Burke, Flat Iron Property Management
We have built up our online presence, and because of this, online rent payments increased. As we are also offering virtual showings, this has reduced the number of hours spent physically showing properties. Overall, the pandemic has forced us to strengthen our virtual online presence and realize the opportunities of working remotely.
Matt Leschber, 1836 Property Management
The unexpected opportunities that we’ve seen include conversions of short-term rentals to long-term ones. We’ve also noticed an increase in the adoption of remote showings, as well as remote move-ins. Our clients also prefer to do online payments because of the pandemic. Since the pandemic, we’ve been operating remotely as well.
Alex Yoder, Dorman Real Estate Management
It has helped us to refine our processes, so that folks can work from home and be productive. We’ve also had the opportunity to give back to our community in a meaningful way and are finishing up a six-day (free pizza on us at Slice420) special for renters in the community. It’s been pretty rewarding.
Stuart Mackey, Hathaway Group
We are spending more time directly interacting with all of our clients, tenants, and landlords. This creates a better understanding of each other’s needs. It also allows us to look at properties from a new approach – what works best, best use, best size, best lease terms, best timing, etc.
If you knew the impact of this situation on your business in advance, how would you prepare your business to mitigate your losses or even profit from it?
Key takeaways from the property managers’ answers:
- Focusing on forging a better banking relationship can help property managers secure the funds/financial assistance they need to weather the effects of the pandemic.
- Evaluating the business to check for necessary internal changes is a must to prepare for unexpected events.
- Property management companies could have adopted remote working options to ease the shock of going from a brick-and-mortar to a work-from-home setup.
- Property managers could have also taken advantage of technology well in advance to start online-related efforts such as video marketing to educate and attract more clients.
Property managers see the pandemic as an opportune time to empower the major players within their line of work: tenants would be encouraged to match their space with their needs to ensure appropriate price, while landlords would be presented with the advantages of having their properties improved to reflect good design, great amenities, and attractive price points. - More job opportunities for maintenance teams could have been generated in preparation for any untoward event. Jobs that don’t necessitate close proximity with tenants like landscaping or fence installations could have provided maintenance personnel with extra income while waiting for the pandemic to subside.
- Property managers who have been facing shrinking profit margins due to rent control could have looked into other sources of income, such as turning to commercial, net-leased management.
- Landlords could have been encouraged to make backup plans to cushion the effects of rent payment freeze. For property managers, planning in advance can help them become more active in taking up a leadership role wherein they can be seen as a good source of information for their clients and tenants.
- Putting in place effective policies and procedures can help property managers face unexpected events without major changes in their daily operations. Moreover, studying the market thoroughly and identifying trends can help them cope with sudden changes effectively.
Tony Chinnici, Real Property Management Corazon
I would have planned in advance, instead of having to plan on the fly. But it’s a fact that the environment has changed quickly and unpredictably, including the confusion and uncertainty between what we hear from medical experts and what we hear from some authority figures who do not appear to operate within the same physical reality.
I knew that we would see exactly that issue – elected officials disregarding the advice of people who know their stuff simply because the facts are inconvenient. But it is the nature of that kind of mess that you cannot plan for it. This forces property managers into an unusual leadership role where we try to source good information to tenants and clients.
Salvatore Friscia, San Diego Premier Property Management
It’s difficult to answer hypotheticals, but I would have focused on strengthening my business banking relationship. Many property managers and real estate professionals have noted their difficulty in securing assistance with PPP loans or other government subsidies offered to small businesses.
Difficulty in accessing capital during the pandemic may be the difference in closing down or bridging your operation until you secure additional funding or a return to normal. Having a strong banking relationship that could be leveraged is key.
Justin Riapos, Brix Management
I would have adjusted the streamline of work for our maintenance team. As work orders are on hold, I would have tried to pick up as many exterior jobs for them to do while we’re not permitted to go in-houses other than for emergency work orders. If I could have had a few larger/exterior jobs such as landscaping, fence installs, masonry, etc., that could have kept them busy in the meantime.
Mike Reid, Ultimate Properties
The only change we would have made are internal changes within our business policies and procedures. As an office, we weren’t set up for a work-from-home environment. As a company, we would have invested more in remote accessibility for our staff to allow for a seamless transition.
Stuart Mackey, Hathaway Group
For tenants, we would right size their needs and make sure that they were paying an appropriate price for their space. For landlords, we would work to position their properties to be attractive to the new market, focusing on pricing, design, and amenities.
Michelle Prince, Accent Property Management Services, Inc.
We would have started video marketing well in advance to get all the kinks worked out. Really that is it; everything else went smoothly and we are actually seeing more people renew and an increase in rental applications.
Ed Arevalo, AG Rentals & Management
Fortunately, we have policies and procedures in place before the pandemic that allowed us to apply minor changes to our day-to-day operations. This has allowed us to do more in less time, get vacancies filled quicker than before, and even hire new team members.
Dean Sherry, Duke Property Management
Since rent control has/is creating rapidly shrinking profit margins and increased liability specifically on property management, my strategy was already shifting towards commercial, net-leased management.
Dana Kern, Lokahi Properties
I would have prepared owners for the potential of such a crisis and encouraged them to come up with backup plans for their units should renters cancel or be unable to pay rent.
Michael Francis, Rollingwood Management, Inc.
A thorough and real-time understanding of changes in the market is critical. Identifying trends and responding to them is key.
What marketing channels do you prefer to use during the pandemic over the rest and why?
Key takeaways from the property managers’ answers:
- Property managers continue to use online platforms like Zillow, HotPads, Trulia, and Craigslist as marketing tools but with caution to avoid fraudulent acts by scammers who trick tenants into accepting fake leases.
- Social media channels like Facebook and Instagram are also popular marketing platforms to use during the pandemic, as people are now spending more time online with their smartphones. These platforms are also the most cost-effective and most effective means to advertise.
- Company websites are also being utilized to gain new clients. Direct email newsletters are also being used as these effectively reach clients directly.
- For some, traditional methods like radio and word of mouth still work wonders in gaining new tenants. MLS and realtor relationships are also being utilized as a marketing method.
- Property management companies are not only using online channels as marketing tools but also educational platforms that can help clients become better informed about the latest on the pandemic and its effect on the real estate and property management industries.
Mike Khesin, Intempus
We use the same marketing channels as before: Zillow, HotPads, Trulia, Craigslist, Facebook, etc. We tend to be more careful with the last two due to the overwhelming amount of fraud increase in the past month and a half.
Scammers are taking advantage of tenants with a more acceptable excuse of not being able to make it to the showing and then can potentially rob them of thousands of dollars after generating fake leases.
Salvatore Friscia, San Diego Premier Property Management
Our marketing approach here at San Diego Premier Property Management has been and will continue to be social media content-driven. We prefer to use social media channels such as Facebook, Instagram, organic blog content, as well as paid Google ads.
We’ve increased our marketing spend during the pandemic with emphasis on educating our audience on COVID-19 issues directly affecting the real estate and property management industry.
Jeremy Tallman, T&H Realty Services, Inc.
We continue to produce a lot of educational content. We’ve always been big believers in answering our clients’ questions within our content. We blog weekly, and most of that content has revolved around COVID-19. We’re also producing weekly videos for our clients.
Matt Leschber, 1836 Property Management
For residents, we use MLS which syndicates to other platforms. For generating new investors/ new accounts, we take advantage of our relationships with realtors to give us new leads.
Judah Hoover, Slatehouse Group
Creating content for digital distribution on social media. Leading with value. Positioning ourselves as a knowledgeable source of information that is timely and relevant.
Ash St. Gelais, Fusion Property Management @ The #REfreedom Realty Group
Honestly, word of mouth has been our best marketing source over the years. We serve a very small community and word of mouth is very valuable here.
Robin Quick, On Q Real Estate & Property Management
Word of mouth has always been our best marketing. However, online channels are now our go-to marketing venue. Radio has also been very effective.
Marguerite Akkawi, Paradigm Property Management
Online marketing and virtual tours, video calls, and showings. Leasing agents can do these without being at the property at all or in the actual units.
Gregory J. Rice, Nexus Property Management
We prefer to use our social media page, as well as direct email newsletter campaigns. We feel that these outlets are the most direct to the end user.
Dana Kern, Lokahi Properties
I primarily use social media for marketing, as that has proven to be the most cost-effective and the most effective means of advertising.
Tony Chinnici, Real Property Management Corazon
Internet marketing: safer contact, ease of giving quality information to people so they can easily make decisions.
Michael Francis, Rollingwood Management, Inc.
Nothing has really changed here. Potential clients are still coming as referrals or through the website.
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