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Summary:
During this time of moratorium madness, it’s becoming more and more difficult to enforce leases and do your job as a property manager. Our guests, Tracy Minick and Katherine Swanberg from Real Estate Gladiators know your pain.
In this episode of The Property Management Show, we’ll discuss the way property management’s role has changed over the last year of this pandemic and how to navigate around ever-moving targets, laws, and expectations.
Key Takeaways:
- Due to Federal and local eviction moratoriums put in place by the pandemic, large parts of property manager’s lease agreements are unenforceable. This has dramatically changed property manager’s job descriptions.
- Property managers like the Real Estate Gladiators are communicating with owners and tenants more, assisting tenants with unemployment & helping tenants seek financial support so that they can afford to pay rent.
- Property managers are more valuable to owners than ever. It’s vital that property managers communicate the way that their job has changed to their owners, and demonstrate the amount of work they’re doing to keep their owners compliant.
Property Management During Moratorium Madness
The Real Estate Gladiators team has been fighting even harder for their owner clients than they ever did before. We asked Tracy and Katherine to talk about how they’re using this experience to showcase their true value as professional property managers, even though their hands are in many cases tied because of laws and moratoriums.
COVID Legislation and Eviction Moratoriums
Current legislation is under consideration to extend the eviction moratorium and to implement other laws that will impact both tenants and owners. While Tracy and Katherine primarily manage homes in Snohomish County, Kings County, and Pierce County in Washington State, they’ve learned that anything done in Seattle usually spreads throughout the state. Often, it motivates other states across the country to enact similar laws.
The legislative session in Washington State will include a tremendous number of bills that will impact business owners and property managers and landlords in many different ways. We could see some huge changes coming.
It’s been almost a year since we began living with COVID. Moratoriums enforced on property managers and owners have required a pivot in the way everything is handled, from late fees to notices to evictions. Most of us likely believed that this was simply a response to a temporary situation. Now, it’s looking like the laws and restrictions put in place could become an additional two-year plan.
You should check out our episode about cashflow during the COVID-19 pandemic if that’s another layer that you’re dealing with right now.
Looking at the Washington State Eviction Moratorium
Like many places in the country, Washington State has had an eviction moratorium for a full year. There’s a national moratorium and then there are local extensions of that moratorium. This provides another blanket of restrictions and rules that hold back the eviction process.
In Washington, there are laws in place that impact Real Estate Gladiator’s ability to:
- Collect past due rent
- Terminate tenancies
- Increase rent
- Charge late rent fees
- Charge penalties or NSF fees
Essentially, large parts of their lease agreements are no longer enforceable.
Even asking tenants to pay rent or providing an invoice for the rent that’s due is not allowed.
Property managers and owners in and around Seattle and throughout the state of Washington have been encouraged to ask tenants to pay what they can when they can. Payment plans are also encouraged. This has dramatically changed the job of a property manager.
Before last year, owners would hire a property manager to enforce a contract. Now, owners are relying on property managers to increase the level of communication and negotiation with tenants to an all-time high. Property managers are communicating with tenants 10 times more than they were a year ago. They’re also communicating with owners more frequently.
To be a successful property manager, you have to understand the situation that each tenant is in and how they’re impacted by COVID hardships. Tracy and Katherine have been providing resources to tenants to help them access any support that’s available to them. This is a different job description than it once was.
Coordinating COVID Resources for Tenants and Owners
Real Estate Gladiators were always providing resources to their tenants. Now, however, those resources include help in applying for unemployment. They’re educating residents on where to go for help and how to initiate an unemployment claim. In Washington State, you do not have to prove a COVID hardship in order to be protected from eviction. Tenants are simply not required to pay rent right now. That doesn’t mean they won’t be accountable for it at some point.
Communication with tenants has been about support. Tracy and Katherine are working hard to help people and to show them that they understand and care about what they’re going through.
They cannot go as far as applying for assistance on behalf of their tenants. The CARES Act funding does not allow for it. It’s up to the tenants to make the phone calls and go through the interviews and fill out the questionnaires. Determining what part of the stimulus they can qualify for is the first step and then there is follow-up required with various agencies and funding sources. Coordinating all of this has become a part-time job for the entire Real Estate Gladiators office.
There’s also support that’s needed for landlords and property owners. They are in a situation where they have ongoing property expenses that accrue whether the tenant is communicating and working with their property managers or not.
Additional expenses are also sometimes unavoidable. Under the moratorium, if a tenant is not paying rent but the hot water heater goes out, owners are still obligated to provide them with hot water. They have to replace the heater. But if that owner hasn’t received rent in maybe six months and they have to pay for this maintenance issue, it’s very frustrating. Communication with the owners has helped them to understand how proactive they’ve been with their tenants. It’s helpful.
Advocating for Property Management During the Moratorium Crisis
Tracy and Katherine have had some clients who left in order to self-manage their properties during the moratorium. They believe that if their property managers cannot collect rent for them, there’s no sense in paying for those services. It’s an understandable reflex. However, property managers are working harder than they’ve ever worked before to make their owners whole during the moratorium.
There’s more work in managing delinquencies and defaults than there is in posting a 14-Day Notice to Pay or Vacate.
Self-managing landlords are dealing with different dynamics than they were a year ago. Treading water is not easy. The tenant and landlord laws are moving targets and the goal posts are now changing quarterly. There are city ordinances and county ordinances and state laws in addition to the federal moratorium. Owners who don’t know what all of those mean for them and their properties are going to expose themselves to a lot of liability.
There is more value than ever in paying for professional property management.
Your owners need to understand that their property managers are plugged into the state agencies and organizations that can provide the most information and help. Property managers understand the legislation and they can share tips with owners about how to advocate for themselves at city hall and in the statehouse. Most owners would not even know about the changes happening on a regular basis with the laws.
If you’re not communicating your value to your owners, you’re doing yourself a disservice.
Owners can’t see how drastically things are happening on a daily basis. Tell your owners everything you can because you’ll always have more information than they do. Check out this episode on how you can use data to guide and communicate to your property owners for more support.
If you aren’t actively engaged in your local real estate associations, you’re missing out on a lot of good and necessary information. It’s not static. The changes are very dynamic and you have to pay attention daily. Most associations have lobbyists with seats at the decision-making tables. They know the state laws and the pending bills and they understand how these pieces of legislation will impact you as a business owner.
Your business will likely never look the same.
Current Legislative Session Concerns
Testimony right now involves the eviction moratorium and the possibility of extending it. Lawmakers are deciding what that extension might mean for people with unpaid rent balances for 10 of the last 12 months. No one thinks it’s a good idea for landlords to pay for a person’s housing expenses for the duration of this moratorium. So, how can they recover their properties? These are the current concerns.
Seattle is floating an idea that once the national moratorium is determined to be over, they will then extend it for two years beyond the end of COVID. That’s a little nebulous. When is COVID over? When is that date?
It’s hard to help people forecast what they’ll be able to do with their properties. If an owner can’t give a notice of termination and renewing a lease is required, what are your real available options? No one wants to see mass evictions, but in order to have a rental housing market, you need landlords. The relief cannot be so one-sided.
There have also been discussions about a rent break. In such a situation, rent might be reduced by $500 for six months, and then after those six months, the rental amount returns to its original level. Incentive programs like this can help people pay and it doesn’t leave the landlords completely empty-handed.
Helping tenants and landlords begins with understanding the tenant’s situation.
What you know about your tenant is probably different now than what’s on the application. They might have been qualified when they applied, but circumstances have likely changed. Property managers need to be creative in encouraging people to pay what they can.
There is currently no opportunity to go to court for an eviction. Even when the courts do open up, there’s going to be some kind of arbitration required before you can actually evict a tenant and it’s hard to imagine what that waiting list will look like.
No one has painted a clear picture of what it will look like when owners want to regain possession of their property.
Currently, there are two options: owners can provide a 60 Day Notice because they’re selling the property or they can take the residence back in order to move into it themselves. But, those two options are only available if the lease term has come to an end.
Bringing in New Property Management Business
How do you bring in new business when you can’t enforce your lease agreement?
Tracy recently spoke with a new owner who has had a vacant property for two years. It’s in an HOA that has strict regulations on condo rentals. So, she hasn’t had a tenant in two years and has no idea what’s going on in the market. She didn’t know about any of the moratoriums or restrictions.
Tracy shared her sincere desire to qualify tenants to the best of her ability and to increase the level of employment verification and proof of income verification so the best possible tenants will be placed. A lot of regular property management services haven’t stopped, including periodic inspections. If there’s a new roof needed or gutters in need of cleaning, there’s a way to participate in maintaining the home.
Owners appreciate this. They know that property managers are still their boots on the ground, even if collecting rent has become impossible thanks to the eviction moratoriums.
New owners looking for property management understand their own limitations. If a landlord calls the tenant to harass them for rent, they’re going to get in trouble. So, property managers can offer themselves as a separation between landlord and tenant. Owners don’t have to worry about the over-communication that’s currently necessary.
The best advice for property managers right now? Highlight the invisible things you do. Shine through communication. Refocus on the things you can do and that you do all the time. You probably never got credit for them in the past, and it’s about time you do.
As frustrating as the moratoriums are, this is the time to prove to owners that they’re better off with you instead of navigating all of this on their own.
If you have any questions about what you heard on this podcast with Tracy and Katherine, please contact us at Fourandhalf.
