What to do in these uncertain times
Predicting what the property market will we look like in the future is difficult at the best of times, and under the current circumstances, impossible. But there are certain principles which should save you from the worst of the fallout:
Compromise with your tenant.
Now is not the time to play hardball with your tenant. Keeping them in the property, even at a reduced rent, is in your best interests as finding a new tenant will be tough and you’ll likely have to drop the rent anyway. If they have lost their job, negotiate a temporary lease agreement which reduces their rent for three months. A 30% reduction for 3 months is the most common solution that many landlords and tenants are agreeing to.
Freeze your mortgage.
Many landlords themselves have lost their jobs and are experiencing financial difficulty. If this is the case, call up your bank and put forward that you are experiencing financial hardship. Banks are allowing their clients to freeze their mortgage repayment for up to 6 months. Although the interest will accrue and you’ll have to pay this eventually, having your monthly repayments deferred will allow you to breath a little easier and protect yourself if your monthly income from rent stops or is reduced.
Buy if you can afford it
If you have retained your job or have some cash to back yourself, now can be a good time to buy a property at a discount, especially during a recession. Just be aware that you probably won’t get the same rent you would have gotten two months ago. Check the rental market to get an idea of how much you could realistically ask on a weekly basis. If you decide to go ahead, price your property near the bottom of the comparable properties to generate strong interest.
Get yourself a good property manager
If you have never seen the need for a property manager, now is the time to consider one. A good property manager can be the difference between thousands of dollars of lost rent, and a relatively smooth sail through these tumultuous times. Property managers have successfully negotiated compromises between landlords and tenants which is ultimately beneficial for both parties in the long term. If you lose your tenant in a time like this, your property might stay vacant for weeks or months if you’re not careful.