President & Co-Founder of Ellicott Realty Group, overseeing the company’s portfolio: Ellicott Realty, Ellicott Financial, & MacKenzie Hall.
Due to the Covid-19 pandemic, many people have been feeling elevated levels of financial trepidation. Unemployment rates have risen to a magnitude unseen since the Great Depression, and a sizable portion of our society has turned to their retirement savings to survive — that is, those who are fortunate enough to have money saved. Property landlords and tenants alike are among the population of people radically affected by the pandemic. Large numbers of tenants have incurred significant pay decreases due to job losses and, consequently, depend on the government’s financial aid to make rent payments, if they can pay at all. The ripple effect passes to landlords, who carry a tremendous financial burden as they must make mortgage and tax payments without the rental income on which they depend.
Landlords are commonly misperceived as wealthy real estate tyrants or corporate villains whose bottom line is the only item on their daily agenda when, in reality, this is simply untrue. The vast majority of landlords I know are earnest, hard-working people who are hustling in an attempt to get ahead.
When the pandemic began, many landlords watched as the months and years of work and financial allocation they applied to their assets was now being overlooked or negated. Additionally, there was little to no relief coming from the media, politicians and other agencies in a position to provide aid to mitigate the risks these individuals had to navigate. Significant numbers of landlords have lost their properties or are in jeopardy of losing them. With rent strikes ongoing, there is little potential relief on the horizon from such capable parties as the Landlord and Tenant Board and others due to staffing decreases and closures to these agencies or departments.
As an owner of a property management company, I endeavor to educate and actively assist landlords and tenants in avoiding these types of matters altogether, or help them through the process. With what can seem like countless items to complete on any given day, the importance of forecasting for unlikely, and often unwelcome, scenarios can fall by the wayside. As we have now seen, it is more important than we ever could have guessed. Employing measures of preparation such as rental rate guarantees and reserve funds can alleviate the devastation that unfortunate downturns in societal conditions can produce.
It may surprise investors and landlords to learn that obtaining a considerable rent is not the most crucial factor for long-term stability. Rather, it’s finding the best possible tenant. In many cases, when we assist landlords with occupying their units, our goal is to identify strong candidates — hard-working people who hold steady occupations, recent retirees or those who have excellent references and interview well. A preferred rental rate becomes a motivating incentive for exceptional candidates. This creates an amicable and auspicious beginning to a hopefully long-term relationship between the two parties, eventually increasing the potential for extended periods of financial stability for both landlord and tenant in contrast to higher tenant turnover and the associated cost fluctuations. Under this paradigm, landlords quickly notice reduced vacancy rates, lower quarterly maintenance costs due to infrequent tenant turnover and more sustainable profit margins over time.
I know readers have heard me stress the importance of communication before, and I will continue to do so because it is a vital element in any relationship; landlords and tenants are no exception. Effective communication can overcome and likely eliminate so many difficult situations that are trivial to our businesses and relationships, professional or otherwise. For example, when a tenant notifies a landlord on the day rent is due that they will not be able to make the rental payment, the lack of direct candor can create undue tension. If landlords employ a reasonable amount of empathy and avoid jumping to conclusions and reacting poorly, especially during a global pandemic, understanding may prevail, and both parties in the situation can discuss solutions.
I heard of a landlord who listened to the difficulties their tenants were having and found a viable solution to help them. It was mid-March when everything had first shut down and stay-at-home orders were put in place. People had lost their jobs and had filed for unemployment. Obviously, with unprecedented numbers, our government was backlogged in trying to provide assistance with the Canadian Emergency Response Benefit (CERB), and payment timelines were understandably elongated. April 1 was around the corner, and rents were coming due across Canada.
This particular landlord decided to be proactive and asked their tenants if there would be an issue coming up with the April rent. For those in financial distress, the landlord used their tenants’ last month’s rent deposit to fill the void and give tenants another 30 days to generate income or develop temporary solutions together. This is a prime example of how communication helps resolve issues and can help tenants realize that a landlord is a compassionate human being, unlike the misperception. It will also go a long way toward a positive review of the landlord for future tenants to consider.
We have to remember that the relationship between a landlord and a tenant is ultimately a relationship like any other: We can strengthen relationships through proper decorum, common courtesy and respect. In this time of great hardship, let us be mindful that we are indeed in this together, and commit to treating one another with the respect that all humankind deserves.