Rental and real estate markets all across the country are adjusting to the fallout from the COVID-19 pandemic, which shows no signs of easing up or moving on. As investors and LA County property managers work through the challenges and embrace some of the opportunities, Bell Properties LA is taking a look at what this means for us locally.
The good news first – this pandemic has caused net rents to decrease, but there hasn’t been a complete stall in rent collections. Most tenants who can pay are continuing to pay as normal. Landlords and property managers have done a good job of working with their residents and remaining flexible during this unprecedented and uncertain time.
One of the things that COVID-19 has taught us is that it’s practically impossible to predict anything. But, we can learn from what has happened already, and we’re providing a synopsis of the impact COVID has had on the LA County rental market.
Smart Investors and LA Property Managers are Adapting
Working with tenants has become a necessity. The CDC has deemed evictions to be a public health crisis. So, they’ve issued an eviction moratorium for residents who have been financially impacted by the pandemic. This comes on the heels of the statewide eviction moratorium that has been in place since March, making it extremely difficult for landlords to remove tenants who aren’t paying rent.
This means you have to work with tenants to get as much rent as possible. If you have residents who have lost jobs or seen their hours and pay cut due to the pandemic, the government benefits they’ve received are probably starting to wear thin. You’ll have to see what you can collect, and you’ll have to be willing to make compromises. Rental property owners have been willing to do this over the last six months, and it’s going to have to continue. Collect what you can and negotiate the rest.
There also needs to be more flexibility in terms of how you’re leasing, managing, and maintaining your property. We’ve seen a huge trend in contactless showings. More owners are agreeing to let their property managers establish self-showing technology so tenants can see properties safely. Nearly every lease is now signed electronically and new safety precautions have gone into place for emergency and routine maintenance repairs.
Los Angeles County Rent Prices Have Decreased
Rental prices have dropped in this market, and that was expected. Rents in LA County have been steadily rising over the last decade, but since April, rents have decreased by about three percent. This means that if you were planning to raise your rent at lease renewal time, you might want to rethink that. Tenants are going to demand that their rents match the market, even if they are able to pay and unaffected by the pandemic financially.
You’ll want to remain competitive in an uncertain market. While no one wants to see their rental values decline, it’s going to be important to retain your tenants who are currently in place. Pay close attention to what similar properties are renting for, and don’t overprice your property. You’ll be left with high vacancy and turnover costs, which would be especially unwelcome now.
Los Angeles County Occupancy Rates are Lower
There’s also been a drop in occupancy during the COVID-19 pandemic. People are always going to need rental homes, but with a large portion of the population working from home, there’s no longer a need to live within commuting distance of the office. This has pushed many residents out of their homes and into roommate situations and markets with lower rents in more remote parts of the country. Demographically, younger renters are moving back home temporarily and older renters may be moving in with adult children to help with bills and childcare.
This pandemic has affected nearly everyone in some specific way. For real estate investors in LA County, it’s caused a lot of uncertainty and probably less cash flow. There’s also opportunity. If you’d like to talk about how to leverage your real estate assets now and in the future, contact us at Bell Properties. We provide exceptional and experienced Los Angeles County property management to owners, landlords, and investors just like you.