What Landlords Should Do in a Recession

What Landlords Should Do in a Recession



Recessions are tough on everyone, but landlords often deal with more pressure than others. They get squeezed by a weak market on one side and desperate tenants on the other – putting them between a rock and a hard place when it comes to maintaining tenant relationships and putting food on the table.

How can landlords navigate the unpredictable waters of an economic recession?

There is no way to negate the pains that come with a recession, but there are some steps landlords can take to make life a lot easier—for themselves and their tenants.

The advice below can help landlords prepare for a recession before it happens and weather it during the toughest times.

Keep Your Current Tenants

Relationships between tenants and landlords can become heated during a recession but remember that losing your current tenants is the worst thing that can happen. This effectively cuts off your income security, and there’s no knowing how long it might take to find a replacement tenant. In fact, it may be more profitable for a landlord to keep a non-paying tenant during a recession than to evict them and find another.

You may need to make concessions in order to keep your tenants and maintain good relationships, such as offering a temporary rent freeze or even a free month of rent. You can also offer incentives such as discounted amenities (like Wi-Fi) or an agreement to forego rent increases the following year.

Get Rent Insurance

Before a recession officially starts, you can lock in a decent rate on rent insurance. This may prove invaluable during a recession, as any rent that your tenants do not pay will be paid to you in full by the insurance company.

As a recession approaches, it will become harder to get approved for this type of insurance. You may also need to provide thorough references to the insurance company. To protect yourself from the looming recession, seek out rent insurance options now.

Encourage Tenants to Get Financial Support

Your tenants may be eligible for financial support without knowing it. While it isn’t your job to provide HMO advice or help renters seek government aid, it will directly impact your income. So, it’s a good idea to at least inform them of their options.

If you have the time, determine which of your tenants is likely to qualify for aid and assist them in filling out the paperwork. This could make all the difference between a tenant continuing to rent or moving out. Plus, it will greatly improve the well-being of your tenants.

Expand your Tenant Profile

Chances are, you will have tenants who move out due to financial insecurity. This will leave you with the difficult task of finding new renters. During a recession, it will be necessary to expand your rental profile, possibly renting to demographics you haven’t dealt with before.

For example, you might have previously rented to families. But younger single people working remotely may have stabler incomes during a recession. In this case, you may want to consider converting your single-family rental into an HMO.

Welcoming pets is also a great way to boost your appeal during a recession. Pet owners are willing to spend more to accommodate their furry friends. According to research, pet-friendly properties are rented much more quickly, and tenants stay in these properties 21% longer.

Cut Spending Wisely

When landlords are backed into a corner during a recession, their instinct is to cut costs by limiting inspections and repairs. This is a bad idea. Cutting costs by reducing the care you provide to the property hurts your bottom line and your tenant. There is no winner.

Taking an “out of sight, out of mind” approach to property maintenance will only lead to higher costs in the long term—and potentially irreparable damage to your property. Worse, it could lead to unsafe conditions that result in lawsuits or fines. Ensure that you continue to inspect and maintain your properties during a recession.

To cut costs, take a look at the services you outsource, such as lawn care, and consider doing some of them yourself or finding cheaper alternatives. Like your tenants, you may also need to make sacrifices in your personal life, such as eating out less often or cancelling some streaming subscriptions.

For a Landlord, a Recession Isn’t just about Money

As costs go up and rent cheques become less reliable, it can be easy for landlords to focus on the bottom line. But when your business involves putting roofs over families’ heads, the numbers are not so simple. As a landlord, remember that you are in the business of people and that your tenants are also suffering from the effects of a recession. Act with compassion and confront the sacrifices you must make, and your tenants will be more likely to stay and pay.