Whatever the experts might have predicted about the 2020 rental market at the beginning of the year, there’s no denying the landscape has changed. Now that a pandemic has turned the rental industry upside-down, inside-out, and all around, many landlords and real estate investors are scratching their heads. So now that we are more than half-way through the year, it is about time that we revisit the new data and predictions for the multifamily market so you can make your multi-family investing decisions with confidence.
Rising Occupancy Levels
If you are anything like most landlords, you are probably panicked that it will be impossible to find quality tenants if you have to evict the ones you have in place now for failure to pay rent. However, there are many people that have actually experienced financial gains during the pandemic and those people will be in the best position to rent from you. Furthermore, the people forced to sell their homes as a result of the pandemic will likely turn to renting again as we saw after the 2008 crisis. So, there is no reason to panic yet.
A Tidal Wave Of Evictions
As you already know, once the 120-day rent deferral is up at the end of the summer, the courts will suddenly be overwhelmed with nonstop evictions. The truth is, for many people it will be financially impossible to get caught up on their rent in time to prevent eviction.
In some cases, landlords that are anxious to flip over their units in order to get better quality, or higher-paying tenants in place, will also likely evict tenants that complain or begin asking for repairs. This is because in many cases, it can actually be more profitable for the landlord to buy the current tenants out of the remainder of their lease to make strategic improvements and attract a higher rental rate.
Increasing Demand In Suburbs
For months now, the fallout of the pandemic has caused people to flock from the cities to the suburbs. In the more urban areas, multifamily investors will likely use this opportunity to make strategic improvements to their units to increase their rental value and make them more attractive for those that still desire a home in the city. For those with multi-family units in the burbs, get ready to have your pick of the best tenants on the market.
Rent Cap Restrictions
Before you get too excited over the prospect of raising rents, remember that when you live in certain areas like New York and California, you have to abide by rent cap restrictions. For example, here in Sacramento, our rent-controlled properties cannot increase more than 5 percent annually by law so you will need to keep that in mind if you are planning to increase the rent as a result of the pandemic.
The Future Is Bright
At the end of the day, when you take all factors under consideration it seems that the future is very bright for multifamily investment properties. However, if you want to protect yourself from risk and maximize the profitability of these unique properties, you would be wise to hire a property manager. Not only can an experienced and certified property manager mitigate the many risks that come with investing in multi-family units but they are your best asset in a time like this when every decision could make or break your portfolio.
For more information about how Alpha Property Management can optimize your portfolio of rental units in Sacramento, give us a call, and don’t forget to subscribe to our blog.