The coronavirus, lockdown and resulting ban on evicting renters in NY could bankrupt many property owners. What can real estate investors do to survive?
Governor Cuomo has extended the moratorium on evictions through at least August 20th, 2020. This includes a ban on charging tenants late fees or fees for missed payments. Even once this ban is lifted landlords are painfully aware that most renters won’t be able to afford to get back on track, and will probably leave or drag out the eviction process for months. Even if they do leave, rents could be much lower this winter.
At the same time NY landlords have been hit with dramatically rising costs, including higher taxes, while new rules limit their ability to raise rents and continue to balance the books.
This is a dangerous situation for tenants, local communities, the local economy and state. If landlords are in the red they will reduce services and maintenance. That lowers the quality of living, health and safety. It reduces employment and wages. It can take more inventory out of the market, and leave renters fewer and more expensive options.
PPP Loans
Real estate investment businesses can qualify for new SBA PPP loans. As of May 7th, there were a reported $100B in unclaimed PPP funds available. This money can be used for covering payroll, mortgages and other costs.
Make Improvements
If units are sitting vacant, this is the ideal time to complete improvement projects. Upgrade units so they can be rented for more later, once lockdown measures are lifted. Of special interest may be installing lower maintenance landscaping, as well as energy efficient upgrades to lower operating costs. New technology for sanitizing spaces and enabling long term social distancing and reduced payroll can also help make your units more attractive and justify premium rents.
Take Tax Write Offs
Use deductions, losses and markdowns on asset values to reduce tax bills and create more financial surplus.
Reduce Property Taxes
The data suggests we could be in the middle of a new great economic depression. Even in 2008, real property values sank by 50% or more for many property owners. This is the ideal time to challenge your tax assessments and annual property tax bills. If your property value is down, grieve your bill and insist on an equal drop in payments too.