At the beginning of the year if you were looking for a tenant, you could take your pick. Boy, what a difference seven months makes! Due to the ongoing COVID-19 pandemic, rental apartments that used to be the most desirable are now in many cases the least desirable. This has caused average rents to fall and vacancy rates to jump almost overnight.
Let’s take a closer look at what’s happening right now in the rental market and what you can do to protect yourself as a landlord.
No longer the most desirable rental units
The COVID-19 pandemic has changed everything. With people working from home these days, many are realizing that they need more space. This has led to countless people moving out to the suburbs where they can get more space for less. And it only makes sense. Why pay top dollar in rent when all the amenities are closed down around you? It just doesn’t make sense.
More renters moving home
The pandemic has also caused renters to move home with their parents. Rental apartments have taken a hit. Living downtown was fine when you could visit your friends, but with that no longer an option, many people are choosing to live under the roof of mom and dad. As a mortgage broker, I’ve heard of many of my clients doing this. They are choosing to move back home to supercharge their savings to be able to afford a home sooner.
Then there are short-term rentals. Before COVID-19 Toronto was a hotspot for tourists. Sadly, that’s no longer the case. If you’re renting out your luxury place on a website like Airbnb, you may be struggling to rent it out for as much as before or at all. It may sit vacant for days or weeks.
Getting through the short-term
It’s important to remember that these changes are more than likely short-term. Once there’s a vaccine for COVID-19 and the travel industry bounces back, there should be a return to normal for landlords. While that’s good news over the long-term, what do you do if you have a mortgage you need to pay right now?
The simplest solution is to sell the property. However, with many people doing the same thing, you aren’t likely to get as high of a price as you could if you took the wait-and-hold approach. A much wiser choice would be to figure out a way to get through the current challenging times. One of the ways to do that is by offering perks to tenants.
Perks for renters ramp up
If your unit is fully furnished, something as simple as buying all-new luxury furniture can go a long way. Speak with prospective tenants and see what they want. For example, painting the unit for new tenants or allowing pets may be the way to land a decent tenant for now.
The bottom line
With rental apartments, it’s important to remember that the current situation isn’t forever. By figuring out a way to still have tenants in your place, it can allow you to hold onto your rental property and eventually benefit when times are better and we can put this pandemic behind us.
TOP IMAGE: 35 storey E18HTEEN apartments, by KG Group, Yonge and Eglinton