The COVID-19 pandemic might have mellowed its effects, but the impact is far from gone. According to reports by USA Today, they pointed out that many small businesses in America are still struggling to pay overdue rent. Why so? Firstly, the rising inflation rates are hitting the market and paying rent is becoming even harder with no apparent rise in income.
In the last two years of the pandemic, many landlords stayed a little lenient on rent payment schemes because everyone was struggling. But since the beginning of 2022, most landlords are now demanding that tenants pay their outstanding rents. Be it commercial or residential real estate; the scenes are not very different.
Most states and even the federal government have started many schemes to help small businesses sustain themselves during the pandemic. IRS also allowed tax rebates, and many other such aids came up from local bodies. But since we are all adapting to the new normal and living with it, most of these schemes have ended, increasing hardship for companies.
Read this article to understand how you can help people struggling to make rent and better the situation in the industry. Also, learn how you can streamline the rent collection process to make life easier for your property manager.
Small businesses struggle to pay overdue rent
According to USA Today reports, more than 30% of small businesses in America could not make rent in May. Why? They struggle to pay back the overdue rent piled up during the pandemic. Through the pandemic, many landlords allowed tenants to pay as much rent as possible to retain tenants and help them. But most landlords now demand businesses pay the overdue amounts in one go, making it harder for businesses.
Due to the rising inflation, there is hardly any increase in income, whereas rents are still growing. This has sent many businesses into huge debts, and many are taking high-interest loans just to retain their rented places and keep business going. More than 52% of small businesses also mentioned that this year most landlords had increased rent making it harder to pay up.
But studies also believe that many landlords have also struggled to keep their business afloat due to many non-payments. NPR reports say that many tenants did not pay rent for months, or some are struggling to make ends meet. Which eventually also makes it hard for the landlord to survive.
Factors to consider while choosing a rent collection method
Rent collection is a struggle during the pandemic. Why? One factor was the obvious lack of work for most people, so they could not make rent. But there was a second factor too. Many landlords did not have online rent collection methods to automate the collection process. So figuring out a common ground is the best solution to settling this crisis to benefit all stakeholders.
So when you finally do make the shift from offline rent collection to an automated online system, consider these factors before you make the technology selection.
Size of your portfolio - number of properties
Whether your real estate business is commercial or residential, it does not matter. You need to look at the size of your portfolio to decide if you need rent collection software. If you only have two properties under your portfolio, you would not need a complicated system to work with. A simple rent collection portal would suffice for you.
But if you have too many units under only two properties, you would need a streamlined system to collect the rents on time and not fail deadlines. How does online rent collection help here? You do not need to send reminders to your tenants about deadlines individually. The system will automatically send reminders. Your tenants can also pay the rent online and save you all the hassle of travel during the pandemic.
Number of tenants
If you have many tenants to work with, then a rent collection portal is a wise idea for your business. Plan your strategy and leadership so that you do not have to meet hundreds of tenants individually; be it retail shopping outlets or multi-family homes, the problems remain the same.
How far are the properties
How far are the properties from one another? Are all your properties inside the same apartment complex, or are they far from each other. If they are situated quite far from each other, it makes sense to integrate rent collection software to help you with the process. You will not only have to reduce travel during the pandemic, but you will also reduce the average carbon footprint of your company with lesser travel.
Your communication skills
If you are bad at communicating, then an online automated rent collection system is one of your best bets. Your property managers can take care of the communication, and you will still not have to worry about rent collections. You will never have to interact with your tenants and still get rent on time.
Your comfort with tech
But the usage and selection of technology in project management is quite a new concept. So you need to ask yourself and your team and understand your level of comfort with tech to work with the rent collection portal. But the right software integration partner will help you get accustomed to the new tech and train your staff to work with it. So, even if you are a little intimidated by the new usage, find an IT outsourced partner to help ease the process.
How can property managers better handle the situation?
As real estate property managers, your tenants mean business to you. You need to have transparent relations with all your tenants to understand who is genuinely struggling to make rent or who is taking advantage of the situation. You can set a rent collection plan in motion to help speed up the process and have a humane touch to it while you do it.
Real estate is all about human relations, so make sure not to lose that even when you count your money.
Is managing your property, collecting rent and working with new tech at the same time becoming a little too difficult? Get in touch with us to know more about our services! Talk to the Assetsoft team; we will help you streamline your property management and tech integration plans.