Assetsoft - Blog #Rent

B.C.'s Short-Term Rental Scam Crisis: How Yardi and Proptech Consulting Offer Landlords a Tech-Driven Defense

Thu, 13 Nov 2025 03:40:42 -0500

The headlines out of British Columbia are alarming: a sophisticated short-term rental scam is draining property owners of their funds, transforming legitimate long-term leases into highly profitable, yet illegal, nightly listings. Following a CTV News investigation, B.C.’s Housing Minister, Christine Boyle, confirmed that the province is “working on” the problem of enforcement. However, for landlords, "working on it" isn't fast enough.

This crisis demands more than municipal fines and slow bureaucratic action; it requires Proptech consulting and immediate technological intervention. At AssetSoft.biz, we believe the solution to this enforcement gap lies in leveraging advanced property management systems, such as Yardi, to create a digital shield for your assets.

The Anatomy of the B.C. STR Scam

The modus operandi of the Vancouver-based scam is simple yet devastatingly effective. A fraudster signs a standard one-year long-term lease, often on a premium downtown condo. Almost immediately, they illegally list the unit on global platforms like Airbnb and Booking.com.

The key to their success lies in exploiting a loophole in B.C.'s new STR laws, which require hosts to only list their primary residence and possess a valid registration number. These illegal listings often falsely claim to be "exempt" from registration, allowing them to bypass crucial verification checks.

The profits are astronomical: one victim noted the scammer was potentially earning $500 a night versus the $125 long-term rental rate they were paying. This financial incentive means the scam is likely to spread rapidly beyond Vancouver. While the B.C. housing minister noted that 1,800 non-compliant listings have been removed, the fact that only one fraudulent host has been publicly fined highlights the slow, manual nature of current enforcement. Landlords are left exposed, facing damage to their units, insurance liability issues, and strata bylaw violations.

The Compliance Gap: Why Technology Must Lead

The core issue facing both the B.C. government and individual landlords is the fundamental disconnect between digital listing platforms and traditional property management operations. Platforms like Airbnb claim they haven't received official removal requests, while others, such as Booking.com, offer a web form and a reactive, manual solution against a highly agile, automated threat.

This gap is precisely where Proptech consulting becomes essential. Waiting for the government to mandate a foolproof verification mechanism is a luxury that property owners cannot afford. The future of compliance and security relies on integrating proactive, data-driven systems into existing property management infrastructures. For large portfolio holders, this means leveraging the power of Yardi.

Proactive Defense: Technology Ways for Landlords

For landlords and property managers using or considering enterprise solutions like Yardi, technology offers immediate and effective countermeasures against STR fraud. By integrating third-party software and customizing Yardi's robust capabilities, property owners can move from reactive enforcement to proactive detection and mitigation.

Here are the critical technology ways for landlords to identify if this is happening:

Automated Listing Scrapers and Geo-Fencing: Specialized Proptech tools can continuously monitor short-term rental platforms within a specific Yardi portfolio's geographical area (i.e., geo-fencing the downtown Vancouver addresses you own). When a new listing appears that matches the unit's description but is not authorized, it triggers an immediate alert.
Yardi Customization for Lease Compliance Alerts: Within the Yardi system, properties can be flagged based on tenant profile risk scores. Custom fields can be introduced that automatically check and verify government-issued registration numbers against a central database (where available). If a property appears on a STR platform without the required Yardi flag, it generates an automatic breach notice.
AI-Powered Anomaly Detection: Advanced Proptech uses Machine Learning to analyze operational data already flowing into Yardi and related IoT systems. Scammers operating illegal hotels exhibit specific patterns:

Access Control: Frequent, unexplained key fob or access code requests for new guests.
Utility Use: Abnormally high water or electricity consumption due to constant turnover and washing.
Maintenance Logs: High frequency of trivial maintenance requests from various "guests" that don't match the primary tenant's identity.

By implementing these Yardi-integrated solutions, property managers can flag a suspicious tenant within days, not months, allowing them to issue eviction notices long before the scam has inflicted significant damage

Secure Your Assets with Proptech Expertise

The era of relying solely on paper leases and external government agencies to protect your assets is over. The short-term rental scam in B.C. serves as a clear warning that digital property management requires robust digital defences.

Don't wait for the province to catch up; take control of intelligent Proptech consulting. AssetSoft.biz specializes in customizing and integrating Yardi solutions, turning your property management system into an active compliance enforcement engine. We can help you deploy the technology needed for landlords to secure your portfolio against the evolving tactics of rental fraud.

Visit AssetSoft.bi z today to learn how our Proptech consulting services can secure your investments and optimize your operations for the modern digital age.

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Businesses are struggling to pay rent - how property managers can improve rent collection

Fri, 06 Jan 2023 10:36:35 -0500

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.

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How Many Rental Properties Does a Landlord have to Own Before Hiring a Property Manager?

Sun, 12 Dec 2021 12:59:07 -0500

As a landlord, managing multiple properties can be overwhelming. You have to list out your property to attract new tenants, screen and interview them, do a background check, and take care of all the documents, plus the maintenance of your property. If you have one property, you can do all of these yourself, but what if you own multiple properties?

Should you hire a property manager? Wouldn’t that be expensive? Or do you even need a property manager? Here's all you need to know about hiring a property manager for your property business.

When Do You Hire a Property Manager?

If you own a single property or even five units, you can handle all of it alone. Sure, it will be too much of a task, but hiring a property manager wouldn't be the best option considering the fees for property managers. But what if you own more than six to seven units? It can be an uphill task running behind every unit, looking for tenants, and maintaining them at once.

If you think you can afford a property manager, it's best to hire one to reduce your burden and get the work done on time. But hiring one means you have no direct control over your properties now. The property manager will handle all your units and report to you at the end of the day.

You will be the middleman indirectly managing your properties. It also means you get more free time and do not directly deal with tenants and property issues. But it would also mean you need to spend a part of your rental income on the property manager and hand over control of your property. It can be a tough decision, but hiring one can reduce your burden to a great extent as long as you have the budget for it.

What are the responsibilities of a Property Manager?

Property managers will be responsible for multiple things, right from interviewing your tenants to collecting rents to returning security deposits. Here are the top seven responsibilities held by property managers:

Screening of Tenants
Listing Property when Tenants are Needed
Setting the Price of Rent
Signing agreements

Manage repair and maintenance orders
Taking care of handing security deposit to the tenants
Handle issues raised by the tenant

When there are too many units to maintain, handling all your responsibilities on your own can be tricky, which is when property managers are hired. They can take care of your property, professionally address issues, and handle complaints by your tenants without taking them personally. Sometimes, disputes between landlords and tenants can turn personal, which may not be good.

Disadvantages of Hiring a Property Manager

Though pros outweigh cons here, one thing to note is that property managers can either be prompt and handle everything professionally since they don't own the property. But at the same time, they can be negligible about specific issues as they don't own the property. Even though you set to hire the best of the best, this factor can be a disadvantage of hiring property managers for your business.

When to Hire a Property Manager?

If you're still unsure when to hire a property manager, here are four tell-tale signs of you needing someone who can take care of your property.

You don't have much time

Suppose you own a business and you find it hard to devote equal time to your property business or find yourself delaying responding to tenant complaints and requests. In that case, it's time you consider a property manager. Sometimes you may not know that you need someone to handle your property, but if these subtle signs can mean hiring one can save you time and have a good relationship with your tenants.

Finding tenants is difficult

Searching for tenants, screening them, and handling their complaints can be a task, and if you don't enjoy managing it, it's time to think about hiring one. Some property owners don't like handling everyday property tasks, and if you're one of them, you know what to do. Leave the heavy work to property managers and sit back and get updates about your property every day if that's what you prefer.

You own multiple properties

One of the most common reasons to hire property managers is when you cannot handle multiple properties at once. And by numerous properties, we mean owning more than seven or eight properties. It sure is a task managing everything when there is so much going on at each unit. You can hire a property manager or consult a property management company to assist you with it. In fact, if you're looking for one, you can consult our team at Assetsoft.

You stay far away from your property

Whether you're staying in a different city or a different country and are away from your property, hiring property managers will ensure your properties are well-maintained, and your tenants are happy too. Having properties away from your home becomes challenging to manage and maintain when tenants raise complaints about the properties. And that's when you can hire a property manager.

Let Assetsoft Help You Decide If You Need a Property Manager or Not

Now that you got an idea, if you're still unsure and want to talk to experienced professionals about it, Assetsoft can help you. We provide property management services and products for your property business to make your life easier. We'll assess your portfolio and tell you what can be done best. Or, if you're looking for property management software for your business, we can help you with that too.

If you want to know more about it, you can get on a consultation call with us, and our team would be glad to assist you with your queries.

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Are You Ready For Generation Z Renters?

Thu, 07 Oct 2021 08:00:00 -0500

For the past few years, the global real estate industry focused on marketing to one target audience: millennials. But as technology develops, we have an entire generation having a different set of requirements. Gen Z renters are digital natives who haven’t lived without the internet. As the oldest ones turn 24 this year, now is the perfect time to prepare your business for the new generation.

There are around 68 million people belonging to Gen Z in the US alone. This demographic is the reason why most property managers want to cater to their needs. To give you a head start, we have compiled the best ways you can use technology to attract Gen Z renters.

Finding properties online

Gen Z uses social media for almost everything, even finding properties. Instagram and Youtube are some of their favorite online platforms. Even though Google search is still a popular method to market properties, you need to look beyond that to reach Gen Z renters.

Modify your marketing strategy to include social media platforms. In addition to Gen Z renters, these platforms also contain a large audience of all age groups. By creating the right ads, you can target the Gen Z renters while still marketing to other groups. Well-performing social media posts also show up as search results which drive organic traffic.

Improve your SEO strategy and create engaging social media posts to build a clientele of Gen Z renters. They also value personalization right from their playlists to their apartments. Create a brand strategy that speaks to them and personalizes their tenant experience.

Affordability over amenities

Even the oldest Gen Z members are still just out of college and looking for a place to live. They look for financial stability and believe in “saving” more than “spending.” A survey by BHG Real estate reveals that Gen Z tenants are ready to give up luxuries to achieve homeownership.

While they value tech and connectivity in their living spaces, affordability is still their topmost priority. Rental prices that allow them to save for their future home are most appealing to this generation.

They also prefer long-term leases that are longer than a year. This helps them achieve stability while they work for their future. According to a survey by Tenant Cloud, 55% of Gen Z renters plan to rent for a few more years, till they can buy their own properties.

Reviews matter

Gen Z do the most research online with 30% of them checking ratings and reviews before touring a property. So apart from listing your property on social media platforms, you also need to build a positive reputation around your property management business.

The best way to get reviews is to ask your current or previous residents. However, tenant experience plays an important role in what kind of review you will get. People rarely need a push to write about a negative experience. But if you ensure quality service to tenants, you can easily get positive reviews from them.

Consider collecting tenant feedback to improve your services accordingly. Tenant portals such as MRI Tenant Connect are an excellent way to maintain tenant communication and collect feedback.

More tour options

For Gen Z renters, property tours need not be on-site with an agent. A survey by RentCafe revealed that 52% of Gen Z renters chose non-traditional property touring methods including virtual and self-guided tours.

Virtual tours use a collection of images and videos that allow a tenant to view a property through phones and computers. You can also conduct virtual tours through video calls with an agent showing them through the property. Virtual tours save time as prospects can view the properties at their own convenience.

Self-guided tours, on the other hand, are conducted on-site. But, these tours lack an agent and the prospects view the properties on their own. Tools such as RentCafe Self-Guided Tours help create a seamless property touring experience. The software includes features such as tour scheduling and ID verification. You can also use AI chatbots to assist prospects throughout their property viewings.

High-speed internet connection

Since this generation is tech-dependent, it is no surprise that high-speed internet connection is the number one priority for them. Ensuring excellent connectivity through WiFi makes your property stand out. As the remote working trend is also catching up, building co-working spaces with a reliable internet connection are also helpful for all your tenants.

You can implement WiFi-as-a-Service (WaaS) to accommodate a high number of devices. WaaS allows your tenants to access the internet directly from your WiFi network. Tenants can choose their own bandwidth speeds through different monthly packages. A WiFi connection also unlocks a whole bunch of advanced amenities that can attract Gen Z tenants.

Smart home tech is a must

Smart home amenities provide favorable housing conditions that appeal to Gen Z. Around 62% of Gen Z renters believe that technology is very important when renting a property. Apart from the convenience and cost savings, these amenities also help in environmental conservation.

Smart home technologies include a host of amenities such as:

Digital locks: Locks that use QR codes or biometric scanners instead of keys.
Smart Lights: Lights that work through voice or motion activation.
Smart thermostats: Adjusting temperature by gauging the number of people in the room, external temperature, and more.

Using AI, machine learning, and the IoT, you can implement smart amenities that are fit for the Gen Z renters.

Prepare for Gen Z together with Assetsoft

Gen Z thrives on digital advancement in rental properties. Assetsoft can help you implement suitable technology through RPA, artificial intelligence, and the IoT. Our team works with the clients to build a custom strategy for each business.

Whether it is property management software or smart home amenities, we can help you with all your real estate technology requirements. Our experts are with you even after implementation by providing the required support and training. By working with Assetsoft, you can leverage the best technology and resources to boost your business effectively.

Talk to us at Assetsoft to make your business Gen Z ready!

The True Cost Of Eviction And How To Avoid It

Thu, 26 Aug 2021 11:30:00 -0500

The most important aspect of maintaining a successful property rental business is having top-quality tenants who abide by the rules and pay rent on time.

Bad tenants lead to a loss of income in the future in terms of back rent. To protect your property and income from problematic tenants, an eviction may be necessary. However, it is a time-consuming and costly process and can be taxing for both you and the surrounding tenants.

Even back in 2015, eviction rates were high in the United States due to the rising cost of rent payments. Landlords were faced with high eviction costs while losing out on revenue as tenants were not able to make the monthly payments. Now with the effects of Covid-19, property managers are further burdened by rising evictions. During the pandemic alone, over 470,000 evictions were filed across 6 states tracked in the US.

Each eviction can cost up to $3,000 for the landlord, making it a costly ordeal. When possible, finding alternative solutions would be the better choice.

Knowing when to evict a tenant

You may be tempted to evict a problematic tenant when the situation gets out of hand, but to avoid any legal trouble, you need to be aware of when a quit notice can be presented to the tenant.

Before renting out any properties, you should make sure that the lease agreement includes all the important terms and conditions of renting a property. Any terms not mentioned on the lease can be fought in court by the tenant.

Here are some common situations where you can pursue the eviction of a tenant:

Recurring months of unpaid rent
Lease violations

Damage to the property by the tenant

The process of evicting a tenant

Due to the lengthy and uncertain process of eviction, many landlords prefer to avoid eviction and try to sort out the problem themselves. A certain amount of time needs to be given to the tenant to resolve the issue. This will differ depending on where you live. However, if the problem still persists, here’s what you need to do:

A complaint should be filed with the local court detailing the issue
A court date will be sent to you, and a summons will be sent to the tenant
On the court day, both sides will be presented to the judge by you and the tenant

If you win, the judge will issue a Warrant of Eviction, forcing the tenant to leave. If required, an officer will be present at the property to evict the tenant. Depending on your lease terms and local laws, the tenant may be liable to all proceeding fees:

Court filing fees
Back rent
Attorney fees

Damages to the property

However, if the tenant wins, they can continue staying at the property and the landlord will be liable for the court filing and attorney fees.

A breakdown of the eviction costs

The cost of eviction may be higher than what you factored in. There are additional costs such as maintenance and back rent involved as well. These rates will differ based on where the property is located. Here is the full breakdown of the true eviction cost:

Back rent - The eviction process can take up to two months to complete. You will lose this income during this period. On average, this can cost upwards of $1500.

Court filing costs - This rate will depend on the location, but the average in the US is $90.

Sheriff’s office charges - To serve a notice of eviction to the tenant, the sheriff’s office will charge a fee, typically ranging from $50 - $300.

Legal fees - The eviction process is complicated and requires a lot of paperwork. Hiring an attorney to handle this and also make sure it is all legal is important. Depending on the attorney, this can cost anywhere between $500 - $900.

Maintenance fees - Once the tenant has been evicted, the property will need to be cleaned for the next tenant. Personal possessions may need to be kept in storage or disposed of properly. This on average will cost around $300.

Property damages - Any damage caused by the tenant will need to be repaired and you may even need to hire a locksmith for security. This cost will depend on the level of damage caused but can range between $400 - $1500.

Marketing fees - There will be additional costs to list the property back for rent. This can cost up to $150 in total.

All of these costs add up to be an expensive endeavor for the landlord and this is not considering the non-financial costs involved such as lost time and the stress of a legal case. Preventing problems before it leads to eviction is the most ideal situation.

How to avoid evictions

The eviction process may look simple on paper but it can be a stressful ordeal. Therefore, evictions should be a landlord’s last resort. Instead, the focus should be placed on finding high-quality tenants and preventing problems before they arise.

These are alternative methods to prevent evictions:

Offer a cash-for-keys deal - This method involves the landlord offering a few hundred dollars of cash to the tenant to move out. It acts as an incentive for tenants with cash flow problems. Paying the tenant this cash will be less costly than eviction.

Screen your tenants - The easiest solution is prevention before it becomes a problem. The best way to do this is by screening and analyzing each tenant before allowing them to rent the property. High-quality clients are much less likely to force an eviction in the future.

Screening tenants also include a small cost, but it is only a fraction of the total cost of an eviction. You don’t even have to do it yourself. You can use Yardi or MRI software to automate the screening process. This will reduce the overall time and cost spent on screening tenants.

Assetsoft is an experienced property management service provider that can help you avoid all bad tenant-related expenses by incorporating this software into your property today.

Why Is Maintenance Important For Your Properties?

Wed, 25 Aug 2021 10:30:00 -0500

Everybody likes a well-maintained property. For property managers, that leads to tenant satisfaction and tenant retention. A survey by Avail states the same - 12% of tenants planned to vacate rather than renewing their term if the property was not well-maintained.

If your tenant’s service orders are met on time, and the issues are fixed, you get long-term clients and attract potential buyers.

The top 8 reasons you need good property maintenance

Here are some of the reasons why maintaining your property is important today:

1. Tenant satisfaction

Sure, maintaining a property is not easy, but current tenants may vacate and not attract new buyers if ignored or postponed. Running a property business means taking care of your property and tenants at all times.

When you care about your property, your tenants continue to reside on it for the long term. It is one way to keep tenants rather than looking for new buyers frequently. Keeping your property clean will keep your tenants happy and, in turn, lead to tenant retention. 

2. Higher sale value

Good property with clean surroundings means fewer repairs making it highly valuable while selling it. No one likes to buy a poorly maintained property and spend an extra amount repairing or renovating it. Keep your property clean without any damages to the windows or doors. You can also get it painted once to make it look visually pleasing and clear the clutter during the process.

3. Maintain rents at market rates

You can increase your rents as per the market rates if you keep it in good shape. Potential buyers will also find its value for price and turn it into long-term tenants. Finding new tenants frequently can be challenging, so you need to keep your tenants for the long term, and it can happen when you care about your property and your tenants.

4. Reduces liability insurance

One major benefit of maintaining your property is that it keeps your tenants safe. Regular maintenance can avoid major accidents such as your kids breaking your tenant’s window or the tenants getting injured after falling down the stairs.

In each of these cases, you are liable for the damage and should pay for it, but in most cases, owners will be responsible for building damages and not personal damages.

Do not delay fixing any hardware components or ignore the issues, thinking it's insignificant. You can get a document signed by the tenant that you’re not responsible for any personal injuries, and it’s mentioned in your landlord insurance policy.

5. Attract good tenant

Sometimes, tenants don’t treat the property well and damage it. You need to find tenants that take care of your property as theirs, and for that, you should keep your property clean. When you don’t bother to fix damages, your tenants don’t worry as well. If you want someone who takes care of your property, you should start.

6. Prevent major problems

Repair the broken ones and replace the rest. Visit your property occasionally and see for any fixes that are needed. Plumbing, heating, roofing problems, windows, doors, drains, pipes, and sewage issues, lost key, and electricity problems are some of the major issues that should be fixed and checked for frequent faults as part of your maintenance charges.

Do not delay fixing them as tenants may be vacant if their plumbing or electricity problems are not addressed and fixed soon. Providing the essentials and taking care of such issues can retain tenants for a long.

7. Builds trust

Having property management software helps tenants raise a ticket for the issue. You can then contact your third-party vendors and fix the problems by talking to the tenant about the right time to get it fixed. You then close the ticket once the problem is solved.

The entire process builds trust among the tenants and assures them that anytime there is a problem, it can be resolved by contacting you. When you delay it, tenants lose confidence and eventually get frustrated and vacate your property.

8. Positive impression

When you ignore maintaining your property, you forget your tenants and future buyers. Imagine you delay fixing any roofing problems in your tenant’s unit. No one wants to reside in a leaky roof, and even after requesting service orders multiple times, it goes unaddressed, the tenants vacate your property.

Your future buyers may talk to residing tenants better understand the property better and not recommend it to them due to their neglected problems.

Depending on your needs, you may go for real estate management software like Yardi or MRI. Assetsoft can help you choose the best fit for you. 

Talk to us for real estate IT consulting today!

The top tips to maintain your properties

Go for regular checks or hire property managers to oversee and manage your property. Contact local vendors who can fix issues such as plumbing regularly.

Here are some of the things that you can do to maintain your property better. 

Hire a property manager to manage your property better
Conduct regular inspections for both interior and exterior portions 
Fix issues regularly, even if it is a small one 
Fix leaks, check fire extinguishers, air filters, and water heaters

Maintain your properties with property management software

Managing maintenance and keeping track of things can be made simpler with the help of property management software like Yardi and MRI.

Manage communication with your tenants, keep track of maintenance, screen tenants and verify documents, provide better service to tenants through online rent payment methods and tenant portals to update them about the latest news about your property. 

Manage all your departments through a self-service portal. It saves time and reduces dependency on property managers.

Assetsoft can help you choose the right software for your business and implement, support, and maintain it while also train your staff to use the software. We implement project management best practices for your business.

Want a project management system for your business? Contact us today!

Top 10 Things To Avoid When Renting Your Properties

Wed, 09 Jun 2021 13:04:51 -0500

Being a property manager comes with multiple responsibilities. And if you are new to property management, mistakes can cost you money. Whether you want to avoid making those or just upgrade your knowledge, this guide will help you.

Here are the ten things you should avoid when renting your properties.

1. Using An Inconsistent Screening Process

A good screening process can save you from costly evictions later. But changing the screening process from tenant to tenant could land you in legal trouble. According to the US Fair Housing Act, it is illegal to discriminate against tenants based on race, color, origin, religion, sex, familial status, and disability.

What You Should Do: Acquaint yourself with tenant screening laws and have the same screening process for every tenant. You can automate the process by using software such as Yardi ScreeningWorks Pro. It can collect and verify documents, run background checks, and access credit history to give you low-risk, reliable tenants.

2. Collecting Rent by Check

Receiving rent by check is risky for both the tenant and the landlord. The tenant’s check could get lost, or their financial details could end up in the wrong hands. A landlord has no guarantee that the tenant’s account has funds to cash the check.

For millennials, checks are outdated. A Money Magazine report states that just 15% of millennials and 40% of seniors pay their bills through the mail.

What You Should Do: Online payments are a secure and convenient way of rent collection. Through automation, tenants can schedule payments beforehand. You can also send payment reminders to tenants on the due date. It also becomes easier for you to follow up on missed payments. Payment automation is the best way to collect rents on time.

3. Letting Tenants Go Off-Lease

As a landlord, you will often have good tenants. But just because they are well-behaved, pay rent on time, and help with maintenance, doesn’t mean you should be lenient with the lease terms.

Getting your tenant to sign a new lease term every year or increasing the rent can be time-consuming. But letting your tenant go off-lease can pose a greater risk to you. A tenant can leave on short notice (usually 30 days), which can leave your property empty for a long time. It can also remove your chance of increasing the rent, which reduces the overall profit.

No matter how good the tenant is, not signing the lease agreements and missing payments should be off the bounds.

What You Should Do: Keep a professional relationship with your tenant. Stick to lease agreements and rent due dates and renew the lease every year. Property management software can help you with managing lease agreements while also being a favorable landlord.

4. Changing Terms in the Middle of the Lease

While making a new lease or renewing existing ones, property managers can change the terms of the lease. But, there are limitations to changing the lease terms when it is ongoing. Even with new additions to your property, you have to check if you are legally allowed to modify the rent or change the agreements.

What You Can Do: Be aware of the rules of the lease agreement and make changes only during renewal. Upload lease agreements to a tenant portal so both parties can be informed of any changes. Assetsoft offers lease abstraction services to help you out.

5. Putting Off Maintenance Issues

Maintenance issues are best addressed quickly. If ignored, they can lead to much bigger problems. A minor leak can flood the property significantly if not repaired in time.

Just because a tenant has reported the issue only once does not mean it isn’t important. Timely repairs can save more of your property from being damaged.

Regularly inspecting your property for any maintenance issues can help keep your property in good condition. A well-maintained apartment attracts better tenants and shows your competence as a property manager.

What You Should Do: Use a tenant portal like MRI Tenant Connect to quickly check on any maintenance requests. They can also serve reminders in case a request is left unattended for a long time. Routinely inspect your property to keep it well maintained.

6. Assuming Your Property Will Always be Rented

One of the most common mistakes property managers make is not planning their finances realistically. If you have taken a loan for your property, you should be able to pay the mortgage for some time if the property stays vacant. Having a financial plan to cover unforeseen situations can save you from a lot of worries.

An excellent way to attract tenants to your property is to price it fairly. Evaluate market listings to decide the right price for your property. Be flexible with the cost of the property and negotiate with interested leads.

What You Should Do: Use property listing portals to attract better tenants. Prepare a financial plan that covers the mortgage when your property is not rented out.

7. Mismanaging Security Deposits

Collecting a security deposit is standard practice to cover minor damages during the tenancy. Most property managers do not give it much thought except on how much to collect. Many states have laws for security deposits covering two points: how much deposit can be collected and where it can be used.

Most laws do not allow using security deposits for normal ‘wear and tear.’ But, in case you spend money on repairs and maintenance, you can deduct the amount from the deposit. In any case, you will have to document the use of the deposit.

Sometimes, landlords feel entitled to the entire deposit if the tenant breaks the lease. But, this can be a violation of law in some states.

Skipping the security deposit entirely is not a solution. It is important to collect a reasonable amount. This amount can also be used in case the rent is unpaid.

Most laws set a limit on the deposit you can collect. Check with your state laws and adjust the deposit amount accordingly.

What You Should Do: Maintain all documents and records related to the security deposit meticulously. Understand the laws on where you can use the deposit and return the remaining amount to the tenant once they move out.

8. Not Having it in Written

Many rookie property managers make the mistake of verbal agreements. Though these are valid in some cases, they cannot be proved. It can cause problems with security deposits, lease renewals, and rent collection. A written agreement is more effective when documenting the terms of the lease.

Written lease agreements can also make your tenant-owner relationship better. You can discuss any details in the contract such as who is responsible for repairs, or how tenants can contact you in case of emergencies.

What You Should Do: The best way to legally protect yourself is through a written agreement. The agreement should be in accordance with the state laws. Make sure the contract is customized according to your rules. If you do not allow pets or charge a late payment fee, include that in your agreement.

9. Evicting Renters Because of a Sale

Just because you sold your property to someone else, you can’t evict the current occupants before the end of their lease. It is best to sell the property when it is vacant. If it is sold in between, make sure the new landlord doesn’t evict the tenants before their lease ends.

What You Should Do: Use digital platforms to keep owners and tenants informed of any changes. Easy access to lease agreements can also help both parties to clear any misunderstandings. Make sure the sale of the property doesn’t violate the tenant’s lease agreement.

10. Treating Rental Property as Your Own

Even if you own the property, tenants are entitled to privacy. Dropping in at odd times without informing the tenants is a violation of their privacy. Once the lease agreement is signed, you have to give prior notice if you want to drop in for maintenance or inspections. You can’t use your keys to enter the property without their consent.

What You Should Do: Use communication tools such as email and text to convey any visits to your tenant. Online portals are another great way to keep them updated on any upcoming inspections or repairs. You can submit quick notices to tenants and obtain their consent before visiting the property.

Bottom Line

Using the best property management practices can not only get you good tenants but also protect you from legal hassles.

Automate your property management when you can. Whether it is online portals, tenant screening, or even online payments, finding the right tools is crucial.

Assetsoft can help you integrate the necessary tools to build the right property management system for you. We can help you manage your properties better by addressing all your needs through ERP software solutions like Yardi, MRI, UiPath, among others.

Integrate all data together. Process invoices and tenant issues seamlessly. And do it all from one dashboard. Talk to us today to know more about how we can make property renting easier.

COVID-19 And Commercial Leases Today - Major Developments

Mon, 12 Apr 2021 08:00:00 -0500

Commercial real estate has been going through a bumpy ride during COVID-19. It's had its ups and downs, particularly regarding the industries focused on by its tenants. Luckily, things have been looking up lately, especially with the vaccine becoming available.

However, recent news and new coronavirus waves have kept uncertainty in the air. As we’ll see in a moment, new regulations have threatened its recovery rate.

What are these regulations? How do they stack up with other unresolved issues? Today, you’ll learn the latest developments and how they’ve affected commercial real estate.

Coronavirus and commercial leases: How have things gone so far?

Corporate renters have suffered extensively because of the pandemic. Some sectors, like retail and leisure, have been the most significant victims. Several companies have implemented several practices to absorb the significant losses from COVID-19.

The most critical strategies relate to how tenants and landlords have managed leases individually. Legal advice has moved from being standard to becoming a necessity for any party looking to keep their agreements.

Aperture considerations

With lockdowns and social distancing, countless retail businesses were forced to close. For contracts demanding tenants to remain open, force majeure clauses have provided substantial advantages in these cases.

If these clauses aren't part of your agreement, staying open becomes a primary challenge. In these scenarios, landlords can leverage damage compensation for failing to honor the contract. However, this strategy is still considered problematic.

Lease charges

In most cases, rent is still a primary obligation for tenants, and that’s the same with paying for essential services. However, governments have taken measures to keep landlords from leveraging forfeitures, often preferring to request post-pandemic compensation and additional agreements.

That hasn't meant landlords have to cover all expenses during the pandemic. Tenants are usually expected to pay rent for as long as they're able. Luckily, most governments have given ground for leases to remain subjected to landlord-tenant agreements, letting them find a good middle ground for both.

Tenant inability for payments

That leads us to rent payments specifically. Multiple legal clauses have stood in the way both for government measures and traditional procedures. For many agreements, not paying rent still makes it possible for landlords to oppose renewing leases.

Good preparation has become crucial for property managers who managed to weather the storm. For instance, initial deposits have allowed landlords to absorb many costs when tenants cannot pay for their rent. Another standard agreement is for tenants to absorb unpaid rent as debt.

Insurances

Finally, insurance policies have also changed the outcomes for any tenants. Many contracts have insurance clauses other than force majeure. Mitigation, general liability, and business interruption policies have enabled tenants to keep their leases during the worst times.

However, it's essential to assess whether COVID-19 is eligible for said clauses. Enforced closure could be considered a force majeure instance, but viruses and health crises could be arguable. "Act of God" clauses aren't considerably uncommon, so that it could provide relief for some cases.

Official advisory for the sector

Official advice has been one of the main advantages for many unprepared property managers. Different entities, like the CBRE, have provided vital recommendations for landlords and tenants.

Naturally, many of these resources repeat the same advice, and that's for a good reason. No one's better informed about government measures than official entities. Additionally, many governments have called for landlord-tenant agreements, looking to appeal to reason while keeping regulations minimum.

Service interruption

Service clauses within leases usually focus on essential services from landlords for tenants. Typically, these clauses help tenants offset abatement options from landlords since they earn the same right if these services aren’t provided.

It's also important to note whether these faults occur within a landlord's control. If that's the case, and the agreement covers the fault, rent abatement could be a necessary right. We still need to consider whether our lease covers these cases. Legal advice will often prove invaluable.

Casualties

In commercial real estate, casualty clauses have been particularly influential when the cause behind any damage could be attributed to COVID-19 or related regulations. These clauses typically entitle tenants to remedies when the building becomes unusable.

The fundamental consideration in this scenario is that these clauses usually cover physical damage. COVID-19 and its inclusion in casualty clauses are still debatable because of how unique the crisis has been.

Condemnation

Condemnation clauses are among the most curious elements during COVID-19 because they address government control over the lease's premises. In many cases, government measures could make it into condemnation.

The language used by the COVID-19 regulations could be considered. However, the full extent of these benefits will likely not be applicable. It could make tenants eligible for government compensation but not rent abatement and benefits from the landlord.

Force majeure

Finally, force majeure clauses have been the primary lifesaver for many lease agreements. It essentially refers to “greater forces” that could hinder any party’s ability to meet the agreement’s expectations.

Commonly, force majeure clauses pertain to earthquakes and similar natural disasters; these cause considerable damage and are often unavoidable. However, COVID-19 has been eligible for certain force majeure instances depending on how the contract specifies things.

Key considerations

When thinking about whether these measures are applicable, landlords and tenants need to consider several issues related to their applicability. Firstly, the premises' usability requires assessment. If access is possible and the tenant refuses not to use it, several clauses won't be applicable.

The same holds for essential services and damage to the installations. If the landlord still provides all the services, it could be more challenging for tenants to leverage clauses. Force majeure clauses could depend on physical damage suffered by the property as well.

However, do keep in mind any clause that mentions or could include governmental action. Those could protect one or both parties from lockdowns, curfews, and other regulations.

The pandemic’s year: What has transcurred?

It’s been one year since COVID-19 became a global pandemic, and it has brought countless surprises. Easily, rent reduction requests and decisions have been a staple during the crisis. Countless tenants haven't been able to pay their rent.

Rent reduction has been a rare measure during the pandemic, especially regarding government measures. The most common aids have included rent moratoriums and rent relief funds. However, tenants and landlords have been expected to meet their responsibilities as long as they can.

Lockdowns

Lockdowns have been around for almost as long as the pandemic. They’ve lessened and strengthened depending on how each country has endured the pandemic.

Additionally, this measure has been the most prominent damage source for businesses. Not being able to take clients often proved more detrimental than the virus for the financial landscape.

Exceptional cases

The global pandemic and government safety measures have defied legal advisors and lease agreements. Since countless commercial tenants can’t pay rent, original contracts require more attention than ever.

In most cases, courts have agreed that the pandemic, particularly government measures, constitutes a force majeure situation. Therefore, both parties usually benefit from these clauses, yet exceptions are plentiful.

Official subsidies

Finally, government aid has been vital for many businesses and landlords, especially in the retail and hospitality sectors. These markets were the most prominent victims of the pandemic.

Rent relief has varied extensively depending on the region. Some states provide rent relief if tenants can’t meet the expectations, and others have absorbed part of the rent, often demanding landlords and tenants to cover the rest.

Restrictions’ extensions in the UK: What do they mean?

Finally, the crisis has shown signs of slowing down, mainly due to the vaccine's development. Consequently, governments have started to ease restrictions. These developments have been crucial for raising hopes for recovery.

However, the UK has taken a somewhat different approach. Instead of slowly removing regulations, it has decided to extend its restrictions for landlords. This decision essentially aims to protect tenants from evictions.

Let's see what they've done and what we can learn from them—especially if other regions start doing the same. If you're unsure of the best countermeasure, make sure to work with a professional strategy and leadership service to curb the damage.

Strengthening regulations

The most noticeable measure is extending the eviction moratoriums for a few months. However, that’s only for not paying rent.

Other contract breaches can still entitle landlords to evict tenants. However, tenants will retain the right to remedy said breaches before eviction.

The CRAR procedure

Commercial Rent Arrears Recovery entitles landlords to issue notices demanding tenants to pay rent debt. Otherwise, the landlord can seize their assets as compensation.

However, the government measures have included the restriction of this right’s threshold. That means landlords will have to wait considerably longer before leveraging it.

Statutory demand restrictions

Finally, statutory demands haven't been announced for an extension, but they'll likely follow the other measures.

The UK is expected to bring back statutory demands at the end of March, yet an extension until June is likely. The main concern behind this (and other measures) is how tenants could abuse these restrictions, considerably slowing down recovery.

Tenants Could Enjoy More Benefits In 2021 - What Can Commercial Landlords Expect?

Mon, 12 Apr 2021 08:00:00 -0500

It’s been a year already since COVID-19 became a global crisis. It gave way to countless government measures to keep the health and financial consequences at bay.

Many of these regulations were supposed to end in these months, but the crisis isn’t quite over yet. Several governments have announced extensions on aid plans, primarily eviction moratoriums.

What does that mean for commercial property managers? If you’re unsure of what you can do about it, make sure to contact our strategy and leadership services for a fantastic edge.

The UK’s extension on landlord restrictions

The UK recently made headlines because it prolonged eviction moratoriums. It extended its forfeiture ban for three months, and it restricted landlords’ ability to demand debt repayments.

Additionally, it has also claimed that it intends to review current commercial lease legislation this year. It claims it's necessary to reconsider several issues related to the current Landlord & Tenant Act and rent payment models.

Is it only for financial complications?

The most important consideration for this extension is that eviction bans are solely for those who can’t pay rent due to the pandemic’s financial damage.

That means that other contract breaches still entitle landlords to evict tenants. The measure aims to aid tenants suffering from complications outside of their control.

What does it mean for landlords?

It's simple; landlords won't be able to evict tenants who failed to pay for their rent and debts within the announced period. However, they're not entirely at a loss.

If they can prove that tenants can pay rent but don't do so out of a will, they could gain leverage with the court. Unfortunately, it's still a considerable setback for recovery.

Mutual agreement is still fundamental

If the pandemic proved one thing, it’s the importance of nurturing healthy landlord-tenant relationships. This lesson will remain vital for landlords in these additional months.

Discussing conditions with tenants and offering alternatives could result in the same consideration from them. That's critical when they have the advantage of these restrictions.

Is Canada following this example?

Canada has employed similar measures to its peers: rent relief, lower mortgage rates, and eviction bans. It has also implemented stricter regulations regarding standard area maintenance and social distancing.

Recently, the government also extended its current regulations. While it extended rent evictions, the most noticeable difference comes with rent increases. It’s an additional restriction compared to the UK, but it comes with intriguing advantages for landlords.

Rent increases remain frozen

Canada extended its rent freeze until July 10th this year. Any increase set before that date isn’t valid, and tenants don’t have to pay the additional amount until the period ends.

Additionally, landlords can’t combine rent increases from this year and the previous one. This year’s increase can’t surpass 1.4% either.

Debt repayment period

Rent repayment also received a large time frame for owed amounts from March to August last year.

This period starts when the landlord provides the repayment plan, and it ends on July 10, with the rent freeze. Tenants must pay instalments on the exact due date for rent.

Unpaid rent evictions

However, Canada has been somewhat flexible with rent evictions due to financial difficulties. If the tenant failed to pay their total rent by the moratorium's end-time, landlords could evict them.

Additionally, landlords can send a notice to end the tenancy if the tenant fails to comply with the repayment plan by the period's expiration.

Advantages for landlords

Naturally, this means landlords aren't entirely at a loss in this case. We need to consider that Canada has been considerably supportive of all parties.

While these restrictions are primarily beneficial for tenants, insightful managers can leverage these exceptions to prevent tenants from abusing these measures.

The US: Eviction moratorium extensions as well

The US has also announced that it would prolong eviction bans, but that’s not the only approach it’s taking. Additionally, it has provided several guidelines for businesses to assess who’s eligible for this protection.

We also need to consider another vital difference between the US and other countries: relief bills. It’s one of the few countries delivering a direct financial stimulus to citizens—and even fewer sending checks to families.

Biden’s administration also kicked off the year with a new stimulus check, which we also need to consider.

Decisions from the CDC

The CDC has been the primary authority behind most health measures in the US, and it recently extended the federal moratorium for the entirety of March.

However, further extensions are possible, yet the total length isn't precise right now. Early March also saw the signing of an additional rescue bill.

Not everyone is eligible for eviction moratoriums

Again, this moratorium is only for tenants who can’t pay rent. It doesn’t forgive debts, and tenants are still eligible for eviction if they breach other contract terms.

Additionally, residential and commercial measures vary considerably in different states. A legal advisory will prove invaluable for any landlord and tenant in the upcoming months.

The latest relief bill: Did it aid tenants?

Last year closed with a significant relief bill providing $25 billion for tenant assistance, aimed for rent and utility overdue.

However, renters need to prove their eligibility for the government relief bill. That means showing that their income has been affected considerably, and they can't pay rent for reasons outside their control.

Considering the future: Other proposals from Biden

Biden has announced ambitious tenant protection measures for the future, but most of them focus on the residential real estate market.

However, rent assistance and greater eviction protections could hinder financial recovery for many commercial landlords. Additionally, individual state proposals could offset or worsen the effects of these restrictions.

Is Australia an exception?

As many of its emergency support measures start lessening, they’re yet to announce an extension for eviction bans.

It’s an uncommon sight among other countries strengthening their restrictions. While the moratorium is still ongoing in most of the territory, it has ended in many cities.

However, headlines could be misleading, as different cities have decided to extend their bans. For instance, the capital territory extended its ban until April 30th. That means that the most extended deadline is still a couple of months shorter than the UK.

Are eviction moratoriums ending?

Most eviction ban periods are reaching their deadline. Many states have ended their restrictions. Some closed last year with no eviction moratoriums in place.

However, not all regions are ending their eviction bans. Some have extended the period until the end of March or April, but not more than that.

No news about extensions

The primary reason why little is known about these regulations is that the government hasn’t released an official statement. Most of that responsibility has been left to each city.

On the other hand, there has been considerable silence since the beginning of March, so there are still chances for official extensions to release nationwide.

Landlord-tenant relationships are more crucial than ever

In states where eviction moratoriums have been lifted, nurturing a positive relationship with your landlord or tenant is critical.

Many landlords have excellent tenants who’ve failed to pay rent. With the eviction ban ending, keeping these tenants despite financial difficulties could be a worthy long-term investment.

New Zealand: A more liberal approach?

New Zealand seems to be the most liberal region regarding its market intervention. So far, notice periods for ending tenancies—and the valid reasons—have been the only target for the latest regulations. No news on outright eviction bans has surfaced.

Additionally, rent increases have been regulated considerably lightly. They've extended the allowed period to a year from six months and temporarily froze rent increases between March and September last year.

If you're unsure whether you can increase your rent and how much, consider working with an expert financial service.

Ending tenancies depends on their type

Not all tenancy categories are eligible for the eviction moratorium. Landlords can’t end fixed-term tenancies before the term’s conclusion.

However, periodic tenancies can end if the landlord provides the proper notice. There's no specific period for delivering the notice, but it's best to give the tenant enough time to relocate.

What about rent increases?

Since September 26th, the rent freeze isn’t in effect. That means landlords have been free to increase their rent for a while now.

However, they must wait for a year before increasing rent, and no additional increases can’t take place within 12 months. Fixed-term leases must allow for increases in the agreement.

Can landlords decide freely?

There’s no regulation limiting the size for the increase, only how to do it and the tenant’s option in case of a disagreement.

Additionally, landlords and tenants can agree on rent increases beyond 12 months. If the increase benefits the tenant (property improvement or a better agreement, for instance), the rent increase is possible.

Are tenants “out of luck”?

The most important takeaway from this analysis is the word “agreement.” Tenants must grow a good relationship with their landlords if they wish to keep their lease.

We must consider that a more substantial recovery for landlords could benefit tenants. Especially if they're in a strong industry, it'll be easier for landlords to accommodate leases to their tenants' needs.

Why Office Sublet Spaces May Turn Out To Be More Of A Competitive Threat Than Thought Before

Thu, 18 Mar 2021 09:09:21 -0500

It's not a secret: office space was among the most prominent victims from COVID-19. Work from home, social distancing, lockdowns, and almost every healthcare measure damaged the sector. Most experts agree that it'll take years to return to "normal"—if we ever do.

However, one subsector from office real estate has been surprisingly promising. Most advisors expected office subletting to go down with traditional leases. It seems like that's not the case. According to market analysts, office sublet spaces could become the dominant assets.

Why do they think that? That’s what we’ll find out.

Sublet or lease: What’s the difference?

Sublet refers to renting a rented property. An example would be renting an office floor and renting it to someone else. It divides the lease agreement into three levels: the landlord, the tenant, and sub-tenant.

Sublets are common when a tenant can’t stay or use the rented space, yet they’re unable (or unwilling) to break the agreement. Subletting allows tenants to collect rent from a sub-tenant and pass it to the landlord. The original tenant remains responsible.

Requirements for a sublet

Naturally, three parties are necessary for a sublease. However, a second lease agreement is necessary. The original contract remains relevant, but a new document must represent the new lease.

This new contract usually includes the landlord's firm as well. They must approve the sublet. A few requirements could become relevant depending on the sublease, but we'll go through them soon.

Having modern property management software is also a great advantage for these

What makes subleasing attractive for all parties?

It’s common for investors to believe subletting is an unnecessary complication. However, sublets allow for several benefits compared to traditional lease agreements. We also need to remember how it can become a necessity for tenants.

Subtenants

Companies often leverage subleases when they don't want to commit to a long-term lease agreement. Commercial real estate is a great example, as most terms demand for over five years. Seasonal ventures and fast growth often demand short-term contracts.

Essentially, any business dealing with short-term uncertainty benefits from sublets. It's simple; if you don't know if you want to keep a space for the next couple of years, a traditional lease can be detrimental. Willingness to use sublets also gives companies access to a broader range of options.

Sublessors

The original tenant—or sublessor—benefits similarly from sublets. For instance, their growth may call for more office or retail space. In those cases, leaving the original property might not be viable. Subleasing allows said business to move without breaking their contract.

That's not the only scenario that calls for a sublet. You could also need less space than what you rented. Subletting "leftover" space can help you keep the entire property's value and aid you with your rent payments.

Landlords

Landlords always benefit from tenants who can pay their rent when they need it. Keeping properties occupied ensure they can profit from those investments. It's easy to see why they'd be interested in subletting.

Last year, tenants being incapable of meeting rent wasn’t rare. Subletting allows tenants to meet their rent in these cases. It’s an obvious benefit for landlords, especially since it keeps them from searching and screening new tenants.

The market is starting to lean toward subletting

Earlier this month, Romania-Insider released an article about big office tenants looking to sublet spaces in Bucharest. Companies like IBM and Visteon leveraged sublets to reduce losses. One of the main problems for office owners is having to settle for cheaper rents.

Curiously, this development comes amid expectations about demand surges for office space. Demand is expected to grow up to 30% this year. So far, tenants have performed better than expected, and space optimization is becoming a consideration.

We can use this report as an example of what could happen worldwide as some industries flourish and others face turmoil. Overall, we can expect office space demand to grow as hybrid work shifts (merging remote and inhouse work) and co-working spaces become more popular.

With tenants needing to sublet their spaces, the market meets new supply, possibly lower prices than lease agreements. That's the reason why sublets can become a significant competitive threat.

Landlords could face the most significant challenge

Despite what we've mentioned, the article mentions that landlords will face higher vacancy despite increasing demand. That would cause negative value correction. The leading cause suggested is that moving to smaller spaces leaves more significant properties empty and reduces their demand.

The problem with this thesis is that landlords will still benefit from these sublets. In any case, tenants/sublessors will need to take the brunt of these transactions. If the sublet is cheaper, tenants will have to make up for the difference.

The real problem for landlords comes from upcoming office space developments. These projects add to the current supply, which could surpass demand.

The pandemic caused sublease space to increase inventory considerably

In July last year, National Real Estate Investor had already covered the considerable growth behind office sublets. Interestingly, it’s very similar to the previous report from earlier this month.

The pandemic has been responsible for countless businesses having to cut losses. The sublet market has been growing steadily in response. The article does mention that social distancing could've offset reductions by increasing demand for more space. Unfortunately, that doesn't seem to hold.

Office sublet supply grew considerably last year

Sublet activity as of the article's publication was already high. Even markets like Manhattan, which aren't too familiar with this practice, experienced significant volumes. Experts also agreed that sublet could grow prominently with time, which we've seen has been confirmed.

It’s also worth noting that some sectors experienced negligible sublet increases. It seemed to occur in markets where downsizing was already common before the pandemic. Regardless, virtually no market has been free from the subleasing trend.

The trend could be more robust in troublesome markets

Diversification has been vital during the pandemic. The subleasing trend supports that information, as the article also suggests. Subletting activity has been higher in markets focused on specific industries, like Houston and its dependence on the energy sector.

As discussed, subleases are also a way to cope with financial constraints, which are the norm with COVID-19. Troubled markets, like the energy sector, have needed to sublet their spaces to overcome financial turmoil.

What does this mean for the future?

Despite optimistic expectations for office space, the sublease market can hinder recovery considerably. New developments need to compete with these cheaper options, and that can drive demand down considerably.

However, it could also mitigate traditionally expensive markets where office rent has always been expensive. Additionally, sublease spaces could reduce possible rent drops, which were a noticeable problem in previous recessions.

Regardless, higher office supply from sublets will increase the current market supply, left by countless businesses leaving their office spaces. With potentially lower prices, they could pose a severe risk against maintaining good market demand.

Office space and recovery: Pre-COVID levels could wait until 2025

One of the main problems about sublet spaces is their disruption of the current market supply. Current forecasts are pretty pessimistic. For instance, CNBC estimates that it'll take until 2025 for office real estate to recover to pre-pandemic levels.

According to the article, office space endured more damage than the financial crisis. It peaked at 95 million sq ft. in unused space. It's estimated for this statistic to reach 215 million sq ft. before complete recovery.

What does this mean for office real estate and the current sublet trend?

The outlook is more optimistic than you might think

Interestingly, the article also mentions that office real estate can recover completely. It'll take a while, but employment growth and specific careers becoming more important will feed demand. Most experts agree that office space will never cease to be relevant.

For instance, creating a work culture and training staff is considerably more difficult if done remotely. Similarly, not everyone enjoys working from home because of the many distractions.

Hybrid work and co-working could breathe new life into office real estate

Additionally, remote work could benefit office space as it becomes “more normal” because of what we already mentioned. Many companies will offer hybrid schedules, where people can work remotely and in the office according to their chosen schedule.

This trend will likely encourage co-working spaces, and that requires repurposing office space. Therefore, office real estate could gain demand from multiple sectors, which previously threatened its relevance.

Companies might sublease offices pace to meet demand

However, we need to go back to the main subject: office sublet spaces. Many companies are likely to sublet their rented space to these growing markets. As we mentioned, this can pose a significant strike to the industry’s recovery, as sublets inflate supply.

That means companies will need to keep up with current developments and adjust their lease agreements accordingly. Luckily, this issue might be temporary. If demand surges above sublet supply, new developments will still yield profits.