The impacts of COVID-19 have been felt by many entrepreneurs, investors, and business owners (for and non-profit) across the globe. Businesses are calculating burn rates to see how long they can keep paying employees while taking large revenue hits, and in some scenarios, laying off employees or completely closing shop. It’s extremely unfortunate, the impact that COVID-19 is having on our economy, businesses, lives, and families. No one is in this alone, and ERK Realty is dedicated to providing Entrepreneurs’ Required Knowledge during this crisis!
To help, we have gathered information from bankers, lenders, and investors to provide you with real estate tips to weather impacts from COVID-19. We’re doing a two part series, first focusing on businesses and commercial properties, and then a fast follow up on residential as each of you most likely also own a home.
If you’re trying to figure out how to keep your business or real estate investments afloat in the midst of COVID-19, check out these tips:
1) Have a plan
Do not wait hoping things will turn around. It’s far better to be proactive. Know your numbers and vet your options on different ways to generate revenue and reduce expenses. If you can’t make rent, what’s next? If your renters can’t make rent, what’s next?
2) Proactive Communication
The more proactive you are in your communication, the better that ‘plan’ we discussed can be formed with everyone involved. If you’re leasing, have an open line of communication with your landlord. If you’re a landlord to others, get in touch with your tenants as soon as possible to understand their position. If you won’t be able to make a mortgage payment, get in touch with your banker now to understand your options and potential ways to prevent default.
3) Working With Your Bank
The last thing your bank wants to do is seize your property or become a landlord. They want you to succeed. With that, there’s also been a surge of refinances causing lenders to be extremely busy right now. But, again, if you foresee yourself getting into a tough spot, it’s best to communicate with lenders now vs later when things are really tough. Here’s some things to think about:
4) Lease Options
For renters, make sure you’ve read the terms of your lease to understand your options if you need out or cannot make a payment. If you're struggling to make rent payments, chances are your landlord is going to be flexible right now. Some states have temporarily banned the ability for landlords to evict tenants due to default, while the rest are sending communication to landlords strongly discouraging it.
Here’s some creative ways to amend your lease with your landlord in light of COVID-19:
If you need any help making your plan, running projections, or navigating through this difficult time, the team at ERK Realty will be happy to help. You can get in touch with us here. In the meantime, stay safe out there!
Yours Truly,
The ERK Realty Team