Property Management and COVID-19: New Orleans Real Estate Expert Breaks It Down
Landlords and tenants across the nation are facing unprecedented circumstances as COVID-19 continues to pose some uncertainty across the rental housing market. As U.S. households feel the financial strain brought on by the pandemic, residential and commercial landlords are working hard to accommodate these challenges.
For many, sudden financial losses and the difficulties of relocating safely have become an all too real and challenging prospect. For property managers, a shift in strategy is necessary to balance compassion for those with newfound financial issues, while also supporting their clients and delivering ROI on their investments.
Through the first two weeks of June, we’ve seen 26 multi-family homes in Orleans Parish get to closing, projecting to 52 closings for the month. If this trend holds true, it would only be one more than closing the month of May, (51). And would be the third month in the row that we’ve seen significant decreases in the number of closings of multi-family properties year over year.
Through the first two weeks of June, we’ve seen 26 sales of multi-family homes, which gives us an estimated projection of 52 closings for the entire month. This is only one more than May, which had 51 closings. This is the third month in the row that we’re seeing significant decreases in sales year over year, following a 46% drop in April 2019-2020 and a 54% drop in May 2019-2020.
That said, 49 closings have gone under contract or are pending in last several days, meaning we’re on pace to see more multi family home sales in July than in April, May, or June. There is plenty of reason to be optimistic that we’ll get closer to normal in the future.
As the pandemic continues to impact residential and commercial real estate, both tenants and landlords are exploring new ways to work together and accommodate each other. Josh Fogarty, partner at Satsuma, Realtors and Satsuma Property Management is going above and beyond to provide compassion and relief to his tenants and clients.
We spoke to Josh about his recent journey navigating these new norms, while running a successful property management business during a national pandemic.
Josh, give us some background on your property management experience.
I started buying and managing properties in 2010 in Baton Rouge and New Orleans while still a college student at LSU. For a long time, I only managed properties that I owned myself. Over the last five or six years, I’ve worked on managing properties for people in my direct network—friends, family members, and colleagues—but officially started Satsuma Property Management and began offering services to the general public as well.
Over the entire course of your history working in property management, have you ever evicted anybody?
I’ve never had a single eviction in properties that I own, nor any properties that I manage for others. That’s a personal success in my opinion.
Why do you think that is?
I spend a lot of time on the front end with tenant selection. I make sure to spend time face-to-face with potential tenants instead of just assessing them by a credit report and income numbers. I give more credence to what people have to say and people’s character than just their numbers on a piece of paper. I try to treat people as people, instead of just a tenant with a completely objective relationship.
Evicting someone is not good for any of the parties involved, whether it’s the tenant, landlord, or property manager. It costs time and money to do so, and the majority of people that are getting evicted are most likely going to be put into a situation that is considerably worse than their current one. So, it’s a lose-lose situation for everybody.
Have you had any situations during COVID that required a more unique solution than what’s typically written in a lease?
Definitely. I’ve never really experienced—and I’m sure no one else has really experienced—anything quite like this. Maybe Hurricane Katrina provided a similar situation with regards to its catastrophic nature, but not on the same magnitude as this. I’ve had tenants who were unable to pay rent on time, some who were able to pay partial rent, and some whose situation did not change.
With every single tenant, I’ve found a way to work with them on a case-by-case basis. From the very beginning of the pandemic, I made sure to communicate with tenants and let them know that I was concerned about their health and safety first and foremost to ensure we were all on the same page. I’ve had several tenants reach out, thanking me for working with them through this difficult time. It’s unfortunate to learn that they’ve had previous experiences with other landlords who were unwilling to be more flexible and understanding.
The reality is that this has been difficult for the majority of us, and I wanted to make sure that the people I worked with knew to take care of themselves first, instead of just worrying about paying rent as a primary consideration.
As a property manager, one of your primary concerns is that of your client. How have you dealt with clients who have not been thrilled that their tenants are in difficult situations and may be unable to pay rent?
A few different ways. Just like I spend a lot of time on the front-end deciding whether or not a tenant is the right fit for a certain property, I also spend a lot of time deciding whether or not a client is a good fit. Let me be clear: We don’t work with just anyone. We try and work with people who have the same philosophical ideas about how to treat people.
Maximizing profit is not the only consideration for us. Our ultimate goal is working hand-in-hand with all parties, ensuring that people are being treated fairly. Oftentimes, property owners are in financial situations that allow them to be more lenient than the tenants that rent from them. We’ve been fortunate that everyone has banded and worked together throughout the pandemic crisis.
As we know, real estate doesn’t stop just because of the pandemic. Leases are still starting and ending, and people are still purchasing and selling investment properties. How are you working with tenants and landlords to ensure that everyone feels safe and comfortable while they’re moving in and out?
Everything starts with a personal conversation. To be specific, we make sure to reach out to tenants who are currently occupying those properties, or set up a meeting with future, potential tenants, property buyers, or property sellers.
We continue operating within the guidelines that are given by the CDC and the government, but respect everyone’s personal comfort level. Some examples of what we’re doing include limiting showings to only a couple of time slots per week, requiring that people looking at properties stay in their own groups—or do viewings at different times—and wear masks while they’re in the properties.
I’ve also done many video call showings of vacant units that are completely absent of person-to-person contact. These methods help me not only show the property in real-time, but also allow me to answer certain questions immediately, which helps add a more personal touch when compared to online listings or linked video tours.
Can the same be said for repair and maintenance requests? How would that kind of situation be handled, and do you think that sort of process is going to evolve and be less physical and more virtual?
In general, I think people have become more laissez-faire about little things that are not causing major problems and can be quickly fixed later. When there are serious emergencies and repairs that need to be addressed right away, we work with both the tenants and third-parties who are doing the labor, installation, or repairs, making sure that we’re not putting people in harm’s way on either side.
What trends are you seeing in the multi-family rental market right now? Do you think rent prices are going to go down, and will there be more opportunities for investors?
I think there are several things that are going on, all working in different ways. When focusing on rent prices, availability, and supply-and-demand throughout the first six to eight weeks of the pandemic, things were very slow. People were not committing to renting apartments, and there was a lot of downward pressure.
There was a big lull as a result of people not being forced to move, landlords not eager to move people around, and many people outlasting their leases. Once the government started considering re-opening strategies, the market really jumped back up, which was exciting to see.
Personally, I haven’t noticed any real decline in rents. I believe there will be more opportunities for over-leveraged investors to unload extra properties that may not be top of the market.
Josh owns and manages a number of rentals and is an advocate for fair housing measures. Josh continues to grow professionally within the real estate industry, and hopes to encourage both locals and transplants to do their part in healing New Orleans and revitalizing its strong culture and history.
If you’re looking to rent, buy or sell, Josh can be reached at firstname.lastname@example.org. Browse his and other Satsuma, Realtors listings at wesellnola.com.