HOW REMOTE WORKING WILL IMPACT YOUR BOTTOM LINE AS A LANDLORD
HOW RENTAL PROPERTY USE HAS CHANGED SINCE COVID
It obviously goes without saying, but…a lot has changed dramatically over the last 2 or 3 years. The way our residential rental properties are used has not escaped the revision. The big shift to remote work that came with Covid is more or less here to stay as employers and employees alike see significant benefits. While companies can relish in the fact there’s less pressure for them to rent thousands of square feet of office space, those of us who own apartments and residential spaces need to adjust our expectations to meet this new reality.
ADDED EXPENSES
As more and more people have become accustomed to working from home, the reality is that people working in sweatpants with a pet dog at their feet is poised to become the norm. In a recent survey, 68% of Americans said they’d prefer to work remotely. As we’ve already seen, people at home means utility usage will increase. More dishwashing, more handwashing, more toilet use, more showering means higher water and sewer bills for you, the property owner. More traffic at home means higher common electric bills and energy bills if those aren’t all paid by tenants.
In addition to direct increases in costs, wear and tear is going to increase dramatically. More use of faucets, more turning of door handles, more pulling on stair railings. With tenants home more often your heating and plumbing infrastructure will get more use and will need replacement sooner than you’d prefer. Everything is getting more touches, maybe even twice as much. If a fridge is being used twice as much, which seems like a conservative estimate, you might only get 7 years out of it when you were expecting 14.
Recent changes in our lives could also mean more guests over than in the past. With people being conditioned to avoid public areas but still craving social interaction, there may be more people in your apartment than was typical. That will add to both the utility usage and wear and tear elements. Speaking of social interaction and wear and tear, we saw pet ownership rise over the pandemic. Pets are lovely for many, but for a landlord, they’re destructive and costly.
[ Learn More: Remote Work Is Here To Stay, And Will Increase in 2023 ]
WHAT WE CAN DO
Step one is greater awareness. The better you understand this reality, the better you can plan for and adjust to it. Going forward, when you present a vacant unit to a prospective tenant be sure to consider how these added costs will play into the rent amount you’re seeking. If your water and sewer bills are doubling some months, you need to be cognizant of this and factor it into your pricing. You need to provide rental prices that make sense for you and your expenses. You’re likely aware that rental prices have soared in recent years as well. Nexus does not advise raising rents just to keep up with market pricing, but building these added costs into your pricing strategy and being able to explain that to prospective tenants could go a long way. Just realize that with increased rent, come increased expectations. Tenants will fully expect the condition of the property to match that rental price. Find a happy medium that works for you and for tenants in an effort to build a long term relationship while responsibly taking care of your bottom line.
[ Learn More: A CHEAP, EASY, AND UNAPPRECIATED WAY TO ADD VALUE FOR YOUR TENANTS ]
IN SUMMARY:
There are more people who are going to be working from home than ever. Because of this, rental properties are going to get more use and become more expensive for landlords. Employees prefer this setup and more and more employers are jumping on board so the trend is likely to continue. As rental property owners, we need to be aware of this so we can adjust where possible. Keep these growing expenses in mind when calculating your expected revenues and keep closer tabs of your utility costs because patterns are being rewritten.
As always, reach out to our team if you have any questions or want to learn more. Our New England teams operate out of four offices in the region and Nexus offers franchise opportunities nationwide.
NEXUS PROPERTY MANAGEMENT® FRANCHISE OPPORTUNITIES AVAILABLE
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Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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