We’re hearing a lot of talk from economic experts recently, and many of them are starting to talk about the likelihood of a recession in the not-too-distant future. If you own, or are considering buying, residential rental property, you may be wondering how a recession might impact you and what changes you might need to make in property management to protect your investment. While the Great Recession that began in late 2007 was a painful blow to most property owners, if another recession does happen at this point, it’s far less likely to cause such massive upheaval in the real estate market. You can take some steps now to reduce your risk as a rental property owner.
Why The Great Recession Was An Exception
In short, bad mortgage practices were a major cause of the Great Recession. People were saddled with mortgages and rates they couldn’t afford, and the vetting process for income verification was sorely lacking. As the job market weakened, homeowners found themselves unable to continue paying those mortgages, and they had little to no equity to fall back on. Lenders and investors who purchased had purchased those loans also failed as an increasing number of homeowners defaulted, and property values plummeted. Since then, the mortgage industry has been more carefully regulated and homeowners, overall, have more equity.
Smart Property Management Practices To Adopt Now
Now is a good time to review and revise your tenant screening criteria. Establishing a fixed set of criteria for judging applications to rent your properties is a critical part of protecting yourself against discrimination claims, and it can also help you keep stable tenancies throughout a potential recession. Consider whether you need to adjust your minimum requirements for income, credit score, or length of employment, and whether it may be a good time to add situations where you may accept tenants with a co-signer, extra deposit, or increased rent.
Professional Property Management In Winter Park
Working with a professional property management firm for your residential rentals in Winter Park and the rest of the Orlando area can help you maintain a steady income, even if another recession does happen. The team at Belmont Management are highly experienced in residential property management, and we’ll work with you to stay legally compliant while protecting your investment and income, now, and in the future. Call or contact us online for a consultation.
Note: Please keep in mind that this is an overview of the important points, but by no means does it constitute a prediction of the economy, nor of the impacts it may have on the residential rental market.