Everyone still needs a place to live, and that means real estate is “essential.” However, that does not necessarily mean that everything is fine and running smoothly. But you can survive this.
In March, just about everything we found familiar in the United States changed dramatically. In response to the novel coronavirus pandemic, businesses were labeled “essential” or “nonessential.” Literally millions of Americans lost their “nonessential” jobs temporarily, if not permanently. We began to talk about “shutting down” the economy and, eventually, “reopening” it. Through it all, everyone still needs a place to live, and that means real estate is “essential.” However, that does not necessarily mean that everything is fine and running smoothly for real estate professionals. But you can survive this. And just maybe, your business will come out thriving.
At Good Success, as occurred within most small businesses and real estate-related service operations, we struggled to adapt to social distancing, voluntary isolation, semi-voluntary quarantines, and statewide lockdowns. It was not easy, but we soldiered on. Closings still happened. Showings still happened. Loans were still made, and properties were acquired. We even started and finished flips. It all kept going, but in a surreal way that made the entire experience seem (and it continues to seem) like something “out of the looking glass.” And it often felt as if the looking glass might shatter at any moment. It was a hard time in March. And it is a hard time now.
Real Estate has a Responsibility to Avert “The Breakdown”
Here is the good news for every real estate investor: The coronavirus pandemic and resultant economic contraction, however severe, does not have to be the end of your real estate business. In fact, you owe it to yourself, your family, and the communities that depend on you to do the very best you can to keep your business running during this difficult time and, to the best of your ability, keep your business thriving. Fortunately, real estate investors operate in one of the best-suited and most essential industries in existence!
Here are three primary actions every real estate investor must implement as soon as possible whether they implement a full-scale contingency operation or not.
1: Establish clear lines of communication.
Everything is evolving constantly, so you must have effective lines of communication in place with clients, customers, employees, and lenders. Reach out regularly to make sure they know that you are still in business, that you are responding in real time to changes in the industry, and that they will hear from you at regular intervals.
- How you will correspond and how you may be contacted;
- To whom they will be speaking when they reach out; and
- What types of information you will provide or need from them.
1a: Correspond in writing with “key people” in your business.
In addition to sending emails and making phone calls, there are certain people to whom you should send at least one piece of formal, written correspondence during this time. This letter should be on your company letterhead and detail the changes you are making in your business and how they can continue to do business with you. You should also create a PDF of this letter and send it electronically. However, the correspondence should read like a formal business letter rather than a less formal email correspondence. Recipients will likely include your tenants, property managers, and individuals for whom you manage properties or other real estate investing activities.
2: Assess your business operations regularly.
With so many things in flux, you must keep up to date on how the industry is being regulated and how your real estate business should respond. This includes monitoring cashflow to insulate your business from economic swings. If you have employees, it is important to measure job performance in light not only of their remote-working environment but also in terms of new responsibilities, such as home-schooling and remote learning. Staying in touch will help both parties do their best work and support each other.
3: Eliminate unnecessary things.
Pare down operations, establishing a framework for communicating about the process with any employees or clients affected and figuring out how you will bring these operations back online in the future.
You Can Thrive, Not Just Survive
The most important thing to remember during this tough time is simple: You can do this! This is going to be a tough time for everyone, but you do not have to accept your real estate investments or business as a total (or even partial) loss. Approach the coming months with determination, knowing that your experience in real estate will serve you well as you deal with this economy moving forward.
Tom Olson is the founder and president of The Olson Group of real estate companies and the Good Success Mastermind. You can access the latest edition of his new ebook, Contingency Planning for Your Small Business During COVID-19, at his website, www.GoodSuccess.com.