New Rental Property Costs During Pandemic

Performance Property Real Estate Question

Q: Do you think rental properties are still a good investment now during the pandemic? Scott, Nyack, NY

A: The strength of any investment depends on the numbers (ROI etc.) vis-a-vis the investor’s goals. The pandemic has certainly affected rental property, particularly multi-family rentals because tenant behavior has changed as a result of the pandemic. For example, now that more tenants are staying home during the pandemic, many of the costs and expenses generated in rental properties have increased for things like water, electricity and gas, trash removal as well as cleaning & disinfecting common areas used by tenants, like stairwells, elevators and lobbies. In addition, with so many more people working and learning from home, rental properties are facing increased wear-and-tear which increases maintenance costs and capital improvement requirements for landlords. These additional costs coupled with softer rental demand will likely lower the ROI on many rental properties–this doesn’t mean that rental properties are no longer good investments, it just means that investors need to adapt to the new realities of the pandemic when they buy and allocate resources for expenses. Thanks for your question, Scott.

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