Holding vs Letting Go

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Holding vs Letting Go

Holding vs Letting Go

by Sonya Loera
Apartment News, Nov 2022

During the holidays last year, I wrote about new traditions emerging as we adjusted to living in the midst of a pandemic. Family gatherings were discouraged and everyone struggled to stay connected.

My article (Apartment News Magazine, December 2020) focused on the importance of listening and really hearing what family members had to say. The goal was to learn and acknowledge without necessarily making any decisions, because at that time no one knew what the future would bring.

The past year has been a roller coaster of ups and downs – both in terms of the pandemic and for the rental housing industry. Just as everyone started to think that a level of “normalcy” had been reached, something else happened.

Even today, as restrictions start to ease, an onslaught of enacted and proposed legislation has put in place new forms and procedures that make collecting rents owed even more challenging. The legacy that you so carefully nurtured likely seems a little more precarious. Yet all of your hard work need not have been for nothing.

Perhaps the greatest lesson learned during the past year is that connections, especially among family members and heirs are very, very important. So, this year, the holidays are apt to take on even greater meaning.

That said, so too are the opportunities for seeing that the legacy you envisioned serves an even greater purpose. But first, just as required last year, you need to do some asking, listening and sharing.

All of our lives have changed. Some of us are now working exclusively from home, which creates an entirely new level of defining space, time and priorities. Others are questioning where and how they want their future to evolve.

If you are self-managing some or all of your own units, you too may be struggling with how much additional effort. While some owners have escaped without significant income losses, others have had to cope with Covid-related non-payment of rent and recalcitrant residents. And, there are also rising costs for repairs and shortages of materials and skilled labor that have become common issues for everyone.
These challenges may total up to the question of why continue? What is the purpose?

The reason remains the same – to provide financial security for yourself and the assurance of a better life for your heirs. However, defining what “a better life” means may be a lot different today than it was just a year ago.

Perhaps one of your children is now in the position to take a more active role in managing your rental properties. Having an heir involved and participating is possibly what you envisioned and hoped would ultimately happen.

At the same time, the complexities of rental housing laws and regulations in a post-Covid world require much greater knowledge and expertise. So, using a professional management service may make the best sense for everyone.

Hiring outside help and/or bringing in closer involvement with a family member is apt to mean some loss of control.
The holidays just might be the time to broach this subject, share your thoughts and concerns, and start asking your heirs about their desires and opinions.

Maybe there is an even more important need requiring a significant cash outlay, such as helping to purchase a house or paying for education for a child or grandchild. Now may also be the perfect time to create lasting memories through a multi-generational vacation. 
Even if you have other resources for cash, you need to look at all of the possible scenarios. Include, as well, such considerations as hiring a property manager and other anticipated cost increases.

If you own two or more properties, although the analysis becomes more involved, your options and flexibility are significantly greater. Perhaps there is one property where rents have become harder to collect and the neighborhood is declining. From a purely investment point of view, your IRR is probably in the negative and your cash flow potential may be diminishing.
Most importantly of all is looking at and adjusting your legacy vision. Perhaps letting go just a little may provide the greatest dividends of all.

Sonya Loera
Agent, Manager DRE#01947308