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How Have Real Estate Sponsors Changed Their Behaviors During COVID?

Updated: Mar 7, 2021

Real estate syndicators have a certain way of working. Each one has his or her unique approach to putting their deals together, working with investors, and making sure that their properties are well managed and, most importantly, profitable. Under normal circumstances, their approach does not change. Unfortunately, we’re no longer working under “normal” circumstances. Once COVID struck, sponsors began changing their behavior and adjusting the way they operate.

The behavioral changes are totally understandable, as the COVID pandemic has created numerous challenges that syndicators could never have anticipated. The more syndicators I talk to, the more I’m hearing about how they’re now thinking and operating differently than they did pre-COVID, and that includes our own operation as well. So, here’s a look at how we’re now managing our assets and how we’ve changed our thinking and behaviors in response to the COVID pandemic’s impact on our operation.

Conserving Cash

Conserving cash and building up cash reserves has always been an objective in our day-to-day operation, but now it has become a focal point of our business. Before COVID we were putting our energy into renovating units, pushing income and, as an aside, accumulating reserves. Now, accumulating reserves is a focus, and the reasoning is clear: as a syndicator you want to make sure you have enough cash reserves available when a downturn happens, and it’s of particular importance during COVID. You want to make sure that you have enough cash to pay your lender, your utility bills, payroll, and other ongoing expenses.

If there aren’t sufficient amounts of cash reserve, the syndicator will need to come up with a plan to ensure there’s enough cash to pay expenses. Or, if something unexpected happens, the syndicator will be able to tap into those reserves. One question is, “How much is enough for reserves? Is it half-a-million dollars, a million dollars, or a different amount?” There’s no clear-cut answer, but there needs to be a focus on having enough in reserves to pay expenses. This is not a time to have problems paying your lender.

Creative Ways to Increase Income

There are two ways to increase income – cutting expenses and increasing your income. Pushing expenses down and pushing income up is not easy, and during the pandemic it’s even harder to achieve. It now requires syndicators to think creatively and find unique ways to boost income.

Certainly, there is an opportunity to increase income through unit renovations, as each renovation is an opportunity to increase rents. However, because of COVID the amount of renovation has slowed, and while we used to plan on renovating as many units as we can each month, in some cases syndicators can only renovate a few units at a time due to a reduction in demand for a renovated unit. With many tenants losing their jobs or facing reduced hours and income, the demand for renovation is less. However, there are still new tenants moving in which provides us with an opportunity to generate a rent premium of $200 - $250 or more each month. You just have to approach renovations creatively. While $200 - $250 is a significant source of increased income, the focus should be on other aspects of income that are less important to your tenants.

Maximizing other types of income is now the key to success. When it’s done in small increments, there is less chance of a pushback from tenants. For example, if tenants paid renter’s insurance at $11 each month, increasing it to $14 per month would be relatively easy, as most tenants won’t find that increase significant. However, if you multiply that $3 per month increase by 12 months, and then multiply it by the number of tenants moving in over the course of a year, you have a nice bump in income.

Here’s another example: add on a $5 administrative fee to the monthly rent. You can only apply it to new tenants, as your existing tenants already have a signed lease, but there is turnover in tenants during the year. We sit down with a list of fees and see where we can either add new ones or increase our existing ones. It’s a creative way to push our overall income.

Focus on Delinquencies

When rents aren’t paid or they’re late, they’re considered delinquent. Delinquencies can drag income down significantly, and if the tenants don’t pay and there’s no way to collect that debt, then delinquency turns into bad debt. So, we developed a laser-focused strategy on avoiding delinquencies. One example was our “early bird discounts” that we offered to tenants who paid before the 1st day of the month. In late March, we went to tenants and asked them to pay their April rent early in exchange for a discount of $50 or $75. Many tenants took us up on our offer and paid early.

Being very proactive was the key to avoiding delinquencies. Another example was when stimulus checks were being mailed out. We had staff knock on doors and discuss with the tenants who were in arrears about using their stimulus check to make their rent current. Many tenants did just that, and this really helped prevent delinquencies from spiking. You see, we didn’t sit and wait for tenants to use their stimulus checks to pay rents; we actively asked them to do so.

Other syndicators have offered delinquent tenants the opportunity to make a partial payment, and in exchange for vacating their apartment they forgive the balance owed. This gives syndicators the opportunity to bring in new tenants who are able to pay the apartment’s full rent.

Deciding on Your Strategy to Handle Evictions

In addition to delinquencies, evictions became a key focus for us. With the original eviction moratorium, which expired at the end of August, we couldn’t even start the eviction process. With the new eviction moratorium that is scheduled to run through the end of the year, we are able to start the eviction process and will only stop if the tenant brings in a signed declaration.

Under penalty of perjury, the tenant must sign a declaration stating that they lost their job due to COVID, among other things. The fact is, we’re more willing to work with tenants than evict them. Now, if they don’t answer their door or phone, we are able to start the eviction process. Tenants have to communicate with us, because if they aren’t willing to discuss their problems, they probably aren’t going to be willing to pay their rent.

Deciding what to do with evictions is a tough choice. Each sponsor is trying to develop their own eviction strategy, so they can be comfortable with their decision to evict if that’s what is required. With the first eviction moratorium, many tenants were simply using COVID as an excuse to not pay their rent, and there was little we could do. We don’t want to evict tenants who are really struggling, but they must communicate with us and sign the new eviction moratorium’s declaration.

Communicating More Frequently with Investors

There are some syndicators who choose not to communicate with their investors, and there are some investors who really don’t want to receive ongoing information about what was happening at the property. While some sponsors were silent, some were over-communicating with their investors. To me, communication is the key and I tend to over-communicate with our investors.

By communicating with investors and being upfront, you have a good chance of reducing your investors’ anxiety. Some syndicators told their investors that “Hey, we’re trying to figure it out. We’ll let you know if something changes.” We, and other syndicators, like to let investors know what’s happening, share occupancies, collections, the number of tenants who don’t pay and other metrics that would be valuable to them. In that sense, we over-communicate, but I am fine with that. Communication is really important and being transparent is always better than being silent.


Many syndicators have changed their behavior due to the COVID pandemic. It’s no longer “business as usual,” because we’re working in unusual times. Some of the changes include a stronger focus on conserving cash and building reserves so that money is available to pay lenders, as well as ongoing expenses.

Finding creative ways to increase income is another important change. Maximizing other types of income like boosting renter’s insurance premiums or adding a small administrative fee will prevent tenant pushback if done in amounts that don’t create hardships. An increase of $3 per month, for example, on renter’s insurance generally won’t bother a tenant, but when you multiply that amount by 12 months and then multiply it by the number of new tenants moving in each year, you’ll find that the amount adds up quickly.

A stronger focus on preventing delinquencies is another change that many syndicators have made. Developing creative strategies to avoid delinquencies is now critical. Offering discounts for paying rent early or forgiving a portion of delinquent rent in exchange for the tenant vacating their apartment are examples of what has worked for us. In addition to being proactive with delinquencies, a stronger focus on what to do with evictions is now very important. The new eviction moratorium provides an opportunity to start the eviction process but, trying to work with tenants, instead of evicting them is a better approach. If the tenant is not willing to discuss the problem, they’re probably not willing to pay their rent.

Finally, communicate with investors to keep them appraised of what is happening at the property they’re involved with. Sharing information on vacancy rates, collections, and other metrics that are important to investors is important. It’s always better to communicate and be transparent than to be silent.

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About the Author

Ellie is the founder of Blue Lake Capital, a real estate company specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

Ellie is the host of REady2Scale , a podcast that highlights honest, insightful, and thought-provoking discussions on the multiple approaches for successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital at and learn more about Ellie at


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