Archive for January, 2012
Fundamentals Driving Rental Business Forward
Fundamentals for apartments are improving more quickly than for other property types, according to National Real Estate Investor, displaying the attraction of renting in the current market.
Real estate data firm Reis reports the national apartment vacancy rate fell to 5.6 percent in the third quarter of 2011, down from an 8 percent peak during the first quarter of the year as property managers saw an increase in business. This improvement, and a coinciding rise in rents, are the result of a number of factors.
According to the source, analysts suggest that improvements in employment, financing options from government-sponsored enterprises and household formation may encourage growth in rental business over the next three or four years. Part of this projected demand would arise from “echo boomers” — adults between the ages of 20 and 34.
Limited apartment supply is also a factor, and experts expect it to remain one for some time. Because of this, and the growing preference for renting among Americans, investors may have an opportunity. The pool of renters for single-family homes and other income properties may be expanded as housing preferences develop.
NMHC Responds Favorably to State of the Union
The National Multi-Housing Council (NMHC) responded positively to initiatives mentioned by President Barack Obama in his State of the Union, noting that broader economic improvement will be necessary if the apartment industry is to sustain its growth in 2012.
The organization did note that a major, beneficial step would be the renewal and expansion of expired energy efficiency tax credits that encourage and assist rental managers and property owners who consider upgrading their properties to save on energy costs. Since the benefits of efficiency can be passed on to renters, this could also promote healthy competition in the market and benefit all involved.
The NMHC noted that rental housing properties are being relied on by more Americans than in the past, suggesting that the federal government take care when devising its housing policies to avoid an unbalanced approach that could jeopardize the gains rental owners and stakeholders have made.
The organization also suggested that an ongoing federal backstop paid for by users may be a necessity to provide the rental housing now in demand in the U.S.
Setting Pet Fees
Landlords and property management companies may find it difficult to figure out how to set appropriate pet fees for renters bringing an animal to live with them.
Type of animal
The amount you want to charge may depend on the pet. It is common to charge less for cats than dogs, and to charge more for larger dogs. Pets like turtles, which do not generally affect the property, are commonly ignored.
Rental managers and owners should ensure their policy clearly states what pets are allowed to avoid confusion. It should also be clear that adding pets after moving in could require additional payments.
Rent, fees or deposit?
One way to cover the expense of a pet is to charge a higher rent. Spacing the cost out over time may be easier for tenants to afford, and can increase the profit for the manager in some cases.
The alternative is to charge an up-front fee frequently a pet security deposit. Some states have laws restricting the amount of the total security deposit, so check for that before setting an amount. This deposit would be refunded after the tenant moves out, assuming the property is not damaged by the pet. Non-refundable fees are also used, although these are typically smaller.
Some landlords may combine more than one of these options, charging a higher rent each month and requiring a pet security deposit to cover any damages.
