Archive for the ‘Rental Property Management’ Category

D.C. rental market may slow soon

March 7th, 2012

The nation’s capital is also its third-largest apartment market, with 533,000 units. Only New York and Los Angeles have more.

The D.C. metro area has experienced a period of strong apartment and rental activity recently, with low vacancies allowing landlords and rental managers to raise prices while remaining competitive.

This trend may be slowing, according to Multifamily Executive. There are some indications that the federal government may reduce staff in the city, which is one major reason. Another is that developers are bringing new housing online to meet the demand which has driven the improvements, increasing the amount of available living space.

Experts told the source that the recent gains are unlikely to disappear, but owners and property management companies may find themselves less able to raise rents as they have been.

If private employers step into the employment gap that government policy changes are expected to create, then the change will be smaller and may have less of an impact.

Rental housing leads market improvements

February 28th, 2012

Confidence in the single-family home construction market increased for the fifth consecutive month, according to the National Association of Home Builders (NAHB), reaching its highest level in four years.

Some analysts believe this is a telling sign for 2012, with Barclay’s Capital suggesting spring will be a relatively strong selling season. Capital Economics, on the other hand, sees it as a precursor to a burgeoning turnaround in real estate, although they noted it would take time for the market to stabilize.

More favorable indications came out for rental housing, however. Capital Economics’ analysts indicated the sector could see as many as 850,000 new households over the course of the next few years, keeping demand high.

Such an influx could support high rents at a time when interest is already causing low vacancy rates and encouraging new construction. Efforts to convert foreclosed homes to rental properties may help meet this demand, although owners may need skilled property management services in order to run their housing well.

Rental properties sold well as 2011 ended

February 20th, 2012

Real estate data firm Real Capital Analytics recently reported apartment sales were up substantially, reaching $16.6 billion during the last quarter of 2011 to make it the best quarter the market has experienced since 2007.

That level was achieved through a 16 percent quarterly increase, but represents 24 percent growth on an annual basis. Rental managers may be encouraged by this level of demand. While apartments do not necessarily reflect all rentals, those striving to appeal to the modern renter may be interested to learn that garden-sector apartments were particularly strong in 2011.

While they were less strong at the end of the year, garden apartments sales were 47 percent higher than in 2010 and Multifamily Executive notes the momentum is expected to be maintained into this year. This may be a sign of a shift in renter preferences that property owners and rental management personnel can position themselves to meet.

Some submarkets were especially strong, MFE notes. Denver sales volume went up 170 percent and Chicago experienced 140 percent growth, while the Virginia suburbs attracted much attention and saw sales rise 98 percent.

How to Reject Tenants

February 19th, 2012

Whatever criteria a property management company or landlord uses to choose between or reject tenants, they must be applied consistently to avoid liability.

Federal and state laws protect against discrimination, and it is wise to review a state’s requirements to avoid later legal problems. Standardized lease documents and practices can avoid many potential difficulties, although any documentation should be examined by a legal professional to ensure it does not violate government requirements.

When rejecting a tenant, it is best to do so in writing. Keep a record of the communication and any others before or after, for corroboration in case of a complaint. The credit reporting law requires that applicants be informed if they were rejected because of their credit report, and provide the name, address and phone number of the credit reporting agency.

The Fair Housing Act forbids discrimination against children, elderly or disabled residents, pregnant women or against anyone based on their race, color, national origin, sex, religion or family status. Outside of those requirements, however, landlords can deny applicants for any reasonable cause, unless state laws say otherwise.
These factors are what make standardization so important. A record of consistent reasoning and documentation can confirm that a rental manager or owner is following procedure, not making exceptions to benefit or harm specific applicants.

NMHC quarterly survey shows positive development for rental industry

February 18th, 2012

The National Multi Housing Council’s latest quarterly survey revealed improvement in all measured areas of the multifamily industry, the seventh quarter that has been true out of the last eight.

All four indices went up, according to the organization. The Debt Financing Index reached 74 from a previous level of 70, with half of respondents saying now is a good time to borrow, compared to 22 percent a year ago. Meanwhile, the Market tightness Index grew to 60, while the Sales Volume and Equity Financing Indices finished the quarter at readings of 50 and 60, respectively.

All grew except the sales volume index, which was previously at 54. This was the lowest it has been since July 2009, but marks the tenth consecutive quarter it has been measured at or above 50.

“In the face of an unprecedented virtual shutdown of development, the apartment market continues its strong recovery as developers play catch-up to the growing demand for rental housing,” said NMHC chief economist Mark Obrinsky.

He predicted the pace of transactions is expected to slow in 2012, but also noted long-term demographic shifts seem to favor rental housing. These trends could be beneficial for all investors and rental managers not just those working with apartments, particularly with the currently limited supply of housing and affordability issues of homeownership.

What to Look for in a Tenant?s Financial History

February 17th, 2012

When examining a prospective tenant’s financial history, there are a number of signs a rental manager can look for to separate good renters from those better avoided.

It is important to apply any financial criteria for renters consistently, regardless of what they are, in order to avoid discrimination. Otherwise the property owner or property management company may be sued under the Fair Housing Act and other laws.

One real estate investor noted that common criteria include a verifiable income at least three-times the monthly rent amount, to ensure that rent will be regularly paid on time. A credit score limit might be set, or tenants with past evictions can be excluded.

Credit and timing
When examining a credit report, it is important to differentiate between overall activity and recent activity. A stable credit score could be a legacy of better times while a tenant is financially strapped. Alternatively, a slightly low credit score could be the result of a problem years in the past, or trouble with a joint account that is no longer open.

Looking at credit card, automobile, insurance and other regular payments may reveal more useful information about a prospective tenant’s payment habits. A one-time problem, even a serious one such as a foreclosure or eviction, may not reflect the individual’s ongoing circumstances and reliability.

Security Deposit Basics

February 17th, 2012

The amount of the security deposit should be specified in a tenant’s lease agreement, to ensure that both parties know it clearly. Rental managers need to ensure that the circumstances in which the deposit will be returned to the tenant are also clear.

Security deposit amount and collection
State laws may limit the amount of a security deposit. For example, the Landlord Protection Agency states that Michigan law limits it to 1.5 times the monthly rent.

Some states also have laws may describing what the landlord must do with the deposit. Landlords may be required to deposit it with a bank, for example, in order to ensure that tenants who meet lease requirements can receive their refund.

Returning or withholding the deposit
This may also vary from state to state. In Michigan, the state law allows the landlord to keep the deposit only if the tenant owes unpaid rent or utility bills, or in cases where the property was damaged beyond reasonable wear and tear.

To avoid disputes over the property’s condition, an inventory checklist can be used when a tenant moves in and departs. Both parties can verify the initial list and keep records. Any discrepancies upon moving out are therefore documented.

Defining security deposits
In some states, any refundable up-front fees count as part of the security deposit, regardless of what they are called in the lease. In others, the lease may be used to define the security deposit, so keep language clear and specific.

Job growth may boost rental demand in Vegas

February 12th, 2012

Las Vegas experienced job growth in the third quarter of 2011, according to to Real Capital Analytics, with unemployment dropping to 14.2 percent from 15.5 percent a year earlier.

The firm’s data indicates the metro area experienced growth mainly in the service sector, Multi-Housing News reports. Increased employment is expected to fuel a resurgence in development that slowed or halted in recent years, according to the source.

Housing prices continue to fall and single-family occupancy rates are at about 50 percent in the area, according to Colliers International. This situation may create an opportunity for investors to profitably own single-family homes, now that housing demand appears set to increase.

In order to make the most of this opportunity, retaining rental property services may be a wise decision. With high demand and limited supply pushing rents for multifamily units higher in some parts of the metro area and significant job growth expected, the source notes, other factors such as an increase in residential electric meter count support the impression of positive development.

D.C. looking at strong rents, investment

February 12th, 2012

According to The Washington Post, analysts expect the rental housing market in the nation’s capital to have a stable year, with some additional rent growth driven by high demand and limited supply.

Rental managers may find limits on job growth and wage increases holding back rents, according to analysts looking at the national picture for the coming year. For the most part, however, the metro area is expected to do well.

The current market and future projections are firm enough that the city is seeing major interest from investors, the source reports. This includes both local capital and real estate investment trusts. The level of interest and declining cap rates has caused investment sale prices to jump, according to the source, reaching 2007 levels.

Some investors are flocking to multifamily for the same reason it was attractive to non-traditional investors in 2011, namely the fact that investment alternatives are performing weakly by comparison.

Class B investments are reportedly doing particularly well. If this year is better than 2011 for rentals, that would mark a trend beginning in 2010, since rental housing land sales increased in terms of both value and potential units from 2010 to 2011.

Young renters flock to Oklahoma

February 11th, 2012

Property managers and rental owners in Oklahoma are seeing more echo boomers and millenials, The Norman Transcript reports, two groups of young adults who are driving rental activity and construction higher.

Millenials, between the ages of 25 and 34, are currently an expanding demographic in the area. According to Advertising-Age, the percentage of millenials increased 12.2 percent between 2000 and 2010, making it the fifth-ranked state in the nation for growth of that demographic.

Given that young adults are traditionally renters and some experts say their arrival is a predictor of economic growth, rental property owners are reportedly looking forward to the future. The older echo boomers fall into the category of young professionals, which one industry broker noted represents a prime demographic for the rental housing sector.

With the population looking unfavorably on homeownership at the moment, these young adults may want to rent houses rather than buy them, creating an opportunity for property owners investing in the area.

This year is expected to see the continuation of 2011 trends, such as increasing rents and occupancy, which made last year a relatively good one for are rental housing stakeholders.