E-Renter News

For the eighth straight month, the Case-Shiller Housing Index rose a seasonally-adjusted 0.3% in January 2010—slightly better than expected. The index is published every month by Standard and Poors and reports on housing prices, using data from across the United States. This month’s report is for the three months ending January 2010, which rose compared to the three months ending in December, 2009.

Price gains were mostly in the California markets of Los Angeles and San Diego, which have seen first-time home buyers and real estate investors competing on foreclosures.

Some analysts saw the news as a mix of good and bad, as a softening of prices indicates declines ahead. The fall of 2009 saw sales numbers rising, when the Federal first time buyers $8000 tax credit was scheduled to end in November. The extension of the deadline to April 30 didn’t appear to help, as momentum was lost and sales dropped. Experts predict the Case-Shiller Index will fall in the next few months.

For January, though, Los Angeles home prices were saw the biggest gains, up 1.7% while at the other end of the seesaw, Chicago home prices dropped 0.8%. For the decade of January 2000 – January 2010, the three top cities are Los Angeles, New York and Washington, DC, where home prices rose over 70% on average. The worst city for home prices in the decade was Detroit, at 28% lower in January 2010 than in January 2000.

Not all indices are equal, however. While Case-Shiller’s data shows a slight increase in home prices, two others indicate drops in January. The First American CoreLogic Home Price Index, was down 1.9% and the Federal Housing Finance Agency dropped 0.6% in January and 2% in December.

The end of the first time home buyer’s tax credit could open up the market for real estate investors, since a big chunk of buyers will likely remove themselves from the market.

“Put it in writing.” That’s the advice we hear most from landlords and property managers—and from lawyers!  Certainly, spelling everything out in black and white is one way to clarify responsibilities, rules, and expectations for both sides of a relationship. Communicating clearly to your tenants from the start of your landlord/tenant relationship can help make things go more smoothly.

A Tenant Rights and Responsibilities Document should be part of a standard information packet provided to new tenants when they sign your lease or rental agreement.

Tenant Rights might include:

• Tenancy: where the tenant is allowed to live in your rental unit until they give proper notice of intent to move out, or until you move to evict for breaking the terms and conditions of the lease.

• Privacy: where you agree not to enter the tenant’s unit unless proper notice has been given, or in cases of emergency, or if the tenant agrees to allow you to enter the unit.

• Implied Warranty of Habitability: The rental unit will be kept in proper working order and all health and safety requirements will be met.

Tenant Responsibilities include:

• Paying rent on time
• Keeping the rental unit clean
• Repairing or reimbursing the landlord for damage to the unit caused by the tenant or guests
• Reporting improperly working systems, like plumbing leaks
• Following the rules established by the property owner regarding parking, noise, and use of common areas

Landlord Responsibilities include:

• Keeping vital services flowing, such as heat, electricity, and water, unless temporary shut-offs are required for repairs
• Following all federal, state, and local laws governing landlord/tenant contracts, including proper notice for eviction and lease renewal
• Not retaliating against a non-paying tenant by changing locks or damaging personal property

This simple document might be redundant, since some of these points might be made in your lease agreement, but it doesn’t hurt to reiterate such important information!

Do you know why you buy a particular brand of toothpaste? Or the car that you drive? How about the shoes you’re wearing right now? What led you to purchase the things that are on you and around you?

You may not know why you buy the things you do, but whoever’s selling them certainly does. They have targeted you for their advertising, which, in turn, might have convinced you to buy Brand C over Brands A and B.

It’s the same for attracting the best possible tenants for your rental properties. You have to know how to target them first. How?

1. Analyze your rental units
2. Figure out who wants what you have to offer
3. Communicate directly with the folks who want what you have

Analyzing your rental property:

• Does the rent fall into a price range that appeals to your target tenant? Are you charging too much and eliminating a section of your target market? Or are you charging too little, which makes your rental seem less appealing?
• Is it located in a neighborhood that people with children love? Or is it right in the middle of the urban area where young singles like to hang out?
• Do you offer fitness facilities on site? Or, if your apartment complex is close to a neighborhood gym, have you worked out a discount with the owner for all of your tenants?
• Where do your tenants park? Do you offer covered off-street parking? Or is your place better suited to mass-transit users, bicyclists and walkers?
• Perks: What upgrades does your rental unit offer? Fireplaces, gas stove and swimming pool? Hardwood floors, big bright windows, and granite countertops?
• How much storage do you offer your tenants? Do they have their own storage area? Are their plenty of closets or built-in bookshelves?
• How accessible are your rental units? Do you cater to older tenants, with easy-to-navigate sidewalks, safety bars in bathrooms and ramps? Or is your third-floor-walkup more suited to an ambulatory tenant? (Remember you cannot discriminate against anyone due to disabilities.)

After you analyze your rental properties best features, prepare a well-written advertisement and put it where your targeted tenant will see it. Younger hipsters find everything the need online and at their neighborhood coffee shop. So, if you’re targeting them, advertise in those places. People who want a big yard for their kids and a neighborhood close to schools probably frequent the library and park down the street. Put up fliers where they’ll be sure to see them.

Targeting your ideal tenants begins with knowing what they want, then telling them how well your rental property fulfills all their needs.

Most landlords we know want to do the right thing by their tenants, including keeping rental properties in good shape. But there are bad apples in every business, from restaurants to regulatory agencies—and rental property businesses. “Slum lords” didn’t get that moniker by taking great care of their rental units!

Whether or not a landlord wants to keep their property in good repair, every landlord and rental property owner must follow the laws as established by the federal government, as well as their local, and state laws. One set of laws covers care and maintenance of rental properties.

The law of implied warranty of habitability means that landlords are required to properly maintain and repair their properties to meet all building housing health and safety and habitability codes.

Tenants have the right to a habitable residence from the day they move in until the day they move out—by law. Rental properties must be safe and free from health and injury hazards, like solid walkways, stairways, and railings; intact, non-peeling paint and wall coverings; sufficient ventilation; and properly operating heating and plumbing systems.

In addition to safety, tenants must also be guaranteed a habitable residence. Water must run—but it should also shut off. Doors and windows must lock; flushers must flush, and heaters must heat. Note that nothing in the law implies that tenants must have new carpeting and tile, or crown molding, or working fireplaces. The basics for comfort and protection from the elements—not luxuries—are required. However, if your rental property is advertised and leased with upgrades like a working fireplace, ceiling fans, or built-in swimming pool, all must be kept in proper working order.

Beyond maintaining rental property to keep its value for you as owner, maintaining proper systems and a safe dwelling unit for your tenants is required by law. And it’s the right thing to do!

If you have empty apartments or rental homes, you are either making little profit or even losing money on them. No rental property owner can keep that up for long. So how do you fill vacancies in such a competitive market?

Do your homework. It takes diligence and research to keep up with everything that’s happening in your market—and if you don’t know what’s happening, how can you expect to stay ahead of the competition, fill your empty units, and keep making a profit?

First, research fair market rents. If you haven’t done so in a while, you might find that your rentals are priced above what tenants are willing to pay. It might be painful to lower your rents, but telling yourself it’s a temporary measure should ease it. You can always go up when it’s time to sign the next lease, so don’t let rental units sit empty because you’re charging too much.

Next, put your marketing hat on. In this economy, sharp marketing skills are absolutely vital for every business owner—including rental property owners. Appropriate, consistent, targeted marketing can make all the difference between filling vacancies and staring at your own “For Rent” signs. Study up on social marketing, keep relisting ads on Craigslist.com, and hit the streets to post fliers in neighborhood coffee shops and day care centers, if that’s what it takes to find your best tenants. Do what your competition is not willing to do.

Think about your offer. Do you have what tenants want? Are your rental units clean, bright, attractive, and well-kept? Or do you need to do some tidying up and add some new landscaping? Tenants want to live in nice places, so make sure your properties fit that description. Do you allow tenants to keep pets? If not, you might want to rethink that policy. Pets are more important to people than ever before, and if you prohibit them, you are eliminating a big section of your market. Are you welcoming and respectful to potential tenants? Maybe your approach, presentation, and interactive skills need some freshening. Take an honest look at yourself. And make sure you put a smile on your face when you’re talking to potential tenants on the phone—and of course, when you meet them for the first time.

Doing your homework in these areas will at least help you stay on top of your local market. And it could even fill some empty rental units for you!

Effect on Rental Market Could be Positive

Mortgage rates are still at historic lows. For borrowers with strong credit, 30-year fixed rates are around 5%, which is as low as it’s been in 60 years. This is due to the Federal Reserve’s activity in mortgage securities, which is scheduled to end March 31.

While analysts think that any immediate effect of this action will be minimal, interest rates are still expected to rise over the remainder of 2010. How much depends on the economic recovery and other domestic and global factors.

On one end, financial analysts predict mortgage rates will stop rising at around the 5.25% mark by year’s end. However, others, like Moody’s and Barclays Capital, think interest rates will top out at 5.7% and 6%, respectively. The higher figure is based partly on heavy US government borrowing and a stronger economy.

Combined with the end of the first-time borrower’s tax credit, the threat of rising interest rates could spur home buyers to make every attempt to put a contract on a house in the next six weeks. The tax credit is due to expire at the end of April, so many house hunters feel a real sense of urgency.

Rising rates have significant affects on borrowers, limiting the price of homes they qualify for, or pricing many out of the market altogether. That news could be good for rental property owners and managers!

There’s a new apartment-searching website out there—and it’s called RentJungle.com. If you’re familiar with Zillow.com, the home-value and price comparison website, you’ll recognize some of the same features in RentJungle.

RentJungle is where an apartment or rental home seeker can go to find a bunch of listings in one place. It’s like a Google search just for apartments and homes to rent. In fact, it’s linked up with Google Maps, so when an address or zip code is entered in the search window, a Google map pops up with markers showing each location.

RentJungle searches Craigslist.com, Apartments.com, ApartmentSearch.com, and more. Users can get the basics on each listing simply by clicking on the marker. If more information is desired, you can have it in an instant. If you want to take a look at the street outside the building, the map will show you that.

And RentJungle takes apartment searching into the social networking realm, by offering a Facebook application as well. Users can share their searches with their Facebook friends—or potential roommates. More and more people are using Facebook as their life portal, it seems, and find it far easier to share information and message friends and family solely through Facebook. If a group of friends are apartment hunting together, RentJungle’s Facebook application makes it easier to check out possibilities—without leaving your Facebook page or your home.

Finally, RentJungle pulls together and presents helpful resources like rent negotiation, renter’s insurance, moving companies, and market trends. It will be interesting to watch RentJungle and see how it grows. Check it out and see if your rental units are listed!

Next time you’re processing a new tenant application, do yourself and your other tenants a big favor—look twice at the photo and name on the ID you’ve been presented. It could be fake--and the person presenting it could have an extremely sketchy past to hide.

Not all applicants are who they claim to be. Some people have plenty of reasons to falsify identification—mostly to hide legal issues or criminal past. Underage kids who aren’t old enough to sign a lease might be holding a fake ID. Even poor credit records or prior evictions will lead folks to present a phony ID.

But the majority of fake IDs are used by those with a criminal history to hide. And they’re easy to obtain. From large-scale, global operations to small-time operators right in your neighborhood, graphics software has made it a lot easier to produce official-looking driver’s licenses and Social Security cards.

How is a landlord supposed to spot the phony documents? We’re not suggesting you become an expert. All it takes to make sure you’re renting to the actual person on the tenant application is a thorough tenant screening. Did you know professional screening can validate your potential tenant’s name, address, and Social Security Number?

Now you do. Don't take chances. Check your applicant’s photo ID carefully, but do the smart thing and run a tenant background screening, too.

Now that the snow is finally melting on the east coast, and weather patterns are back to normal elsewhere, it’s time to take a look at your rental properties to see how the winter winds and cold treated them.

Here are a few tips that landlords and property managers can use when making the rounds of rental buildings.

Walking around the exterior of your apartment building or single family home is important. Snow can cover problems, like foundation issues, drainage problems, and shifting in sidewalks and driveways.

Check shrubs and trees for broken branches. You don’t want a tree limb falling on anyone—like a tenant, a child, or the postal delivery person. While you’re trimming back damaged areas, check that shrubs won’t cover windows for safety. And keep them from growing too closely to foundations, where they can cause damage.

Wooden posts and railings can become snow-soaked and weaken over time. Make sure that any barriers are strong and safe for your tenants.

Make sure that your landlord tool box contains batteries for smoke and carbon monoxide detectors. Spring is the perfect time to replace them in all your units. If any of your outside light fixtures are on timers, be sure to adjust them for daylight savings time.

Inside, you’ll want to check plumbing lines for leaks. Ask tenants if they’ve observed any leaking pipes. Replace furnace filters and open vents to keep air circulating in basements or crawlspaces. If you’re in a warm climate, spring is a great time to have your air conditioning unit serviced—before your tenants start using it.

And while you’re walking around your property, engage your tenants. Ask them what they need, and how they enjoy living there. It helps to know what people want before they decide to move away. Now is no time to lose good tenants. And to entice yours to stay, offer to purchase seeds for flowers or vegetables, if your tenants are interested in gardening this spring. It’s good for everyone!

Depending on where you live and own rental property, you might be thinking the rental market may never rise from its current valley of lower rents, higher inventories, and less-qualified tenants.

But fear not—the tide may be turning, finally. Here’s why:

• The economy is improving. Job losses have stabilized and unemployment is steady. Earnings are up at several major U.S. companies, and retailers have seen increased sales. Even oil prices are rising again—another positive indicator.
• Demand will increase. The 20 – to – 34 age group, made up largely of renters, will grow by 5 million over the next decade, according to reports from real estate investment firms.
• Sharing housing will decrease. When the job market improves, renters will move back out of mom and dad’s house or away from sharing apartments with friends.
• Landlord concessions are drying up: More desirable neighborhoods in New York City, which has been experiencing a renter’s market, are seeing an end to landlord concessions like free rent and WIFI. Where property owners were paying broker’s fees to entice new tenants, the tenants are again paying the fees. And two months’ free rent has become two weeks’ free rent.
• Developers are getting back into the development business in more stable markets (as in, not Las Vegas, Phoenix, and parts of California). Real Estate Investment Trusts (REITs) are expected to start $1 billion in new multifamily projects, a huge increase over 2009. It seems they are betting that by the time the projects are completed in 2011 and 2012, the recovery and demand will match new supply.

While all these signs point to long-term, not near-term, improvements, they might add up to a reason for cautious optimism for stressed-out landlords and property managers!