E-Renter News

Despite the common idea that owning a home is the American dream, it’s turned out to be a nightmare for millions of homeowners. But some people have always felt it’s better to rent than buy, and financial advice websites and television shows are echoing that alternative.

Moneywatch.com recently reported on why and where people should rent, rather than buy a home. A few examples of why they should rent:

• They are either unemployed or think they might be soon;
• Their credit has been hurt by the economic downturn, and they’re not likely to get a favorable mortgage;
• They can’t afford the extra expenses of home ownership, like property maintenance, emergency repairs, and property taxes;
• They aren’t ready for the responsibilities of home ownership;
• They are not planning on staying in one geographic location;
• They're in a state of flux with career, partner, children, or finances;
• It’s cheaper to rent than to buy.

According to Moneywatch.com, and based on a formula developed by Rent.com, here are the top five cities where it’s better to rent than to buy:

1. San Francisco: it can cost twice as much to own as to rent in the Bay City.
2. New York City: It's notoriously expensive to live anywhere in NYC, but rents are stabilizing.
3. Honolulu: Prices for a 3 BR/2 BA home in a sample gated community are around $540,000. Renting is a better deal at $1,875/month.
4. Tucson: Because Tucson’s housing boom led to overbuilding, new homes for rent are plentiful. More supply than demand means bargains for renters: as little as $740--$1,270 per month for a single family home.
5. Los Angeles: From foreclosures on $790,000 Beverly Hills condos to lower-level 3 BR/2BA homes at $300,000, the housing bust hit the area hard. Renting in the city can cost as little as $1,000, while near the beach might be as much as $6,700. Prices are everywhere in between, and depend completely on the neighborhood.

This is good news for landlords; as it becomes more acceptable to be “just” a renter, rather than a homeowner, fewer people will feel the pressure to own and will do what you’re hoping: call you to lease your vacant rental property!

RentBits.com recently conducted a survey of over 1,000 renters. The results show few surprises, but it’s good to know what your tenants—and potential tenants expect!

First, an astounding 72% of renters start searching for their new rental home or apartment online. If you’re not advertising with the online rental search engines, Craigslist.com, and your local news site’s online classifieds, you’re probably missing the majority of your market. And do advertise on as many as you can. 93% of searchers look at 2 sites, and 25% search on more than 10 sites.

And not only do they start the search through Google or Bing or Yahoo’s search engines, rather than going straight to the rental site or Craigslist, they are using specific keyword phrases. For example, a typical rental housing search will begin with the person entering “St. Louis apartment pets $650.” So make sure your ad headline includes what people are searching for. Don’t use “For Rent” or “Apartment For Rent” as your headline.

Price and location continue to be the most important factors to potential tenants. Then they look for photos, lease terms, deposit amount, whether pets are allowed, and if there is a washer and dryer included. Be sure to include plenty of photos of your rental unit—especially the bathrooms, kitchen, and closets. Multiple photos keep people on the site longer and get more attention. They also get more click-throughs, where instead of leaving the site, the user takes action, like asking for more information.

Be responsive—potential tenants expect a response to their inquiry—whether made by telephone or online—within 24 hours.

Houses are more in demand than apartments, according to 83% of respondents. It could be because of the many foreclosed homeowners who are back in the rental market. With more apartment inventory than ever, that’s not the best news for apartment property owners and managers!

Landlords pre-screen tenants to know whether or not they have prior criminal convictions, evictions, and poor credit records. Smart landlords take precautions to protect themselves from liability to third parties due to tenant behavior.

But in Georgia, a recent court decision stated that a landlord was not responsible for his tenant’s alleged drug dealing, and a small-claims court suit against him was dismissed.

The plaintiff, Lori Davis, accused landlord John Weigle, Jr. of renting a property in her neighborhood as a “known neighborhood drug house.” A judge in Richmond County, GA ruled that she failed to prove that the landlord owes her $5,000 due to his management of the rental property. He says he had no knowledge of his tenant dealing drugs.

Davis is described as an activist, pushing for a new city law to hold property owners responsible for Chronic Nuisance Properties. Current state law in Georgia says that landlords are not responsible to third parties for their tenants’ behavior—so she was ruled against.

Chambersburg, Pennsylvania’s mayor, Pet Lagiovane, is proposing an ordinance that will hold landlords responsible for tenant behavior. He says he fields telephone calls from residents who are forced to put up with problems from unruly tenants. The mayor maintains that landlords have a responsibility to the neighborhood, while landlords say they are not parents, they are business owners. A group of landlords banded together to oppose the ordinance, saying that the tenants—not the landlords—should suffer consequences when they break the law.

In York, PA, a landlord/tenant ordinance assigns points to violations like noise, disorderly conduct and domestic disputes. If a property earns a set number of points in a certain period of time, the city can shut down the property—and a landlord’s lack of knowledge is not considered a proper defense. The landlord group says the point system should be against individual tenants, not a property.

Does state law trump a local ordinance? It depends on the state and on the ordinance. As a landlord, you should know what your state law says about landlord responsibility concerning tenant behavior.

Stuart, a landlord we know, starts his search for new tenants in the same way every time he’s faced with a vacant rental unit. You might think that means placing an ad on Craigslist.com, or uploading photos to RentJungle.com. And of course, he puts a “For Rent” sign in the yard, right?

Well, the last one is correct—but as soon as the sign’s in the yard, he checks in with a few of his good tenants. If they have friends or family members who are planning on moving, Stuart wants to know. And, when they refer a new tenant who passes the standard background screening process and signs a one-year lease, Stuart pays the referring tenants a finder’s fee.

How can asking current tenants for referrals help landlords fill vacant units? In Stuart’s experience, his tenants enjoy having their friends live nearby. (Sometimes, they even like having family members live nearby!) Stuart’s tenants know that he is strict about who lives in their apartment building. And, they know if they help fill the building with good people, it’s good for everyone. They’re happy to recommend people they know are solid renters. So just by asking a few good tenants about referrals, he usually gets three or four interested parties coming by to view the open unit. Then, he goes through the standard lease application and background check process.

Have you ever considered paying a finder’s fee to tenants for referring their friends and family members to your rental property? It could be a win-win situation: landlords love good, solid tenants, and everyone likes to be rewarded—especially with cash!