When Should Landlords Negotiate on Rent?

Posted by Teresa on June 28, 2013 under Lease and Rental Agreements, Rents and Deposits | icon: commentBe the First to Comment

tenantscreeningblog, tenant screening, background checkIn many areas of the country, rental vacancies are very low; some are at all-time lows. But that’s not the case in every market. If you’re a landlord or property manager with no available units for lease and a waiting list, you don’t need to worry about whether or not to negotiate the rent. But for those of you who have vacancies to fill, should you be considering it?

Here are some tips for knowing when it might pay to negotiate the rent:

When you’re in a renter’s market. When local economic conditions are such that vacancies are high and demand is low, that’s a renter’s market. Savvy tenants will read the signs: units staying vacant for months, several open units in the same complex or building, and landlords who seem anxious to get a lease signed.

Your tenants moved out months ago. If you have several empty apartment units, or your rental home has been empty for more than a month, it’s probably time to consider negotiating with prospective tenants. Losing a month’s rent for too long can be difficult to make up.

You don’t have other perks or amenities to offer. When attempting to attract new tenants, landlords often waive certain fees or pay for a tenant’s Internet service for several months. If you can’t offer other perks, then rent may be your only place to negotiate and bring a tenant to the table.

You have a high-quality applicant. When you have a tenant who meets your income requirements, passed your tenant screening with flying colors, has a steady job and gets rave reviews from former landlords, it might pay to negotiate on the rent. And if that applicant is willing to sign a long-term lease—such as two years—you might regret not reducing the rent if it’s a deal breaker.

Your unit is overpriced. If your tenant has done her homework, she’ll know what comparable units are going for in your area. If she can walk away and rent another place for less money, you might find it difficult to get a good tenant in your building without matching—or at least coming close to—comparable units.

And don’t forget that in negotiation, you also get to ask for what you want. For example, in exchange for lowering the rent, you might get your tenant to agree to pay before the first of the month, or to pay the first few months up front. You could ask for an 18- or 24-month lease. Or, you could ask the tenant to accelerate his move-in date.

Where Should Real Estate Investors Buy Rental Properties?

Posted by Teresa on June 25, 2013 under Rental Market | icon: commentBe the First to Comment

Tenant Screening, Tenant credit checkAsk a landlord in San Francisco or New York City how they feel about running their business in their city, and you might hear a long list of complaints. Rent control, tenants’ unions and plenty of regulations make those markets tough for landlords.

But of course, there are other cities that aren’t exactly ideal for landlords, for other reasons. These are the places where buying property and renting it out for a reasonable return on your investment is more challenging. Luckily, there are plenty of markets where it’s possible to buy a home for less than it costs to rent a typical home—so in theory, landlords can buy low and rent high. Of course, if it’s cheaper for landlords to buy, it’s also cheaper for homeowners to buy!

You’d be best off by analyzing your own financial situation and seeking investment advice from a professional before adding any properties to your portfolio.

Based on information from the real estate evaluation site Trulia, the following cities were rated as the “best” and “worst” places to be a landlord.

Best Places: Where it’s much cheaper to buy vs. renting:

City Buying vs. Renting
Detroit, MI -70%
Dayton, OH -63%
Gary, IN -63%
Cleveland, OH -63%
Warren-Troy, MI -63%
Toledo, OH -62%
Memphis, TN -62%
Kansas City, MO -60%
Birmingham, AL -59%
Indianapolis, IN -58%

Worst Places: Where it’s much cheaper to rent vs. buying:

City Buying vs. Renting
San Francisco, CA -19%
Honolulu, HI -23%
San Jose, CA -24%
New York, NY -26%
Albany, NY -30%
Orange County, CA -32%
San Diego, CA -33%
Los Angeles, CA -35%
Long Island, NY -36%
Ventura County, CA -36%

Finding Your Niche in Rental Housing

Posted by Teresa on June 21, 2013 under General | icon: commentBe the First to Comment

tenant screening, tenant credit checkIn business, they say you can’t be all things to all people. It’s the same in the landlord business. Just as your neighborhood hair salon, coffee shop and drycleaner have to figure out who their best-fit customers are and market themselves, so should you.

Now, you can’t discriminate whom you will rent to, based on things like gender, family status, race, color or religion (see the complete list here), but you can certainly add amenities, focus your policies and market your property to appeal to a certain type of tenant.

For example:

  • If you want high-end tenants, make your properties stand out from the others on the market with top-of-the-line appliances, wood floors, beautiful landscaping, patios, a fitness center and other premium amenities.
  • If you want to attract executives and other professionals, you might think about going luxury: installing security systems, high-speed wireless Internet, upscale laundry facilities, a swimming pool and fitness center.
  • Women make housing decisions in the majority of families, and more single women are in the rental market than ever before. Women also want good security and exterior lighting, as well as safe parking areas, large bathrooms with plenty of vanity space and good lighting, wood floors, bright, open rooms, high-end kitchen counters and nicer appliances.
  • If you want to attract stable, long-term tenants, consider having a wide-open pet policy. People with pets, especially large dogs, are often desperate to find rental housing that will accept their furry family members. They will pay a premium, sign long-term leases, and agree to your terms and policies.

Think about the tenants you want to live in your rental property, then give them what they want. And be sure to advertise in places they’re sure to be—which is usually online. Soon, you’ll be filling units—with your targeted tenants—by word of mouth.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Do You Have What it Takes to be a Successful Landlord?

Posted by Teresa on June 19, 2013 under Landlord Tips, Tenant Credit Checks | icon: commentBe the First to Comment

tenant screening, tenant credit check, background checkHave you been thinking about becoming a landlord? Do you think you have what it takes to be a successful one? Despite the rise in home prices over the past couple of years, it could still be a great time to purchase investment property in your neck of the woods. Mortgage rates remain at historic lows, and some bargains are still out there.

New landlords are typically new investors, but the club also includes folks who’ve had a hard time selling their homes, who are turning to renting to keep the mortgage paid. And while there are plenty of resources out there for newbies, the advice of seasoned landlords can be priceless.

Here’s a compilation of what it takes to be a successful landlord, as provided by our clients over the years:

Business acumen: Treating the landlording business like a hobby is a mistake. It’s a business, in which you are trying to make money. Never forget that. Be professional. Keep excellent records. Maintain procedures and follow them. Pay for professional tax and legal advice.

Toughness: You’ll have to enforce your rules in every situation, with every tenant or prospective tenant. At times, tenants will appeal to your softer side, asking for leniency, extensions on the rent or other favors. And you’ll have to be tough.

Patience: On the other hand, you’ll be dealing with people, not numbers. Being patient (and even kind) while enforcing your rules will go a long way to establishing a good rapport with your tenants. You’ll also need patience when your phone rings at 2 a.m., when a tenant stops up the sink for the fourth time and when your landscaping crew cuts back the wrong tree.

Outgoing personality: You don’t need to be s total extrovert or comedian to be a successful landlord. But you should be good at dealing with people, able to confront or engage them as the situation warrants, and ready to smile—even when you don’t feel like it. Remember, your tenants are your customers. A pleasant demeanor will go a long way.

Consistency: Some landlords apply the rules according to the tenant or prospective tenant. For example, Tenant A’s kids are allowed to have huge float toys in the pool because you like them better than Tenant B’s kids. Or, the nicely dressed white female prospective tenant does not have to undergo a tenant credit check, but the casually dressed minority male applicant does. The first scenario could make for upset tenants; the second could have you accused of discrimination. Be consistent with all of your rules, in every situation, for every tenant.

The ability to say “no”: You have certain obligations to your tenants, including safe housing, heat, water, trash pickup and functioning plumbing. Depending on the terms of the lease, you may also be obligated to provide Internet, cable TV, air conditioning or a clean swimming pool.

You are not obligated to provide housing to people who don’t meet your minimum requirements for credit history, income or employment. You’re not obligated to allow a tenant to rescue a kitten if you’ve a no-pets policy. And, you’re under no obligation to finance your tenants’ housing. You provide the housing, and they pay you. On time. You’re within your rights to say “no” to any and all other requests—and if you have a hard time saying “no,” you might not be cut out for the landlording business.

Do FHA Rules Apply to Guests of Tenants?

Posted by Teresa on June 14, 2013 under Fair Housing Act, Landlord and Tenant FAQs | icon: commentBe the First to Comment

Tenant Screening BlogBetween the Fair Housing Act and the Americans With Disabilities Act, it’s clear that landlords must accommodate tenants with disabilities. If your rental property is of a certain size and age, it’s probably already built to accommodate wheelchairs. And if a unit is to be leased by a person with disabilities, you must allow them to make reasonable modifications to accommodate their needs. And of course, if a tenant requires a service animal, you must allow it, even if you have a “no pets” policy. You’re entitled to ask for documentation from your tenant’s healthcare provider outlining the need for the service animal.

But what about your tenants’ guests? One landlord experienced this situation recently. A tenant had a long-term visitor who brought his dog along. When reminded of the no-pets rule, the tenant stated the dog was a service animal.

In this case, is the landlord obligated to accommodate the guest’s animal? And is the landlord allowed to request documentation?

The answer to both questions is “yes.” Under the Fair Housing Act, persons who are associated with tenants are a protected class if they have a disability. If that disability is not obvious, the landlord may request verifying information. Note, however, that a landlord may not ask that the verification letter include a description of the disability.

So there you have it. You may certainly ask a tenant why their guest has an animal and if it is a service animal, ask for verification. Otherwise, you could have angry tenants who wonder why you’re making an exception to the no-pets rule.

HUD Study Says Minorities Still Experience Discrimination in Housing Market

Posted by Teresa on June 13, 2013 under Legal | icon: commentBe the First to Comment

tenant screening, tenant credit checkA new study by the U.S. Department of Housing and Urban Development found that minorities who seek rental housing, as well as those wishing to purchase homes, are experiencing racial bias.

Since 1977, HUD has conducted the study once each decade, in an effort to monitor trends in racial and ethnic discrimination in both the rental and sales markets. The studies have found that reports of blatant discrimination against minorities (such as refusing to meet or provide any information) have declined, but there is still evidence of bias.

In the study, white, black, Hispanic and Asian testers inquired about available units over 8,000 times in 28 cities. In each test, one white and one minority contacted a housing provider to inquire about a randomly selected, recently advertised home or apartment. The testers were matched by gender and age, and presented themselves equally well-qualified to rent or buy the advertised unit.

In markets across the country, white testers were told about and shown more units. When compared to whites, black testers were told about 11% fewer rental units and 17% fewer homes for sale, and were shown 4% fewer rental units and 18% fewer homes for sale.

Asians were told about 10% fewer rental units and 15% fewer homes for sale, and were shown 7% fewer rental units and 19% fewer homes for sale. Hispanic testers were told about 13% fewer rental units and were shown 8% fewer rental units, but when inquiring about homes for sale, when they were treated similarly to whites.

In one test, a white tester arrived first and asked to see a two-bedroom apartment. He was shown both a two-bedroom and a one-bedroom unit, and provided applications for each. Two hours later, a Hispanic tester arrived at the same office and was told nothing was available.

In another test, a black tester was told by a real estate agent that she needed to prequalify for a loan before she could see homes for sale. The agent refused to meet with the tester until she had talked to a lender. A white tester called the same agent, was not told about prequalifying, and was able to make an appointment.

Discriminating against prospective tenants on the basis of race, ethnicity, gender, family status, religion or disability is against the law. But as this study shows, that doesn’t mean it doesn’t happen.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Target More Tenants With a Walkability Score

Posted by Teresa on June 7, 2013 under Housing Trends, Marketing for Landlords | icon: commentBe the First to Comment

tenant screening

What is walkability, and why is it important to include in your advertising for rental properties? Walkability means that a home is within walking distance to shops, restaurants, public parks, libraries, schools and other places that people frequent.

People like to live in walkable communities, and demand for this feature is growing. Younger renters are particularly interested in areas developed under “New Urbanism” guidelines, which cluster living spaces around open spaces, shops and restaurants. These neighborhoods encourage walking and bicycling, while reducing the need for a car.

Cities that are walkable are growing, are more vibrant and have higher home values. They also typically have higher rents and lower vacancy rates. The ability to walk to the grocery store, their children’s schools, public transportation and coffee shops appeals to tenants who would like to avoid congestion, parking issues and fuel consumption associated with driving.

If you own or manage property in a walkable neighborhood, you should mention it in your advertising, right along with the number of bedrooms, bathrooms, types of appliances and location. In fact, you can plug the property’s address into WalkScore.com and receive a walkability rating. The higher the score, the more walkable the neighborhood. The site even provides maps to restaurants, coffee shops, grocery stores, schools and outdoor spaces.

WalkScore.com also provides links to apartments for rent. You can have a featured listing on their site, get maps to add to your website, or download a badge to that displays the walkability score. You can then add the badge to your site or Craigslist advertisements.

The WalkScore site is easy to navigate and use, and the FAQ page should provide answers to most of your questions. If you’re competing for the best tenants, adding walkability score to your advertisements can help boost your visibility and response!