Rental search in a tight market

rental
Finding a rental (infographic from appfolio.com)

Some housing experts are excited about the recent one-half of one percent uptick in the homeownership rate, saying it’s at a three year high. But the Census’ most recent release of the Quarterly Residential Vacancies (Fourth Quarter 2017) and Homeownership described the move as “not statistically different” from the previous quarter or year (census.gov). Essentially, the homeownership rate remains historically low. This dovetails with the Census’ most recent renter moving data indicating that the percentage of renters who moved in 2017 was the lowest since 1988. So, it should not be a surprise that rents are on the rise, and it’s becoming even more difficult to find a rental.

How can you find a rental in a tight market?

Before you go off and sign a lease, you should create your own “rental guide.” First, make a housing budget of how much you can afford for rent and utilities. Then make a list of “must haves” for your new home. Think about the size, location, local amenities, commuter routes and public transportation, and anything else you deem important. This guide will help you stay focused on your needs, and help you decide on a rental that makes sense.

home ownershipOnce you begin looking for a rental, you may realize that finding a rental that “checks all the boxes” may be difficult. You may find that rent per square foot varies depending on the neighborhood, age of the building, and the amenities. This may force you to prioritize your needs. For example, you may find that a small condo near a metro station is the same rent as a three-bedroom single family home that has a longer commute. Or there may be a new apartment available with luxury amenities with a higher rent than the older apartment building with sparse amenities.

The internet is the medium of choice these days to look for a rental. There are numerous websites using state of the art applications to advertise rental listings. They also include vast amounts of information on each listing to help your search. There are a number of specialty sites focusing on niche rentals (such as apartments, luxury, etc.) that tout their exclusive listings. However, there are sites that are more comprehensive that include a mix MLS and private listings. And let’s forget there are online classifieds too.

Many renters search for their new home without an agent, and that’s ok. But consider that an experienced licensed real estate agent can help negotiate your lease, possibly getting better terms. While most agents will work rentals and sales, there are real estate agencies that specialize in rentals. Consider contacting legitimate property managers or rental management companies and ask about their upcoming rental listings.

If a rental listing sounds too good to be true, then be suspicious of a scam. To protect yourself from scammers, it can be helpful to understand how they operate. The Federal Trade Commission (ftc.gov) offers insight on how rental scams work, and how to report scams.  Scams are typically from hijacked ads or phantom rentals.  The FBI (fbi.gov) and USA.gov also offer tips on protecting yourself from rental scams.

Some basic cautions from the FBI:

-Only deal with landlords or renters who are local;
-Be suspicious if you’re asked to only use a wire transfer service;
-Beware of e-mail correspondence from the “landlord” that’s written in poor or broken English;
-Research the average rental rates in that area and be suspicious if the rate is significantly lower;
-Don’t give out personal information, like social security, bank account, or credit card numbers.

Regardless whether you go it alone or with a real estate agent, practice due diligence. Real estate scams have been part of the rental scene for decades. Scams have become more prevalent with the increased reliance on the internet for home searches. And in a tight housing market, it’s no coincidence that real estate scams are on the rise.

Copyright© Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

When landlord-tenant relations go wrong

HousingAlthough renting your basement out may seem like a great way to generate extra income to help pay the bills, it can also become a point of conflict that could spiral out of control if not handled correctly. The recent report of the arrest of local landlord highlights the issues of being a landlord, as well as being a tenant.

The arrest seems to be the outcome of events that climaxed when the landlord allegedly forced the tenants out of the apartment earlier this month because the tenants were allegedly late paying their rent. According to an August 21st Montgomery County Police press release (mymcpnews.com), the police responded to calls of woman screaming for help and banging on a neighbor’s window. The woman reported to police that five individuals were in an interior room and prevented her from closing her bedroom door. The woman and her son were allegedly grabbed and were told that the “landlord said they had to, ‘go and pack their stuff.’” It was reported that the individuals yelled at the woman to take her belongings and get out of the apartment; and the suspects “pushed” the woman and her son out of the home.

Another tenant, who spoke to investigating officers, stated that the landlord allegedly told them that they should stay in their room because he was going to pay people to force the tenants out. Another tenant stated that the landlord told them to not come out of their residence because there would be people “yelling and screaming.”

One of the five suspects who was subsequently arrested, was allegedly paid $1,000 to “scare and force” the tenants out of the apartment. The landlord reportedly turned himself in to police and was “charged with conspiracy to commit first-degree burglary, conspiracy to commit robbery, and conspiracy to commit second-degree assault.”

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Another outcome of this incident is that the property was condemned by the Montgomery County Department of Housing and Community Affairs (DHCA) and all occupants were ordered to vacate the property. An investigation of the home by the 4th District Community Service Officer and DHCA Housing Code Enforcement Inspectors determined that the landlord was “running a rooming/boarding home”; which “included four, illegal accessory apartments and five separate kitchens” and was “occupied by 15 people at the time of the incident.”

The unfortunate actions, events, and outcome of this incident are atypical. However, the plight of the landlord and tenant highlights the frustrations that can occur on both sides of the rental relationship, and may serve as a reminder to consult with an attorney before taking matters into your own hands.

Before you decide to become a landlord, consider familiarizing yourself with federal, state and local laws, rules and ordinances governing landlord-tenant affairs; as well as making sure your rental(s) conforms to licensing and zoning laws. Locally, the Montgomery County Office of Landlord – Tenant Affairs (housed within the Department of Housing and Community Affairs) is a resource for landlords and tenants on licensing, security deposits, evictions, leases, and rent increases. Besides publishing a Landlord – Tenant Handbook (a guide on informing of general rights and responsibilities of landlords and tenants), it also offers a free and quick avenue for tenants to seek amicable dispute resolution.

(dankrell.com)
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© Dan Krell
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Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Finding a rental in a tight market

by Dan Krell © 2012
DanKrell.com

AparmentIf you’re looking for a rental, you’re not alone. In fact, according to an October 28th (2011) commentary from National Association of Realtors® Chief Economist Lawrence Yun, there was an increase of 1.4 million renters in from the fall 2010 to the fall 2011; and as of the second quarter of 2011, there were about 38 million renters. As the economy and foreclosure crisis added to rental demand; Dr. Yun pointed out that the lack of multi-family construction (e.g., apartments) in the first decade of the new millennium also added to the falling vacancy rates (“Falling Rental Vacancies”; realtor.org).

Of course, as rental vacancies fall- rents increase. According to the National Association of Home Builders (nahb.org), the Multifamily Vacancy Index (MVI) fell in the fourth quarter of 2011 indicating fewer rental vacancies. Additionally, the Multifamily Production Index (MPI), which measures builder and developer sentiment about current conditions in the multifamily market, is at its highest since 2005. Furthermore, the MPI component gauging developer sentiment for market-rate rentals is at an all time high!

But don’t worry too much. Consider that while some have described falling nationwide home ownership rates and rental vacancies, the U.S Census data indicates that home ownership rates for the Washington DC region has not significantly changed during 2011. Additionally, rental vacancies increased throughout 2011 to rebound from some of the lowest vacancy rates in about ten years (census.gov).

So what does all this mean for you, the renter? First consider your budget, and then decide on your needs and preferences for your rental home. Since size, location, and amenities are some of the factors that dictate rent, you might be able to lower your rental costs by deciding which factors are more important to you. For example, renting a studio apartment close to a metro stop may be less expensive than renting a four bedroom bungalow about the same distance to the metro stop. However, if you want the four bedroom home, the rent may be less expensive as the distance from the metro stop increases.

The internet age has made finding a rental easier than ever, many apartment guides and MLS rental listings are now at your fingertips. Some apartment guides even provide virtual tours of available floor plans and amenities. The internet has many rental tools as well; one such tool is the “rentometer” (renotmeter.com), which can help you determine if your rent is in line with other area rentals. While hunting for your rental online- be careful of internet scams; Craigslist posts some very good safety tips for online home searching (washingtondc.craigslist.org/about/scams).

You might even consider hiring a real estate agent to assist you in your search. While some agents only focus on MLS rental listings, others may assist you in negotiating a rental rate and terms with rentals found outside the MLS. It should also be noted that some rental management companies also specialize in executive rental placements.

Once you found a suitable rental, be prepared for the rental application- which may include a credit check. If you’ve had financial challenges, such as a job loss or foreclosure, don’t be afraid to explain your situation; as some landlords may be willing to work with you if they have a vacancy.

As the housing market struggles to gain a foothold, the rental market remains strong. Finding your perfect rental may take a little time and effort.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of March 19, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Housing shortage concerns; supply and demand

by Dan Krell © 2012
DanKrell.com

New HomesExactly two years ago, I wrote about the possibility of a housing shortage. In February 2010, Montgomery County’s housing inventory of homes for sale hit a two year low and was almost cut in half from the previous year; most likely due to a respite in the foreclosure tsunami. However, home inventories remained relatively low through 2011; as some looked forward to a renewed seller’s market, if not a balanced market.

So here we are in February 2012, and home inventory in the county is just about where it was in 2006- which is the consensus peak of the housing market. You might think that because home inventories are at a five year low, it might be a good time to jump into the market and list your home for sale.

Not so fast. Consider that the average time it took to sell a home during the peak of the market was no more than two months; much sooner in many cases. However, the current average time on the market is almost 30% longer today than what it was at the peak; much longer in many cases. Additionally, even though home inventory is similar to the peak market, the number of units sold compared to that time is about half; and keep in mind the average home sale price continues to fall.

For a home owner thinking of selling their home, it’s still a precarious market regardless of the reduced inventories. Although eager home buyers lament the limited choice of homes for sale, they are still demanding and selective. For home owners preparing their home to sell, the market is still about price and condition; make your home look its best. Keep in mind that about one-third of the home buyers in the market are first-time home buyers looking for their “perfect” home.

As I concluded two years ago, it’s not so much of housing shortage, but rather a market seeking equilibrium. Clearly, a market shift has taken place- but where?

As the number of single family homes listed for sale declines, the number of single family home listed for rent increases- as does the average rent. Supply and demand; another option for home sellers may be renting their home.

Homes for saleThe up side of leasing your home is that you can move on and have cash flow from the rental. To assist in determining an appropriate monthly rent, your Realtor® can provide neighborhood rental data. You should also consult with your accountant to make sure that leasing your home is an option; considerations in calculating rent may include (but is not limited to): tax implications, your mortgage payment, HOA/condo fees, property taxes, insurance, and maintenance.

Of course, solving one issue opens the door for others; there are disadvantages to renting your home as well. Other considerations might include (but not limited to) daily rental management, what to do if the tenant does not pay, and cost of repairs after the tenant vacates. Also, if you plan to rent your home to buy another home, don’t commit mortgage fraud; your lender may require extensive documentation on the rental – including an established rental history.

Although a balanced housing market may include increased rental inventory; do your due diligence before you decide to rent your home, and make sure it’s right for you.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of February 20, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.