Property Management Maven

Our area is in the "early throws" of the rental season, so I made sure ALL of my FOR LEASE signs were placed on available properties before Easter so that prospects in the area for the holiday weekend AND for Spring Break who are driving around the area would take interest in the properties I have for lease.

Surprisingly, I started getting several calls over the Easter holiday from prospects who wanted to know if I would LOWER the rent.  They did not know the rent the property was listed at, they just had a figure in their mind or a budget rent that was clearly below the market rent for properties in our area.

After the 3rd or 4th such call, I started asking the caller why I should even consider lowering the rent when I had not reviewed their application, run their credit report or heard their offer....such as a longer term lease; 6 months rent in advance, etc.  They were shocked that I would want to "check them out" BEFORE I AGREED TO NEGOTIATE A LOWER RENT - why wouldn't I just lower the rent for a voice on the phone?

Maybe it is the constant media attention to the nationwide real estate slow down, the pundits advising "now is the time to buy" or the make an offer/any offer mentality; the REALITY is  there are FEWER good rental homes for a LARGER pool of rental tenants this year.
 
....there are area apartment/multi-unit residents who want to move out on their own and lease a single family home;
....there are MORE people moving into the area with UVA Medical Center, the expansion of NGIC, UVa grads schools as well as new-hires to new businesses in the area - Lowe's at Zion X Roads, construction/expansion of the UVa Med Center;
....more people are choosing to RENT rather than BUY....in past years, the rule of thumb was if you would be in the area for 2 to 3 years, it made financial sense to purchase a home * in the current market, these people are electing to rent so that they are not stuck with a home to sell when they have to leave the area; and,
....we still have people moving into the area who want to rent for a year  BEFORE they decide where they want to buy or if they want to buy or build their own home.

Add to this, the fact that many investor owners have sold their older, single family investment homes over the last few years and gotten out of the rental/landlord business.  This has removed many homes around the university and urban ring from the rental pool so that even with property owners who have tried to sell homes and have now placed their homes on the rental market, the number of well maintained homes in DESIRABLE areas (south and north of town) will not provide enough inventory for the anticipated demand.

The economics of being a landlord can often be contrary to the current real estate market......Central Virginia landlords have the best of both worlds......

It's happening * in the relm of area real estate, area list prices have dropped so that some would-be tenants can actually afford to BUY an area home; but their credit, employment history  or income are not sufficient to qualify them to lease a rental home.

Military families (officers) coming in have more than sufficient salary/wages and housing allowance to rent homes in the $1,800 to $2,200/month rent range....a family who has rented in the area for a year with only his income and a CAT and who qualify for a $400,000 ($350,000 mortgage) home purchase do NOT qualify for the same  rental homes.

Even with raising my rents, incoming rental applicants are better qualified BECAUSE they do not want to buy.  They want to rent for the 2 or 3 years they are in the area in grad school, medical school, building the new addition to the UVa Medical Center or on assignment.  

It is not that the area sales market is so terrible * there are loads of nice, desirable homes on the market * the reality is they don't want to be tied down to having to sell a home in two or three years. 

These rental prospects are asking if the property they are interested in is going to be for sale and they are asking for 2 or 3 year leases upfront which my investor clients are happy to accomodate with a rental increase for the third year.  Renting from owner who may want to sell in a year is not appealing to these would-be tenants so they quickly bypass our local MLS rental section and are making inquiries of area property management firms. 

A phone call today from an insurance company representing a local family whose home burned over New Years clarified an aspect of being a landlord that I am often hard pressed to explain.

The insurance company representative was pleased to advise me that, should the home be suitable, the insurance company would rent the property and pay me the rent....they just needed to ask me some questions regarding the property.  I advised the insurance representative that while I appreciate the situation of her insured family * homeless in minus 20 degree weather * I would not rent to the insurance company and that I required completed rental applications for all of the adults in the family.  The insurance company could pay the family who could pay me; however, the lease would be in the name of the adults in the family as I wanted them to be responsible for the condition and maintenance of the property.

She again assured me I did not understand - the insurance company would pay the rent and I assured her that I would not put my property owner clients in a position of attempting to sue the insurance company if their insured family destroyed or damaged the property.  If the family was not responsible for the terms of the lease, there is no guarantee that the property would be maintained during the lease.

Over the last four+ years, I have had several fire-displaced families in my rental homes.  I currently have a family renting a home in the same subdivision where they are re-building the home that burned in June, 2007.  Their insurance company paid them the entire rental amount of the one year lease and they pay their rent to me monthly.  They were required to pay their own security deposit as the insurance company had no way of tracking the refund at the end of the lease. 

This process seems reasonable to me and in today's conversation when I attempted to explain that the collection/payment of rent is not my only concern as their prospective landlord, she was incredulous that I would expect more than just the rent and that I would want to hold the residents accountable for the property condition at the end of the lease term.

I wished her success in her quest for rental housing for her insured family and suggested she call individual property owners who may be willing to work with her on the insurance company's terms....I am sure there is someone in need of a rental tenant who won't look past the collection of the rent every month.

Since late April, I have been sending brochures (3-panel printed on my laser printer) to homeowners who can't sell their homes * overpriced, poorly presented in listing photos (don't get me started) * the properties are PRIMO from a rental prospect * 4BR, garage, basement...The flyer has a reprint of the the article entitled * REAL ESTATE * Rent Now * Sell Later * Local housing market stalled? Consider becoming a temporary landlord. By Pat Mertz Esswein *From Kiplinger's Personal Finance magazine, February 2007.
 

I've done 15 property presentations from these flyers and gotten 10 new properties to manage for 12 to 18 months...of the 200+ flyers I have mailed out, I've tracked which ones ended up listing their home for rent with their listing Realtor or attempted to rent and manage themselves.

Over the last week, I've gotten 2 calls from property owners * one who rented themselves and one who rented through their listing Realtor * both of whom have tenants who have not paid rent and the owners are now out of the area...I asked the first homeowner why their REALTOR is not assisting him and he said the Realtor does not know what to do * DUAH!?! and he can't afford to keep the home since he has a second home to pay for now. The second owner did not screen the Craigslist tenant he was lucky to find on his first property posting AND allowed occupancy without a deposit....JEEZE!!! I'm going to go back and see if these properties were overpriced to begin with when originally listed for sale.

In both instances, the wives had kept my brochure and urged their husbands to call me when their rent did not arrive with the Xmas cards....one owner I will assist and deal with the wife and the one with no documentation on their tenant I will refer to my local attorney with permission to use my name to get their phone call returned.