Property Management Maven

A recent posting on the real estate web site, ActiveRain, invites comments on the “Today Show” real estate guru Barbara Corcoran discussing the real estate woes of the country with specific emphasis on renting.  The AR post brought out some heavy comments from landlords and property managers.

The AR discussion dovetails beaufitully with a recent e-mail discussion I had with a prospect that wanted me to come down $200 (20%) on rental price of a home from the rent that had been charged for the last 2 years….I am not going UP at this time of the year; however, my e-mail correspondant insists that rents in Charlottesville are too high and they AND real estate prices have come down….tell that to the City Tax Assessor who when UP on recent assessments - just not as much as the last few years.

As I explained in my e-mail, our area rental home (SFR = single family home) market is extremely tight.  More families moving into the area for grad school, JAG, law and med school are electing to rent rather than buy as they have in the past.  Likewise, the influx of 800+ new-hires at NGIC are also predicted to be renters as they currently own homes that they can not sell and access equity to purchase in our area.

In her Today Show appearance, Barbara Cororan’s discussion emphasised asking for concessions, reduced rent and then going on to the next ad (or Craigslist listing) may well work for listings in Orange County (OC), CA where there are estimated 2200 to 2800 rental listings DAILY on Craigslist…..her suggested process will not work for prospects for local homesin our area as we have no where near that number of rental homes AND our number of rental homes is actually lower than in years past as our “shadow rental market” (unsold homes rented for a short term) have actually been absorbed and are rented.

Knowing how to deal with these prospects is a challenge since many are over-reaching their income capability to move from an apartment to a SFR just as first-time home owners over reached their ability to buy when interest rates were down and they were ignorant that their interest rates would adjust UP in a few years. 

I’ll make rent concessions after I have run a credit report, checked the applicant’s FICO score and have a deal making offer * lump sum rent up front; long term lease; assuming landscape/yard maintenance duties….to reduce stated rent just because the Today Show guru says so is WAY DOWN on my LIST of reasons to reduce the rental rate. 

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.