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. 

Having been quoted in The Hook about the rental increases for GOOD, single family homes, I’m including some recent articles on the real estate market nationwide that supports my observation that the local market is enjoying some significant rental increases.

$ There are fewer rental homes in the area as many investor owners took advantage of the last few years of double digit appreciation and sold their rental homes to first-time owner-occupants. They either went into the long string of apt to condo conversion units for CASH or they got out of the real estate market altogether.

$ Many new hires to the area are electing to rent rather than buy if they are only going to be in the area for 2 or 3 years. While the rule of thumb for the last decade has been to buy a home if you would be in our area for 2 or more years, newcomers to the area are not willing to get stuck with an unsold home if and when they leave the area.

$ Many new residents still have un-sold homes with little or no equity. They are either renting their current home short term until the market turns in their area or the wife is remaining in that home until it is sold and the entire family can relocate and reunite to our area. In anticipation of this, they rent a comparable home locally so that the family does not have to relocate twice.

$ In addition to NGIC * National Ground Intelligence Command * expanding and bringing in over 800 new employees, the new MJH * Martha Jefferson Hospital * has broken ground next to State Farm on Pantops. The UVa Medical Center is expanding, again, and with a significant grant from the State of Virginia, the new Emily Couric Cancer Center has broken ground where the old “Towers” at the corner of W. Main and Jefferson Park Avenue once stood. While many incoming new residents will rent some of the newer condos or conversions in the area, many will want to rent homes in the county for amenities, schools and quality of life.

$ The Fluvanna/Lake Monticello area continue to be desirable for new residents working in the west side of Richmond/Henrico/Short Pump area and Charlottesville. Additionally the commercial area at I-64/Rt 15/ZionXRoads has blossomed with a new Best Western motel on the NW corner across from a new LOWE’S. This area will continue to attract new com-ercial growth with the employees desiring to live in Albemarle or Fluvanna counties * a 10 to 15 minute commute.

Anticipating the tightening of our local rental home market, many homeowners who are relocating out of the area are electing to rent their current home and purchasing a second home in their new home town. They are buying at the low end of the market and hope to sell their current/local home when the area sales market increases in the next few years…Buy LOW and Sell HIGH works for real estate as well as the stock market.

Anticipating the next growth area for desirable rental homes is not hard. The Crozet/Old Trail area will not be a “rental home destination” until there is significant commercial presence in the area * primarily a regional grocery store which is in the works.

Although there continues to be new construction at Lake Monticello, it is smaller/Senior housing that does not attract families so the current rental homes in the area will continue to be desirable. The Forest Lakes/Hollymead area continues to attract families because of the very good schools and commercial businesses new to the area.

My crystal ball says that our area’s rental market will continue to remain STRONG and demand will continue to GROW!!

From our May, 2008 newsletter….view the full newsletter on our website…http://VAHomes4Rent.com

Predictions have been that there would be fewer good rental homes on the market this rental season (May thru August) and those predictions are proving to be correct.

While some of our current residents are being forced to purchase a new home because they are at the end of their 2 year window from selling their former home and purchasing their “replacement” home for tax purposes, most of our departing residents are actually leaving the area through graduation, advancement in their medical specialties or reassignment by the military.  Those who are remaining have accepted a $100 to as much as a $300 rental increase to remain in their current rental homes.

For those properties that are going to be available in July and August, I’ve raised the rents $100 to $400 and have had no resistance.  Most incoming military families have significant housing allowances to rent LARGE homes in pricey areas such as Forest Lakes, Fontana and Redfields.

Schools continue to be a MAJOR feature in housing desirability; however, many incoming residents either home-school or have smaller children and convenience to day-care is also important.

As I have maintained for the last 5+ years, a 4th bedroom or bonus room for a home office is critical and broadband or DSL connections are a MUST.  Luckily over the last year or so, HughesNet high speed internet via dish has greatly improved so that even the more remote properties can get high-speed access.

Prospective residents who have been directed to search our local MLS rental listings are finding that homes being featered there are homes that are also available for sale and the owners/agents wish to continue to show them during their tenancy….since most military and incoming medical residents want housing for 10 months to 2 or 3 years, the prospect of having to move in 3 to 6 months removes these listings from consideration quickly.

Likewise, most “agent listings” * whether on MLS, Craigslist or broker websites * are poorly worded to attract rental prospects as few agents realize that what might attract a homeowner is not necessarily what is attractive to rental prospects.   

I am pleased that I started taking photos of homes while they were vacant many years ago and have kept those photos updated as interiors were repainted, carpets replaced, appliances changed out.  Since our web site listings also feature property floor plans, our website has become the “go to” web site for prospects wishing to rent “sight unseen”.

To maintain this position, I routinely post our listings on Craigslist, Kijiji, HotPads, Google base using postlet format.  This creates the greater potential for ”first capture” with a “long tail” as these listings contain hyperlinks directly to our website. 

Several other local property managers have now created their company web sites through HomeRentals.net * the national website that is highly ranked for national rental home searches.  The addition of these management listings  has populated the area listings on their national website with 30 and sometimes 60 rental listings which is good for all of the rental listings featured.

I suspect that in June or July, those owners who are attempting to rent their homes AND sell them at the same time will realize that they should hire a professional to give their full attention to leasing their property.

I sus