The national monthly price for the lease of a principal residence has increased over 3% annually for the last decade, according to the Consumer Price Index (CPI). Although prices for the purchase of a home have decreased, consumer confidence in the homeownership market is still dismally low. As a result, individuals are choosing to live in rented property and the increased demand is driving up rents.
Brokers and agents with property management interests as well as independent landlords are aware of this market shift and how it effect negotiations with renters. Many ex-homeowners who were burned by foreclosure, strategic default or unemployment are looking for a discount on their monthly payment.
Oftentimes a landlord or property manager can compromise with a potential tenant. Offer to reduce their monthly payment if they can agree to pre-pay some of the rent up front, or pay before the first of each month. Most tenants are aware that rent schedules are competitive, and will not likely expect more than a 10% discount.
If you are unable or unwilling to discount a tenant’s rent, you can offer an upgrade. Updating appliances, flooring or other fixtures is a solid investment for the property as well as a popular incentive for potential renters to consider a unit with higher rent.
first tuesday take: Brokers and agents struggling to generate income in the feeble homeownership market can use their experience and knowledge of real estate in the property management industry. In such a competitive rental market, those real estate professionals with networking and due diligence experience will have an advantage when working with tenants to make an arrangement suitable for both parties. [For more information regarding the California rental market, see the July 2010 first tuesday article, Rentals: the future of real estate in CA?]
Property managers and landlords who provide good customer service for a competitive price will find no shortage of potential tenants. Many ex-homeowners are looking for a community similar to the neighborhood they left, and will be interested in the extra amenities offered in and around their unit. Clear, early communication with tenants about repairs and maintenance goes a long way towards building a positive reputation. Renters want the assurance their landlord or property manager is available to them for inquiry, and they will be notified of any important changes to their living environment.
The next wave of future renters will come from Generation Y. Gen-Y renters will begin their search for housing online, and will be looking for as much information about the property as possible. Landlords who are diligent about up-front disclosure, good customer service and providing extra amenities will have the benefit of positive word-of-mouth advertising from former or existing tenants on rental websites. Landlords who plan now will reap the benefits during this recovery, as well as be the privileged recipients of these young renters’ business in the future. [For more information regarding Generation Y, see the October 2010 first tuesday article, The demographics forging California’s real estate market: a study of forthcoming trends and opportunities – Part I and Part II.]
Re: “If the rent is too dang high, employ a few new tactics on next rental” by Mercury News