No vacancy means no polar vortex. This rental market is hot.

No Vacancy

 

Don’t take my word for it. A simple Google search will provide you with a bevy of data to support the claim there will be no polar vortex for the US rental market this winter…..it is hot, hot, hot. (The question is…..for how long?)

Let’s start with Zillow’s January press release. According to their findings, the US rental market increased 4.9% from 2013 to 2014, for a total 2014 market of $441B in rent. It’s a BIG number.

So, rent dollars are up – what about vacancies? They are down. US census data reports Q4 2014 national vacancies were 7.0%, down 1.2% from Q4 2013 and fairly consistently down in every region. Digging deeper, we are hearing about rental gaps in markets like Asheville, North Carolina, where they are reporting a 1.0% vacancy rate (reported by the Citizen-Times HERE). They claim that 5% vacancy rate makes for a healthy rental market.

Don’t be shocked to see ‘no vacancy’ signs across the US.

What about your region? Is it hot or not?

Vacancy Rates Q42014

 

Vacancies hurt. Wrong tenants hurt more.

VacanciesHurt

Vacancies hurt! I’m convinced that a property manager’s biggest fear is a vacancy. You have a nice tenant that pays on time and then the dreaded, “we will not be renewing our lease.” I personally have a vacancy approaching for one of my rental homes and I’m certainly not looking forward to paying that mortgage on my own. Getting the home ready for its next tenant will be expensive, time consuming, and stressful. Do I rent it to the first applicant with a job and pulse? Probably not…..

Different property managers have different approaches for their properties. Let’s look at a handful of data points that are available for landlords to collect, review, and consider when evaluating prospective new tenants:

  • Rental application – Typically a document used to capture general information about the prospective applicant, which might include details about the prospect’s income (indicating their ability to pay rent), other applicants, other tenants (kids, dogs, etc.), rental history, and referrals.
  • Credit check – Credit checks produce a number, a FICO score, which should never be taken at face value. The full credit report offers much more data and should be fully reviewed before jumping to any conclusions. There are a variety of factors to consider. The Fair Isaac Corporation is the analytic software company that publishes FICO scores and has published a nicely written brochure titled, “Understanding Your FICO Score.” Feel free to download and read that brochure HERE.
  • Background check – As you probably know, the internet can provide a wealth of publicly available background information about people. Beyond your internet searches, there are a number of different types of background checks that can be purchased from third parties. Background checks can include: identification verification, court and/or criminal records, property records, financial information, academic verification, employment verification, and more.
  • Rental history – These reports are newer, but are now available. Rental history reports can shed light on your prospect’s past rental payment history, assuming they have paid rent to a company that would have been submitting rental payment data into the credit bureaus.
  • Prospective renters’ rights  to Equal Housing –  The details of the US Fair Housing Laws can be found HERE, but basically, your prospective tenants have the right to expect that housing will be available without discrimination or other limitations based on race, color, religion, sex, handicap, familial status, or national origin. This includes the right to expect equal professional service, the opportunity to consider a broad range of housing choices, no discriminatory limitations on communities or locations of housing, no discrimination in the pricing of housing, reasonable accommodations in rules, practices and procedures for persons with disabilities, and to be free from harassment or intimidation for exercising your fair housing rights.

It can be a lot to consider but it’s all important. What else is there? How do you get to know your tenants?