Do’s and Don’ts in a Rental Market Frenzy
Rental prices peaking, inventory low, more people seeking rentals now than ever before…what is going on? There are many speculations on what may be causing this. Folks in Rancho Murieta, Amador County, and even Calaveras County have thought this to be caused by the Butte Fire that happened almost two years ago in Calaveras County. I would differ in opinion as we in our rental office were seeing evidence of the market behaving this way even eight months prior to that fire.
Then why the frenzy? Being in property management in the 2008-2009 market crash, I have my own philosophy on why the rental market is what it is today. In the end of 2008 to beginning of 2009, there were many property owners trying to sell their homes, realizing they were no longer valued at more than what was owed. This was a difficult predicament for many home owners as they needed to sell their homes and DID NOT want to have a rental. Due to the market, they were left with few options. As a property manager at that time, I would receive many phone calls from owners very discouraged with this situation and wondering what to do. Their homes were high end beautiful homes that they felt renters might ruin. However, being unable to find buyers, they decided to try the rental idea on for size.
At the same time, there were many families who were losing their homes through no fault of their own. They had been put in adjustable rate loans that were now at the point of adjusting. Being faced with having to refinance, they found themselves in the same predicament. Due to the severe drop in the housing market, their homes were also not worth more than what was owed. These perfectly hard working and proud home owners were being forced from their homes due to foreclosures as banks were not willing to work with anyone on a modification. This resulted in an amazing pool of potential renters for these great high-end homes that the owners were reluctant to rent out.
Fast forward to today. Many of these families are still in those rentals they rented in 2008-2009 timeframe, but now find themselves getting notices of their rental homes selling as the market has finally come back. The owners find they can now make a profit on their home again. Enter the high demand for rentals and the low supply that we see TODAY!
Now that we know why this is happening, how should we handle it? Here are some do’s and don’ts for owners and renters alike in a white-hot rental market.
- Pre-screen applicants by phone with questions legally allowable: do you have pets: how many occupants will be occupying the property: how long are you looking to stay at a new rental (for example if you are looking for someone to sign a lease longer than one year): if approved, what date would be your desired move-in date?
- Once they have passed your pre-screening, schedule group showings of no more than 8-10 at one time on vacant properties and 4-5 on occupied properties.
- Be mindful of giving everyone an opportunity. Often the ones who try to take all your time at the showing are not the best applicant. Make sure to talk to everyone at the showing.
- Ensure you are treating every applicant the same, i.e., asking the same questions to everyone on the pre-screen, requiring the same documents from everyone, etc.
- Be thorough and consistent in your screening. Sometimes something that appears small on an application can open a large can of worms.
- Don’t raise the price of your property so high that when the market starts to drop you lose your tenants because a better property for less comes along. Ask market rates, and don’t get greedy. Just because someone will pay it doesn’t mean they will stay.
- Don’t talk about credit history over the phone. Let the tenant know that the application is what you need to make your decision. After they have filled that out, tell them you will contact them if you have any questions.
- DON’T WASTE TIME! If they’re looking at your property, they are also looking at others.
- Don’t EVER discriminate on the basis of kids. This is not something you want to come into play in your conversation with potential tenants.
- Don’t forget to follow up with everyone from the showing. The ones that were quiet may be great tenants, but just uncomfortable talking in a group setting.
- Keep your eye out and respond immediately when you’re interested in an available rental.
- Try to give the owner/agent as much information over the phone about yourself as you can without going into your credit history, etc.
- Be honest. Don’t try to hide any information, e.g., the fact that you have pets, or that you smoke and are applying for a non-smoking property. The owner will find out and you could receive a three-day notice to move out because of it and/or forfeit your entire security deposit. It’s not worth it.
- Apply as soon as possible with ALL the information requested. You can always remove your application from the process, but can’t ever add one when the process is too far along.
- Get renters insurance regardless of whether the owner/agent requires it! Rental dwelling insurance policies that owners carry ONLY cover the structure in the event of damage or loss. Your renter’s insurance would be the only insurance covering your personal belongings.
- Don’t GET OUT OF YOUR CAR AT THE PROPERTY WITHOUT THE OWNER/AGENT! Just drive by and then request a showing from the owner/agent.
- Don’t assume that because there are so many applicants you would not be chosen. If you’re a good renter, you could definitely be considered.
- Don’t wait to apply or provide the owner/agent with all your information. Get everything requested to the owner/agent right away.
- Don’t just send an email. Call the owner/agent to schedule a time to see the property.
- Don’t give your 30-day notice to your current property owner until you have secured another rental.
Just like the sales market, the rental market ebbs and flows. Be wise in the decisions you make during this time as, just like the winds shift, this market will, too. If you’re interested in using a property manager to help find a renter and/or manage your property for you, please don’t hesitate to call us at Divine Properties or look us up on the web, www.divine.properties. It is our desire to help everyone’s dreams come home!