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What Floats A Renters Boat Isn’t Always What Floats A Landlords Boat.

In the height of foreclosures and what seemed like almost everyone losing their homes, investors/landlords jumped on the wave – increasing the number of rental homes with low rent prices. As the demand for rentals increased – so did the rent prices – many landlords asked for higher rents and many more, raised their rents even higher.

Much of the US is still experiencing a rental upswing.  But the home ownership/housing market is starting to shift and also experiencing an upswing.

As the housing market improves, and rents rise, tenants will at some point start considering other alternatives – including home ownership.

If you are a landlord, have you prepared for the shift?   Are you banking on the bad economy, frustrated home buyers, tougher lending rules, etc., to keep your rental ships floating?

As a property manager, I think it’s important to stay on top of the current market conditions, but it’s also important to:

Stay in touch with your tenants about their current situation – can they afford your rent, are they considering buying a home, etc.

Don't define rental success just by the bottom line. If you want to be successful as a landlord, don’t be rent greedy. Find good tenants and keep rents affordable – that brings long term success.

Don’t bank on thethey lost their home – they won’t buy another home” attitude.  One “for sure” thing – if people think they can find something cheaper – they will.  If rents are high, it’s a matter of time before they look at owning again.

Buying or selling Tucson real estate, Mt Lemmon, Tucson bank-owned homes, Tucson rental homes, or Tucson lease option homes? Visit www.KGCPropertiesLLC.com .

                                                 

 

This blog is written with my opinions and my opinions are  presented with accuracy but not guarantees. Please talk to a professional before making any real estate, financial or agency decisions.    Gabrielle Kamahele Rhind - 2014. If you want to reprint parts of this - just email me for my permission: KGCProperties@gmail.com .

 

Comment balloon 23 commentsGabrielle Kamahele Rhind • January 20 2013 05:28AM

Comments

Everyone involved in any part of the real estate market needs to keep heads up and eye on the market...great post !

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce (EXP Realty 414-525-0563) almost 6 years ago

Hi Gabrielle, there is a point where rent increases will make it more feasible to purchase. Why rent when you can buy. Landlords need to be aware of this.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA almost 6 years ago

Good morning, Gab.... that switch is inevitable....not so sure it will happen sooner rather than later....there are many more short sales and foreclosures that need to cleaned up.... it also takes a few years for credit to strengthen again....

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) almost 6 years ago

GOOD MORNING SALLY & DAVID! Follow and adjust if necessary!  Thanks for the comment!

GOOD MORNING MICHAEL!  Agreed - and if tenants can't buy for whatever reasons - it's better to keep rents affordable and keep tenants in place - than not!

GOOD MORNING BARBARA! So many variables like you write - hard to predict when - but a for sure is - it will switch at some point!

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) almost 6 years ago

And I just noticed this was featured - and I always like to thank the AR folks when a little gold star appears on one of my posts - thank you!

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) almost 6 years ago

You need to know both clients. The client that owns the home and the client that rents the home.

Posted by Than Maynard, Broker - Licensed to List & Sell - 405-990-8862 (Coldwell Banker Heart of Oklahoma) almost 6 years ago

I have a stated policy that if I have to serve 3 pay or quit notices in any 12 months, I will not renew their FIXED TERM Lease and I warn residents after the 1st and 2nd notices....they need to PRIORITIZE their payments to make their RENT PAYMENT FIRST!

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) almost 6 years ago

Gab,

Every agent I know is out there trying to convert renters to buyers. Owners need to factor this into their plans.

Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) almost 6 years ago

Great post and well deserved Feature Gabrielle.  Last year I had some young tenants who were ready to move out because they could no longer afford the rent.  They are excellent tenants, were never late on the rent, so we lowered the rent $50.00 and they signed for another year.  This week, they are signing again for another year at the same rent. I'd rather keep them then take a chance on someone else at a higher rate and have to go through all of the expense of getting the suite ready for new tenants.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) almost 6 years ago

A lot of renters can grumble about high rent and wanting to buy but deep down inside the FICA score, in the upside down debt ratios, not going to happen anytime soon. Foreclosure, short sale, repossession tainted property sales not the rage everywhere and small rural markets weather everything pretty smoothly. Lower priced properties, don't have a mortgage long and fear of debt makes homeowners stay that way. 

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) almost 6 years ago

 

There be downsizing afoot especially with these low interest rates so many renters may make the leap to purchase..I am also an advocate for fair market value and not gouging. If the renter has some skin in the game, everyone wins long term...finding the "happy" spot is worth the time and effort. Beware of greed all you landlords too

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) almost 6 years ago

One has to be wary  with this upswing in home prices and activity...Interest rates are ultalow....what happens in 5 years when you want to sell and the buyer of your home is looking at interest rates twice as high as they are presently.

Posted by Edward Gilmartin (CRE) almost 6 years ago

Gab some very good tips, awesome website as well, good luck.

Posted by David Popoff, Realtor®,SRS, Green ~ Fairfield County, Ct (DMK Real Estate ) almost 6 years ago

I have a renter in one of my homes that is paying significantly under market, but he has been there 18 months, never missed a payment, did some painting and repairs and calls me at the hint of a problem before it becomes large.  They will be buying their first home this year.  I'll miss them, but happy that they can take the opportunity while rates are low.  

Posted by Jeanne Gregory, The most important home I sell is YOURS! (RE/MAX Southwest) almost 6 years ago

You are the first post I have seen on this subject. I agree with you 100% that is looking like a bubble to the landlords. Great post.

Posted by Chuck Mixon, Cutler Bay Specialist, GRI, CDPE, BPOR (The Keyes Company) almost 6 years ago

It is a beautiful thing when a tenant finds an awesome landlord (property manager) and the landlord finds an awesome tenant. The tenant pays on time every month and doesn't complain at a drop of the hat. The landlord or property manager backs off and doesn't nit pick. I actually describe our situation. Sold our house and we are renting until our daughter graduates high school then we are moving out of the area. We have an awesome property manager and landlord. We pay on time every month, keep the house clean, paint without asking to be reimbursed. The dishwasher died on us recently and it is a courtesy item that the landlord did not have to replace, but they did anyway. I am very grateful for that and for how we are not badgered by them.

Posted by Pam Graham, Jacksonville, Clay & St Johns Counties (All Real Estate Options) almost 6 years ago

Hello Gabrielle,

Congratulations on being featured. Great post and I agree with you 100%. As a property manager I make a strong effort to keep my numbers affordable and competitive which is easy in that many of my competitors have raised their rents to incredible numbers. Thanks for sharing.

Posted by Robert Rucker III almost 6 years ago

Hi Gabrielle,

Congratulations on the feature!  You have written a very timely post.  I currently have rents that pay on time or a day early, bu they whine at the drop of a hat.  And of course the owner does not want to spend any money.  Oh well...Best of success to you this year!

Posted by Jordon Wheeler, J W Group Real Estate Sales and Service (The Jordon Wheeler Group) almost 6 years ago

Gaby, 

It's a balance, our goal is to have great tenants.  As much as anything, we give a great property, condition and cleanliness and that helps attract strong tenants.  However, we do continue to raise rents even on tenants that pay on time and take good care of the property as markets continue to improve.  We keep it well within bounds of the market, but want to make it a win-win for all.  

We have one property where we gave a better rate since it had been vacant two months and was a tougher time of year.  The challenge now is the property is rented too low and the owner doesn't want to give away 15% below rent market value for the renewal coming up.  So, it's a balancing act if you will.  

There are a bunch of factors and we try to consider those and act appropriately with good communication to our landlords and tenants.

All the best, Michelle

Posted by Michelle Francis, Realtor, Buckhead Atlanta Homes for Sale & Lease (Tim Francis Realty LLC) almost 6 years ago

Gabrielle, if a landlord has a tenant that can help to appreciate the value of the property and pays the rent timely then not getting maximum rent is definitely to their advantage.

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) almost 6 years ago

Gabrielle - Perhaps this is why they refer to the real estate cycle? ; )

Seriously, it makes sense to stay in touch with tenants and their plans.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) almost 6 years ago

I used to have 17 rental units and when people rented off me I used to talk to them about buying a property instead of renting.  Most people never did bt we did have some that ended up buying the property after renting it for awhile and liking it.

Posted by Steve Warrene, Pittsburgh Real Estate Investment Specialists (Your Town Realty) almost 6 years ago

Rentals is a built in income for buyers if things are done right, very good post and thanks for sharing.

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) almost 6 years ago

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