Is it Really a Renters Market?

Oregon Real Estate Market Now A Renters Market

BY KRISTIAN FODEN-VENCIL

Portland, OR  March 23, 2009 11:21 a.m.

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http://news.opb.org/article/4573-oregon-real-estate-market-now-renters-market/

As Oregon’s ‘real estate’ market staggers, the closely related ‘rental market’ is also struggling to find solid footing.  Rents usually increase during a recession – because people can’t pay their  mortgages but still need somewhere to live. So they have to rent.

But there’s evidence things are different this time. And as Kristian Foden-Vencil reports, it's a renters' market.

Over the last 20 years, downtown Portland’s skyline has blossomed. And shiny new condo towers continue to spring up.

Melanie Adrian started a property management company two years ago, to help the owners of all those condos find renters.

Melanie Adrian: “Prior to this downturn in the economy we were seeing increases in rent. We were seeing high occupancies, we were seeing no concessions being given away. And as soon as the economy started taking a downturn we’ve seen a lot of rental properties come on the market which has caused increases in concessions as well as decreases in the rental rates.”

She’s seen some places offer the first three months ‘rent free.’

So the question is, why? Are investors buying foreclosed properties and renting them out for cheap?

Melanie Adrian: “I think there’s a little bit of that. I think more it’s owners who have bought investment properties, they need to turn around and they can’t sell them, which was their intention when the market was going strong. And they’ve had to turn around and make those properties rental properties. And instead of doing it on their own, because they aren’t experienced to do that, they have hired people like us to manage those properties.” 

Nearby, in a small park, Peter Phelps sit and enjoys a sun break. He sports a long grey ponytail and a bunch of keys hanging off his belt.

Phelps is a computer technician at Portland State University.  Over the years, he’s lived in more than a dozen rental properties in the area.

Peter Phelps: “Well there’s actually several different complexes that I walk by on a regular basis because I have various appointments and errands that I run. And places where two years ago there were waiting lists to buy places as now, suddenly you’re starting to put signs out in front saying, please come in an check our place out – we’ll negotiate the rent.”

The lease on Phelps’ last place ended in February. So he decided to do what many renters are now doing. 

Peter Phelps: “A friend of mine who owns a house is in between employment situations and I figured I could help him out and rent a room from him for a while until he gets back on his feet.”

Kristian Foden-Vencil: “That’s pretty good. How much do you pay for that?”

Peter Phelps: “We’re still working that one out. I’m fixing stuff up and taking care of past bills and helping him with a bunch of the maintenance, so I’m not quite sure what it’s going to turn into, but it’ll be fair, I’m sure.” 

To try and understand how renters like Phelps are responding to the market, property managers turn to ‘Metro Multifamily Housing Association.’ It conducts surveys on everything from rental prices to the number of units standing vacant. 

Greg Knakal is both the president of the association and responsible for renting out about 900 apartments around town. 

Greg Knakal: “Normal recession you would see rents stabilize, but in this particular time we’re seeing kind of the opposite. We’re seeing people move out of apartments due to a job loss and we think they’re moving in with family members, whereas in the past where we’d see them double-up with roommates and get a two bedroom, we’re not seeing that today.” 

Knakal admits it’s a good time for renters to negotiate.

Greg Knakal: “Today we may be running incentives to get people in. Which could be concessions, giving away free rent, even though we would rather not. We may also give some kind of upgrade in an apartment, do some kind of accent wall, a ceiling fan, add something to the apartment to make it more attractive. And then also the last thing we would be doing is reducing the rent some to help motivate new prospects to move in.”

Knakal doesn’t expect rents to firm up until the unemployment rate improves.

Still, it’s not exactly a free-for-all out there. Only about five percent of rentals stand vacant. Last year, when the economy was better, vacancy rates stood at about 3 percent.

© 2009 OPB

How Pets Can Be an Apartment Owner's Best Friend

by Karen Aho MSN Real Estate (05/01/09)

Apartment owners should reconsider using free rent or a big-screen TV as incentives to lure residents. Instead, they should bill their communities as "pet friendly" and roll out the welcome mat for Spot and Mr. Whiskers. The downside of allowing pets is the mess that isn't involved -- i.e. improperly disposed-of kitty litter, dog excrement in common areas and so forth. But there are many more good and conscientious pet owners than bad ones, and owners need to keep that in mind. National Association of Residential Property Managers President Fred Thompson states, "Somewhere in the neighborhood of 70 percent of your tenants are going to have some kind of pet, so you can't just say, 'No pets allowed.' If you do, you're going to see an extended vacancy period on your investment and that doesn't work out long term." A 2003 study by the Foundation for Interdisciplinary Research and Education Promoting Animal Welfare (or FIREPAW) found that pet-friendly apartments rented in 19 days versus 29 days for non-pet-friendly units. Back then, 9 percent of apartments surveyed allowed all pets, 44 percent limited pets by type or size (most allowed cats) and just 11 percent allowed large dogs. The U.S. Census Bureau reports that the apartment vacancy rate has spiked above 10 percent nationally and topped 20 percent in some areas, primarily because of an oversupply of condo conversions and fewer employed residents. The article gives several tips on how to rent to cats and dogs stress-free. Apartment owners are encouraged to meet potential residents' pets before approving applications. In addition, they should look into various insurance products regarding on-premise pets and request an additional security deposit as opposed to charging additional monthly fees for pets.

Add Value to Your Property...Avoid Concessions!

Last year at this time I was speaking with a colleague regarding an improving economy, occupancies nearing 98% with demand on the rise, and rents increasing. But what a difference a year makes. Today many apartment communities in Oregon and Southwest Washington are starting to struggle with increased vacancy rates, lowering rents and concessions on the rise.

Now more than ever it is important that you add value to your apartment community. Why should a prospect choose your community over your competition? What does it mean to add value to your community? According to Wikipedia, “the value of a product within the context of marketing means the relationship between the consumer's expectations of product quality to the actual amount paid for it.” Realistically you may not need to lower rents and give away concessions but you must demonstrate to your prospects that you are a good value for the amount of rent being paid.

This starts with your curb appeal or the overall appearance of your community. No matter the age of your community you can add value by keeping your curbs and speed bumps painted, maintain your landscape by pruning and keeping your flower beds fresh, paint your vacant unit front doors, keep your leasing office and clubhouse clean and welcoming, and ensure that your flags, banners and signage are in good condition.

Being the most exciting selection of apartment homes in the market is not about free rent. Before you give in to temptation to give away free rent, try a contest with an exciting (non-rent) giveaway instead! Before you begin, remember that everyone who visits your community must be allowed to enter a contest in order to comply with fair housing regulations. Choose a giveaway that people in your market would love! For example, add value to the apartment home by giving away a free painted accent wall, install a high end ceiling fan or add an iPod docking station. These items remain with the apartment and are selling features that can be sold to future prospects. Other giveaways may include a home office and computer, printer, and software package or a mountain bike. You can offer vacation packages for very little, and you can offer them to everyone including your lease renewals!

To add value inside your vacant apartment homes create a great living experience. First remember to remove the old residents ceiling hooks and any other items that make the home feel lived in. Industry expert Toni Blake says, “People like to feel like the apartment is NEW! Even though a friend buys a used car they will say to you “I got a new car”! It is new to them! People feel the same way about their apartment. You need to Re-package it! Re-market it! Re-present it! RE-markably!” I know we all like to shop at the Dollar Store but often times it makes the apartment look and feel cheap. The idea behind a mini-model is to increase the value of the apartment thus a good mini-model may cost you $100 or more. Your “vacant show ready homes” should feel, smell and look good. After your maintenance team has turned over the apartment it is your job to make it shine. How about using a “spiff kit” to make this happen? At minimum this kit should include wipes with 409, Windex Wipes, paper towels, lemon ammonia, Pine-Sol, Carpet Fresh, Febreeze, light bulbs, a broom, and trash bags. In addition you should add items like the great smelling Wall Flowers from Bath & Body Works (lemon verbena, vanilla and coconut). Plug one in and leave it during your “show” time and move it to the next target apartment once it is leased. Add a great music CD as it helps the prospect to relax and makes it feel like home.

Prospects are looking for value and they are also looking for things that remind them of their core values: home and family. Nothing says home and family like cute little “Fluffy!” That’s right, allowing pets is a great community feature and statistics show that residents who own pets have a tendency to be longer term residents than those that do not have a pet. Did you know that 80% of residents that live in the Northwest own a pet? By not allowing pets you are significantly reducing your pool of potential prospects. Have you thought of making your community the “Pet Friendly Place to Live?” This could be your niche. In an effort to reposition itself during a down economy, popular airline Jet Blue, recently added value with their new pet program, “We’re excited to introduce JetPaws, JetBlue’s exclusive program designed to provide pets and their owners the tips and tools they need for a smooth trip from start to finish. We’re simply committed to each and every one of our customers-including the four-legged ones,” said a representative of JetBlue.

Finally I challenge you to look at your community and see what you can do to communicate value, illustrate your community and management company’s strengths, and create a feeling of warmth.

Your Advertising should Match the Prospects Experience

Recently I reviewed several apartment communities on-line and then decided to drop into a few of these properties just to see if the advertising matched their product. I simply walked into each leasing office and asked for a tour of the community. What I saw on-line and what I experienced was really interesting and sadly not what I expected.

1. Property 1: The ad on-line read, “Great quality for a great price!” Well let’s just say they lost the “Great Quality” branding statement when I walked in the door: Handprints all over the entry door glass; resident packages tossed into the corner next to the door; poorly dressed leasing associates; no interest in me; the brochure was photocopied with pages of floor plans that were barely legible.

2. Property 2: The ad on-line read, “5 Star Service”. I was excited to visit this community. I walked in the door of this beautiful clubhouse and this is what I experienced: It took over 5 minutes to be acknowledged. Once I was acknowledged the leasing agent never got up from the desk and did not offer me a nice welcome or handshake. The agent handed me a brochure and asked if I had any questions. The agent never qualified me, never asked me my name and never asked me what was important to me in a community. I was told they had nothing to show but the ad said, “Visit our beautiful model today!” The leasing agent said it was down due to repairs.

3. Property 3: The ad on-line read, “A place to call home…..24 hour maintenance guarantee.” When I entered the office several discussions were going on with current residents. Nobody was happy and it sounded like most of the complaints surrounded around repairs not getting fixed. I was never acknowledged and from listening to all the complaining I definitely did not want to call this place home.

4. Property 4: The ad on-line read, “New carpet, light and bright interior….Free Weekly Brunch.” Obviously the new carpet was not pertaining to the office carpet as it was stained and dirty. The lights in the office were turned off as I guess they were going “Green” and saving on electric costs. I hoped the greasy plate of Otis Spunkmeyer cookies (out on the table) that had fruit flies buzzing around was nothing like the Free Weekly Brunch! Yes the show ready apartment had new carpet but the rest of the unit looked like it had not been updated since 1970. Oh ya it was light and bright because I don’t think they could have purchased a brighter white paint! Regardless of the new paint it did not cover up the smell of the cigarette smoke. I was not impressed.

5. Property 5: The ad on-line read, “Visit us today!” Guess what, I visited them just like it said and the office door was locked, they had no signage with hours, no brochure box, nothing! After the 5th property, I was so discouraged so I simply went home.

If you had me visit your community unannounced, what would I see? Does your advertising match your actual product?

Plumbing Tips for Maintenance Technicians

1. If you are having issues where your P-Trap is drying out or you are experiencing a septic smell in the unit, have the exhaust vent on the roof checked before you start tearing into the wall. If you vent pipe is clogged, your P-trap will dry out very quickly. (obviously employees will NOT get on the roof!)
2. WEAR YOUR GLOVES!- When ever any of you are working with any kind of plumbing, including lifting a toilet seat- you MUST wear your latex gloves. This is so important as there are countless germs and diseases on these plumbing surfaces. Also, never reuse your latex gloves and always sanitize your rubber or leather gloves. Most germs can live up to 30 days on surfaces.
3. When you are about to perform a work order, always visualize the job before you start it. This means going through the steps in your head before you go to the maintenance shop. There is no point in making a dozen trips back and forth to the shop to get parts. Bring everything you need with you the first time.
4. Wear your eye protection. This is extremely important. There are dozens of very harmful diseases and other parasites in the water. If you get splashed in your eye….its going to be a very bad day!
5. Sanitize your tools! When ever you are using a tool in a potentially bio-hazardous area, you have to sanitize your tool when your done. Keep a bottle of Lysol in your tool bag or at the least in your shop. These germs including Hepatitis can live on the hard surfaces for 30 days.
6. When you have to replace an angle stop or you have to shut the water off to a building, you should go ahead and replace the old technology “gate valves” with a new “1/4 turn ball valve” (unless you have a dual supply line). The gate valves are notorious for breaking off in your hand at the worst time. Also, if your replacing one in a unit, you might as well do them all as the water is already off and you will need to replace it sooner or later. The ¼ turn ball values are not lined with plastic which means that the chlorinated water that we all have running through our pipes will not corrode these valves, thus they wont become weak and break off in your hand.
7. When you have to replace a supply line…DO NOT replace it with a cheap plastic tube. Plastic will corrode and break. Spend the extra $1 and get a braded stainless steel supply line. And if you are replacing a supply line…now is the time to also replace that gate valve!
8. “Zip It’s”- these are a maintenance man’s best friend. No it’s no nitrous oxide- Sorry. Zip It’s are a long barbed piece of plastic/ vinyl that can be thread down a tub drain or sink to remove the hair and clog. Buy a couple of them because they always come up missing when you need them. Using your needle nose pliers is not the way to do it. Your working too hard if you are doing it that way!
9. When you are unclogging a tub, don’t just run your snake, whip it or what ever down the main drain. You should first run your line through the over flow drain as to catch everything that my be clogging the drain and bi-pass the basket.
10. This one is my favorite—If you have a toilet tank that is constantly sweating….take ½ of a standard red masonry brick and place it in the bottom of the tank. Make sure not to cover the flapper. This creates a reef like environment and will make the condensation magically disappear. So I hear. Its definitely worth a shot!
11. If your toilet tank is sweating, I also hear that spraying lemon pledge on the tank may help as well. It acts like “rain-X” and prevents the water from sticking to the tank. I cannot vouch for this…but I hear it a lot.
12. When replacing your toilet flapper, spend the extra $1 and buy the red “Korky Plus” replacement flapper. It has a stainless steel chain vs. the vinyl strand and it will last longer against the chemicals and cleaners. Spend the $2.99 and you shouldn’t have to replace it again.
13. When setting a toilet or replacing a wax ring—ALWAYS use a double thickness wax ring. The best way to do this is to place the wax ring on the toilet base then stick the toilet to the ground. Much easier than trying to guide the toilet on the ring from above. Work smarter not harder!
14. Water Heaters—By Law, you can not have a water heater set above 120 degrees. No matter what a resident says-Do Not adjust the heater above 120. If your heater has no numbers on the gauge, its probably half way between A-B. If your not sure, run the sink on hot and test it with a meat thermometer.
15. Flushing your hot water heaters- No one is doing this and everyone should be doing it once or twice per year! At least do it on every turn. If you flush your water heater once or twice a year, you will add three years to the life of that heater. All you have to do is turn the power off, hook up a garden hose to the bottom bib on the water heater, run the hose to external drain outside, then turn the water on to the water heater. The water in the hose will run very dirty with white sediment for several minutes. When the water is clear…your all done. If the tenant is upset for the inconvenience, just explain to them that we are doing this to save them money. The water heater likely has 20% of the tank filled with sediment. So, the water heater is constantly running because its trying to keep the tank hot. If the tank is 20% filled with junk, then your tank will hold less water.
16. If you are constantly having plumbing fittings break, CHECK YOUR WATER PRESSURE! The water comes to the property from the City at around 100 PSI. Your water then runs through a regulator into the units and should decrease the pressure to around 65 PSI. Your plumbing fixtures are designed to optimally perform at 65 PSI. If the water pressure is too high or too low you will have problems. Don’t know your PSI? Here’s how to find out:
-You will need a water pressure gauge: Take a reading at the hose bib on the side of the building. This should be your highest reading as its closest to the main line and regulator. Then take a reading at an upstairs shower towards the back of the building furthest away from the main line. Then add those two readings together and divide by two. That is your average PSI for the building. If you are more than 7 or 8PSI over or under, we need to look at your regulator and make adjustments.

Remove Tough Stains

When it comes to difficult stains, wall marks etc. you must give this special eraser a try. In the property management business we have used this product for many years and have received excellent results. Before you move-out of your next home or apartment you might want to use this "Magic" wand! If used it may help you get your deposit back........Check out this link http://cruftbox.com/blog/archives/000988.html

Rental Market Cools?

Don't get me wrong, it is still a good time to rent out your home. But you must remember that there is more product in the market place. Why? Builders that cannot sell have decided to rent out their homes and foreclosed homes are being purchased by investors and turned into rentals. Also the condo market has gone cold thus these homes have been converted into rentals. Long story short, potential tenants have many choices!

For this reason, investors/landlords need to ensure their product is in good shape and reasonably priced so that it rents quickly. Competition is tough right now. Potentially more important than price is finding a good quality tenant that will keep your home in good condition. Background checks and asking the right questions are vitally important and should not be taken lightly. For instance, is the potential tenant willing to sign a one year lease or longer? It cost money to turnover tenants and the longer they stay around the better for the investor. But first you must find a good qualified tenant.

info@RedDoorResidential.com