Melinda Fulmer from MSN Money gives all landlords and investment property owners good news. Apartment (asking) rents jumped 4.2% in the 3rd quarter alone. Vacancy rates, although, are hovering at the same rate as last year at this time. I believe we will continue to see good news in these areas as foreclosures the tightened credit market push more people to renting instead of owning. Check out the full article here.
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#1StPaulRenterJanuary 2, 2008, 4:36 am
I have another theory for the rise in asking rents. When I was looking to rent a 3 bedroom on St. Paul’s East Side last summer, I routinely asked landlords if they would be making a profit on the property after renting it at their asking price.
More than 2/3rds of the the property owners said NO! I immediately ruled out renting from them.
Why did I feel the need to ask this question? Because as a renter I moved 2x in 2007 due to landlords who failed to crunch the numbers when they got into the investment property biz. The first property was foreclosed on six months after the landlord had an appraiser come through when he was getting the property re-financed. He pulled all the equity out and never made another mortgage payment, while continuing to collect our rent. After the sheriff’s auction, we left before being asked to leave. The property was in a decent zip code (55126) and the vultures were descending. Strangers would pull into our driveway, case the property and knocking on our door with offers to help us out of our situation. Several would-be investors refused to believe us when we told them we were only the renters.
The second property I negotiated hard to get at a lower rent than what it was advertised for on craigslist. With a Jan 1st move in date, I felt I had negotiating power. Only to have the landlady tell me in March that she refinanced to get away from an ARM and now needed an additional $200-250 to make her mortgage payment each month. I receive section 8 assistance, so what she was asking of me was illegal – never mind the signed 1-year lease! When I refused to pay the extra, and she discovered she couldn’t blackmail me because my husband is on my section 8 papers, on my county papers – not to mention on the lease, she put the property on the market. Her Realtor-puppet, who I am convinced was also her daughter, was in our face EVERY week. We finally signed a mutual agreement to vacate the property.
Property owner after property owner I talked to was losing money renting at the asking price for section 8. The dirty little secret is that many, many more than you might suspect, landlords have section 8 tenants paying extra under the table. Oftentimes landlords will claim to be paying all the utilities, while requiring tenants to pay the utilities. I had agreed to trumped-up extra garage rental charge at my last property, which was on the table and approved by section 8, but I would NOT, on principle, pay extra charges under the table.
It’s my finding that too many landlords are not making their numbers work. My current landlord, who told me “yes I am making a profit, although not as much as I used to”, told me he knows of a east-sider landlord who is collecting rent and not paying the mortgages on three properties. I have heard of two families who have had to scramble for housing due to foreclosures, as we did.
My theory is landlords are asking for more because their lousy mortgage terms are costing them more.
I am seeing wonderfully renovated “flip and hold” properties hitting the rental market. I continue to see a renter’s market on the horizon, with better quality properties being available to tenants once the newly renovated properties, many of which were bought at the the peak a few years ago, go into foreclosure and eventually get picked up at a price which will allow landlords to finally rent at reasonable rates – without turning to extortion techniques!
We ended up renting an upper duplex on the east side, while it’s smaller than our prior two places, we are very happy with our gas bill. Our downstairs neighbor cranks the heat and, of course, heat rises! Our furnace has barely kicked in all year, in fact our Nov. gas bill was $3, not including regulatory charges.
From the prospective of a section 8 renter!
#2Scott FicekJanuary 2, 2008, 4:51 pm
Thanks for all the information. You are correct that it is illegal for landlords to charge “under the table” for units from Section 8 tenants. Whenever a tenant suggests it, I tell them I can do it as I would sacrifice all my Section 8 income. It is not worth it.
I believe that rents will continue to inch up. You are right, good properties will continue to become available as they go through foreclosures and rehab.
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