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For Leasing Consultants Who Sell Value, Fluctuating Rental Rates Can Cause Massive Headaches

For Leasing Consultants Who Sell Value, Fluctuating Rental Rates Can Cause Massive Headaches
I have always been a value seller, in that I justify the cost of an item by showing all the value that the person will get out of it.  So when I was leasing apartments, if the rent was $1,000, then there must be $1,000 (or more) of value that we are providing in order for me to be confident in my sales approach.  However, as different pricing strategies came into play which resulted in constantly fluctuating rental rates, it really threw me for a loop.  I’m guessing that there are others who struggle with this same issue, so hopefully this helps! Let’s say that a certain 1 bedroom floor plan two months ago rented at $1,000/mo, but since then, the supply of 1 bedrooms has gone down, and also the market rates in the area have turned up, so now that same apartment rents at $1,100.  The challenge for me was that nothing had fundamentally changed in my idea of “value”.  The amenities hadn’t changed.  The level of customer service, although great, hadn’t really changed.  It was essentially the same apartment and living experience as it was two months ago, and yet it was more expensive.  From a practical perspective, I understood what was driving the price up, but I was having trouble being as confident in an apartment that was more expensive even though nothing had really changed with its “value”.  Now, not everyone will have issues with this value conundrum, as people sell in different ways, but for those who happe......
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California will be Voting on Rent Control in November!

California will be Voting on Rent Control in November!
  On Friday the Secretary of State Alex Padilla confirmed that tenant activists have gathered enough signatures to qualify their state-wide rent control measure for the November ballot. With the fate of the Costa Hawkins Act in the hands of Californian voters, it is vital that rental housing professionals in California be vocal in their opposition.  The Potential Effects of This Rent Control Measure If passed, this rent control ballot measure (also known as “The Housing Freeze”) could: Allow rent caps on properties to be locked in place forever Open the door for rent control on single family homes and new construction Lead to lawsuits, as it unclear what constitutes fair market value Grant new powers to regulatory bodies to impose or modify rent policies – without public oversight Allow proponents to intervene in lawsuits with all their expenses paid by taxpayers – even if they lose While less than 20 cities currently have rent control regulations (with many activists aiming to put a rent control ordinance for their city on the ballot as well), repealing the Costa Hawkins Act would invite local governments to create their own rent control regulations. Owners with multiple properties in different Californian cities would need to be mindful of the differences in rent control regulations (with some cities tacking on “just cause” eviction regulations onto their rent control ordinances) as well. Although multiple tenants’ rights groups believe that rent control can help alleviate the rising rental rates in major metros across California, repealing the Costa Hawkins Act w......
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A Mid Year Report Card, Is Your Property Achieving Its Goals?

With the end of June,  take this opportunity to review your property’s achievement or progress toward its goals.  Explaining goals during team meetings gives each team member ownership and understanding of these objectives.  Converting each objective into SMART goals gives a value every team member can measure. What occupancy is needed to produce the budgeted rent revenue?  What is the average occupancy for the first half of the year? How do the year to date expenses compare to the budget?  How do occupancy and expenses compare to the property performance from a year ago? With many organizations, success is not only measured in a comparison to budget, but also, it’s year over year expenses, same store sales. The results of changes to revenue and expenses will determine the effect on NOI, Net Operating Income, for the property. Has the Gross Rent Potential increased over the previous year?  This would be achieved if the market rent has been increased.  The impact of rent increases, is lessened by the existing leases on a property.  Managing lease renewals will reflect in a decreasing trend in the rent dollars tracked in a loss to lease expense area.  Failure to increase rents on renewals will decrease the rent revenue on a property. What change has affected the average or economic rent?  Market rents can be increased, but if lease renewals do not result in increased rental rates or move in concessions are increased; the average rent will have decreased from the year before. A property coul......
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It’s Coming: Preparing for the Rent Plateau or Decline

It’s Coming: Preparing for the Rent Plateau or Decline
Inevitably, the sizzling apartment market occupancy rate had to cool off at some point. That time might be just around the corner. According to a recent report by the National Multifamily Housing Council, rent softening is already underway in a number of markets. Market conditions in all four indexes in the NMHC’s October survey, including market tightness, sales volume, equity financing and debt financing showed weaker numbers than the previous quarter. The findings indicate that the growing supply of new apartments has finally begun to catch up with demand. Panic isn’t going to help, but ramping up your marketing efforts will. We’ve always recommended that you continue marketing through the slow season to maintain consistent exposure, even when the market is trending upward. But whether you kept marketing or dialed it back a bit, now would be a good time to reinvigorate your marketing campaigns. If you don’t take action now, come leasing season, you might be in more of a fight than usual for leases. Here are a few ways to make sure you get a head start on your comps. When spring arrives and your comps are desperately trying to regain exposure and traffic, you’ll already be ahead of the game. First, start with some housekeeping items: Follow the market trends. Analyzing market trends in rent, occupancy and more at the unit level on a regular basis is vital to your ability to effectively price apartment homes. Make sure you’re receiving market trend reports from your marketing partner so you can sta......
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Dear Gabby: Average Rent in Major US Cities

Dear Gabby: Average Rent in Major US Cities
Dear Gabby,  I’m thinking about making big changes in my life. My friends all think I’m going through a quarter-life crisis, but I just want a change of scenery. I live in the country currently, and I’m ready for hustle and bustle of a more metropolitan area. I know apartment rent can be pricier in the city, so I’m hoping you can give me an idea of what I can expect. - #CountryBoyMovingToTheBigCity Hey #CountryBoyMovingToTheBigCity, Last year I got really excited when my son joined the cross-country team. But then I learned they don't cross the country and are back home in a few hours. I was hoping for something a bit more permanent.  Kidding (kind of)...but moving to the city is a great idea. I’m a city girl myself and can’t talk it up enough. I mean, living a three minute walk from five different coffee shops is truly a dream come for a coffee addict like me.  Considering the cost of rent is important if you’re seriously thinking about moving, especially since the price varies so much throughout the United States. Lucky for you, a study conducted by GoBankingRates has revealed what the average person pays in rent for a one-bedroom apartment in cities across the country.  The data reveals some predictable insights, but you also might be surprised by some of the findings. It’s fairly well-known that San Francisco and New York City are pricier cities, given high demand for housing but low supply. You may want to remove those fr......
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Student Housing Wants and Needs

Student Housing Wants and Needs
This week marks a special time for many college students: the beginning of the fall semester. Students may be feeling the pressure of getting all their books, supplies, and living essentials in order, especially if this is their first time away from home. One aspect that many may overlook or not spend enough thought on is exactly where they’re going to live. Students may be unfamiliar with the area and unsure of what to look for in a student housing community. Many have already made their living arrangements but there’s still an opportunity for “late registrations.” Here are the top things students look for in a community. Proximity to Campus Students will seek communities close to campus. However, these communities fill up and are more than likely completely leased. On the flip side, don’t count out students who are seeking a good deal on rent. If your community can’t offer a short distance to campus, make up for it through affordable rent. Students will trade a longer commute for savings in the long run. Student Room Sizes College dorms can be the equivalent of living inside a closet. That’s why many seek off-campus housing. Students need room to study in peace; there’s nothing worse than having a roommate playing video games three feet away from you while studying for the big exam. They also desire privacy; that’s why they’re interested in an off-campus community. Show students how you can provide space and privacy and you’ll have an upper hand. Furnished Spaces Think about this from a student’s perspective: the less they have to move,......
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Targeting Second Chance Renters

Targeting Second Chance Renters
Does the old adage that life is sweeter the second time around apply to “second chance” renters? After all, why would a professionally managed property company want to attract renters who they know have a ding somewhere in their credit or rental history? The answer is quite simple: the individuals who are bunched into the “second chance” category aren’t all bad. In fact, given the estimates that nearly half of all Americans don’t have $400 at their immediate disposal in the event of an emergency, we have to wonder if the majority of today’s renter population is all heading toward a giant ding in their profile that would define them as higher risk. And given the law of averages, all good rental communities are bound to have a balance of high credit/low risk residents combined with lower credit/higher risk residents. It’s often an 80/20 rule in terms of which segment of resident population performs best since some people are just better than others at managing their money, and some people are forever in the deep water trying to juggle expenses that outstrip earnings. Rental Housing Statistics Industry statistics paint a clear picture of what a rental community can expect to find in its applicant pool: ·        25-30 percent will be accepted outright without additional conditions to a standard lease ·        25-30 percent will be accepted conditionally with additional conditions that usually require higher security deposits and/or the need for a co-signer/guarantor ·        50 will be denied due to credit or rental or criminal histor......
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Rising Rents Make It Tough to Afford Housing But Property Owners Aren’t to Blame

Rising Rents Make It Tough to Afford Housing But Property Owners Aren’t to Blame
Finding an apartment is hard enough. Understanding the calculus of finding an apartment you can afford could make you wish you’d paid more attention in math class. According to the latest annual report by the National Low Income Housing Coalition (NLIHC), "in no state can a minimum wage worker afford a one-bedroom rental unit at the average Fair Market Rent working a standard 40-hour work week, without paying more than 30% of their income."  In a market driven by supply and demand the scales may seem tipped against the renter, but it’s important to realize that property owners are also in a bind in that they need dependable cash flow to maintain operations, and the individuals whose income has to stretch beyond 30% to cover their monthly rent will likely also present a payment risk. In these days where consumer credit worthiness is in the doldrums, perhaps it’s time to re-think what percentage of income should be allocated to housing. Would 40% make more sense? That’s a larger conversation for bigger math minds than mine. For now, let’s look at what renters really need to know in budgeting for a new rental home. Take for example costs associated with a new one bedroom lease in rental markets like Charlotte, South Carolina or Austin, Texas. Here’s the math you have to assemble your budget: 1.       Twelve months rent @ $1,000 per month = $12,000. Anyone can get that far, but that’s only half the story. 2.       Twelve months rent @ $1,000 per month = $12,000 + one month r......
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Credit and Payment Risk

Credit and Payment Risk
Whoever said that fair and equal go hand-in-hand?  No one who has ever tried to get a loan lately if their credit score is below average, or just below the required standard.  For these millions of Americans, life is tough.  Essential services cost more. And service providers have no choice but to define those who fall into this group as "higher risk” and tack on extra charges to protect against future potential defaults.  I want you, but only if you protect me against the payment risk your credit score reflects… The irony should not be lost that those who have the less and who can least afford extra charges are charged the most to get by.  The question is why do so many people have credit scores in the doldrums?  We can point to lots of reasons, including wage growth that has been practically flat for the past decade while the cost of living has climbed consistently year-over- year.  The general consensus is that median household income has also been flat, but for a whole lot longer since the 1980’s, making it harder for individuals to stretch a paycheck and pay all their bills on time which ultimately makes it impossible to build credit.  Almost one-in-four of today’s college graduates are unemployed, and may never have had a chance to build a credit score.  And that doesn’t begin to account for the millions of people who have found no reason to trust financial institutions that could help them to build a better cr......
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Why Charging Higher Security Deposits Hurts Apartment Communities

Why Charging Higher Security Deposits Hurts Apartment Communities
Higher security deposits are typically charged when rental applicants don’t meet standard credit requirements.  These charges are intended to compensate for presumed future payment risk and protect an apartment community against loss.   The problem is that the renter population most likely to be charged higher security deposits is comprised of individuals most financially vulnerable.  In practical terms, because it costs more for lower credit renters to obtain access to a rental lease, apartment communities are making it more difficult for these consumers to pay rent reliably throughout the term of the lease. Why?  Because life always gets in the way of good intentions, and replacement of a car tire that has to be repaired in order to get the resident to work will always trump delivering rent on time.  And so the cycle continues until, according to survey released this week by Bankrate.com  consumer debt overcomes meager savings.  According to the survey, 37 percent of Americans have credit card debt that equals or exceeds their savings.  That means that nearly three-out-of- eight people would be financially stranded in the event of an emergency more pressing than a flat tire.  For apartment communities, that means that rent would be late, additional charges would be imposed on the resident whose already stretched, and things could result in either a skip or eviction, which no one wants. In light of these troubling statistics, what alternatives are there to charging higher costs to those with the least to give?    Enter security deposit alternatives like rent f......
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