This is a Question and Answer session I had with the Calhoun Times Editor Brandi Owczarz about what we are seeing in the rental market. It ran in the paper a few weeks back and a friend asked me to post it to the blog. So here you go.
Q. What rental “trends” are you seeing right now in NW Georgia…are you seeing that 3/2 homes are popular? Are people requesting big yards? etc….
A. We are seeing a shortage in single family homes for rent. I believe this shortage is due to this most recent housing crash. We all know banks got burned. Because of that, they have tightened up their lending criteria and made it much harder to purchase rental properties. Therefore, fewer landlords are buying new rentals. But there is another group that got burned as well: the people that got foreclosed on.
The natural progression of things should be: move from mom and dad into an apartment, move from the apartment into a single family rental, and then attempt to purchase your own home.
Because so many people got foreclosed on after the crash, the idea of home ownership has become less appealing. I am hearing people say, “I am just going to rent for the rest of my life”. That means tenants are finding a home and staying put. Where this is good for landlords, the lack of turnover from tenants to new home owners means less available houses to rent.
This year has been a little paradoxical. Since people are not moving, supply and demand has increased rent prices. For Gordon County, I would say the average rent range for a standard 3/2 to be between $750-$900/month.The paradox we are seeing is the Millennials and Generation Z’s are also expressing a lack of interest in home ownership. They’re skipping apartments and looking to get right into single family houses at a rent range of $450-$600. So landlord’s are increasing their rents and having little trouble filling vacancies, while the younger generation is expressing a desire for cheaper rent. Both present a niche. So be on the look out for ways to fill those needs.
A 3/2 in a nice neighborhood is still the best investment property. It is desirable, fits most families, and has the best ratios maximizing rent and minimizing expenses. As we take calls, people are asking for at least a 3/2. However, we are seeing more and more people asking for four bedroom houses.
Q. What do you suggest anyone looking to rent a home do before they jump in?
A. Since supply is low, Landlord’s are being more choosy as to who they put into their homes. If you are thinking of looking for a new home, make sure you have a good “rental resume”. Your rental resume will be things you supply the landlord in your applications. Here are some things we like to see:
- Being on the Job for at least a year. The longer the better, but one year is a minimum. This shows the landlord you have a stable life style.
- Your combined household income is at least 3 times the rent rate. The industry standard is that a tenant should be paying no more than a third of their income in housing. This insures that they can pay rent and have enough left over for all other living expenses.
- We like people that have a budget and that have something in savings. These two things show financial maturity and put you a head above applicants that do not focus on their finances. We ask for this on our application. But if it’s not asked for on your application, it may be a good idea to fax a budget along with your account balances when you send it in. *Note: Landlords are not prying to see how much money you have. They just want to see that you have thought to save enough that an unexpected car expense will not prevent you from paying on time. When we see you have a buffer/ emergency fund, we see someone who is responsible.
- Showcase any home maintenance skills you possess. You are more likely to get a home if the landlord knows you can take care of it.
- Have a voicemail set up with your name on it. I know this sounds funny, but good communication is important in any relationship: including a land lord tenant relationship. If you have not taken the time to set up a personal greeting, we take that to mean you don’t communicate well.
During this time of rental shortages, you need to outshine your competition in order to get the house. Putting these things on your application will give you an edge on the getting the house you have been looking for.
Q. As a property owner, renting to others, what advice do you have to those looking to rent through your eyes or perspective?
A. If you’re thinking of becoming a landlord for the first time, Congratulations. You are making one of the best investment choices you could ever make. As you get ready to put a tenant in, make sure you are not afraid to be choosy. It is better to take your time and find a great tenant than to take the first person with cash. Landlords who do that often tell stories of tenants who stop paying after the first month and destroy the house.
My Advice is to look for people that will do the four jobs of a tenant. That would be:
- Take care of the house
- Pay on time
- be a good neighbor
- be good to work with
Your application process should center on finding tenants that can do all four of these.
The best piece of advice I can give you is do an in home interview. When you go to meet your perspectives, you will see if they do three out of the four jobs. First, you will be able to see if they take care of their house. (Remember, what their house looks like today is what yours will look like in 2 months if you rent to them.)
Second, you can find out if they are good neighbors. You can do this two ways. Ask your perspective about their current neighbors. You can tell a lot by how they answer. Next, go ask their neighbors what kind of people your perspectives are. Neighbors will not mince words about each other.
Lastly, you will see if they will be good to work with. You will get a good feel for how they will treat you from their hospitality and the social interactions you witness between families members while you are there.
These are the things you will not find by just reading an application. Besides, after you discover all this, finding out if they pay on time is easy.
Q. What is you bio?
A. Joe and Ashley English are a husband and wife investor team that has been investing in Northwest Georgia since 2010. We actively flip property as well as manage over 20 single family rental homes. For more information or to ask a question, check out our blog at www.cashflowwithjoe.com