By Justin Elliot
There are fundamental reasons why your apartment may not be renting as quickly this year as it may have in previous years. The first of which is the job market, which is no secret, but its effects have been hard felt. National studies have now revealed that only 1 out of 5 graduating seniors had received a job offer in 2009. In 2008, that number was better than half. This dynamic change has drastically reduced the number of new “renters” looking for an apartment.
The sour job market has also made people more apprehensive about moving in general. There is that underlying feeling, “will I even have my job next month or will there be more layoffs?” In fact, another national survey reflected that 25% less people moved last year than 2008. This again is eating into our pool of renters.
Overall, people are being far more conscientious about how they spend their money. The truth is that it is expensive to move and people are taking this into account. Yes, there is movement in the market due to people downsizing, but a large portion of these people are moving in with friends or back home to save money. Once the job market returns, these people will be back in the market looking for new apartments. We are also seeing that corporate relocation, as you may well have imagined, has slowed significantly. We are no longer seeing professionals renting an additional apartment in a market where they commute.
The Future is Bright
The job market will eventually rebound and things will get back to business as usual. When this happens newly employed individuals will rush to rent apartments. It is unlikely these people will seek purchasing condos given new mortgage requirements and the likelihood that rates will have risen substantially, enough so to discourage buying. I am optimistic that renting apartments will be the trend for the foreseeable future; much like buying has been over the past ten years. The rental market is in a small storm, but the future is extremely bright. Once the job market returns, so will the renters.
Make Renters Fall In Love With Your Apartment
Despite the bad economy there is good news. People are still renting apartments; the overall pool is just smaller. And with fewer renters in the sea, you need to be more skilled at capturing them. I want to share some tips with you to help you fill your investment property faster.
1. Great pictures attract renters
In a market with a higher supply than demand it is crucial that your unit stands out. Great pictures will not only attract renters to your property on our website but also catch the attention of leasing agents when they search through the thousands of listings in rental databases. That’s why I more than anything recommend that you get some very good pictures of your property. And if you want to go the extra yard, you should also provide agents with a description of what makes your property unique, for example that it is close to the beach, has brand new hardwood floors, ample closet space or free parking. Remember this is no different than a personal ad; you have to strut your stuff.
2. Make your property accessible to show
The second most important thing you can do is to make your unit accessible at virtually all hours. Agents have prospective renters that view apartments up until 10 p.m. They find that when renting an apartment, more often than not, people do not have much time and therefore are likely to rent one of the first places they see. Would they have rented your unit if they had been able to get into it? The answer is maybe, but these are the opportunities, which need to be captured. I therefore strongly encourage you to entrust your agent with a set of keys so they can gain immediate access to your property.
3. Price your property in alignment with the market
We often hear that landlords cannot take less than a certain rent amount or they are losing money. I strongly discourage this outlook. It is far better to collect something than nothing, even if that something is only 85-95% of your target. Nothing costs more than an empty unit. Renters are aggressively negotiating rents, because they know it is a “renters market”. My advice is to not resist this trend and to ride out the storm. Whatever money is lost during this economic downturn, will be quickly recouped as soon as the market rebounds at which point you will be in a commanding position.
4. Make your property presentable for showings
This is simple, but often overlooked or forgotten. Nothing turns a renter off more than a dirty kitchen or bathroom or an entrance area that is cluttered with old newspapers and mail.
5. Think about collecting move in fee’s rather than security deposits
Given the recent number of law suits surrounding the improper management of security deposits, there has been a significant trend of property owners that have phased out security deposits and in lieu are taking a non-refundable move in fee. I strongly recommend this course of action. It will help you to avoid a lawsuit, many of which are above $10,000 in fees and penalties, and you will also receive additional revenue with the “move in fee”.
About the author
Justin Elliot is the CEO and Co-Founder of Chicago Apartment Finders, the fastest growing locator service in the Mid-West.