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Rent Out Your House Instead of Selling it in Slow Housing Market

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You’ve heard all year, “it’s a seller’s market” and may have considered putting your house on the market. If you have not taken action yet to sell, don’t. New talk from Redfin CEO, Glenn Kelman, states that the market has seen a “significant slowdown” in recent weeks and while second quarter earnings came in as expected, Redfin’s third quarter forecast came in under what Wall Street projected. Talking specifically about the West Coast, including areas serviced by Elk Grove property management team, RPM Select, like Seattle, Portland, and San Jose, Kelman states, “June sales were down in these markets by double-digits while inventory was up also by double-digits.” He states that new reports are now coming in showing that the East Coast is following the trend in places like Boston, Washington, D.C., Virginia, and areas of Chicago.

Why is the Seller’s Market Transitioning?

Many factors go into making the success of a seller’s market. Some real estate experts suggest that the recent slowdown in housing sales can be attributed to less new construction of homes and a short supply of existing homes for sale, which directly push housing prices so high, they become unaffordable to would-be buyers due to bidding wars. New taxes on imported lumber are also making the construction of new housing more expensive. Another direction to place the blame is on The Federal Reserve. With a flourishing economy, it intends to continue to raise interest rates, making a mortgage more expensive. Government-sponsored enterprise, Freddie Mac, expects the housing market to stay slow through the rest of 2018.

What Can Homeowners Do if They Don’t Sell?

Having your home listed for sale and not receiving offers or receiving low-ball offers, can be disheartening. Elk Grove property management company, Select, does not want you to get discouraged if you need to relocate and are unable to sell. Renting out your home is a wise decision when the selling market takes a turn for the worse. As home prices rise, people are more likely to rent than buy. This turns the odds in your favor. Before you choose to rent out your home, may we suggest you consider the following:

  • Rent Amount: Do your market research to determine the asking rent you can achieve. Pull comparison rental properties in the immediate area to determine your rental price. In a bad economy, you may only be able to cover the mortgage. In a good economy, you will likely cash flow, especially in a city like Elk Grove. Property management experts warn against listing your rental house for too low. If you do this, you run the risk of attracting less qualified tenants. Be realistic with your asking rent.
  • Finding and Qualifying Tenants: Advertise your property across multiple outlets including print ads, websites, and word-of-mouth. Ask prospective tenants to fill out and submit an Application to Rent after they have walked through your property. Require an applicant’s two most recent pay stubs to verify their employment. If they do not receive pay stubs, six month of bank statements or two previous years of tax return documents would be sufficient. Verify the applicant’s employment and rental history. It is standard for property management companies in Elk Grove to ask for a deposit and rental application fee when an applicant returns the above mentioned documents. Check credit scores and conduct criminal background checks to ensure you have a reliable renter who is likely to pay rent in full and on time each month.
  • Signing a Lease: Require your tenants to sign a lease agreement at the time of move in. Ensure that your lease clearly explains each party’s obligations and responsibilities. Select recommends that you contact a local lawyer to assist you in drafting a lease agreement to make sure it complies with all Fair Housing, rental, local, and insurance laws. Clearly communicate your expectations with tenants at the time the lease is signed. Conduct routine property inspections to make certain your tenants are adhering to all lease agreement rules.
  • Insurance Changes: Renting out your home with property management in Elk Grove is a great way to earn passive income. Before a tenant moves in to your property, change your homeowners insurance policy to a rental home insurance policy. Your original homeowners policy covers the structure of your house, the belongings inside of it, and any damage done to the property. A rental home insurance policy covers the structure of your home, legal fees, medical expenses and loss of rental income if repairs are needed.

Hire the Top Elk Grove Property Management Company to Work for You

With more than 35 years of experience in the rental property management industry, you can feel confident knowing your house is in good hands. Select handles everything for you including advertising, showing your home, qualifying tenants, lease signings, move ins, rent collection, regular property inspections, move outs, maintenance, and repairs to the property. If you are needing to get out of your home, but cannot seem to get a fair asking price for your it, give Select a call today.

Why Studies are Showing People Renting Instead of Buying

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It may seem surprising, but multiple research studies conducted by Zillow and NYU show that people are choosing to rent instead of buy houses in major cities across America. Whether they choose to rent or are forced to rent due to affordability, the research results tell the facts. The facts that allow real estate investors like you to make more money. The stigma of renting has adapted to a positive light as renters find they can get more space for their money than with buying in a market with pre-recession prices. If you are looking to get into the rental property management Sacramento scene, there is a lot of money to be made off renters.

Major Cities that Saw Increases in Renters

A study conducted by Zillow researchers found that the amount of renters versus homeowners in America from 2006 to 2016 increased overall by 5 percent. Of the top 50 urban areas in America, 29 of them were made up of a majority of renters. That is more than 50 percent. Below is a list of the largest metro areas in the United States and the percentage of renters in 2016 in the urban area, as well as the increased percentage of renters between 2006 to 2016:

  • Albuquerque, New Mexico – Renter Rate: 39.6 percent, increase of 0.9 percent
  • San Francisco, California – Renter Rate: 62.1 percent, increase of 1.4 percent
  • Austin, Texas – Renter Rate: 55.1 percent, increase of 2.4 percent
  • New York City, New York – Renter Rate: 68.0 percent, increase of 2.4 percent
  • Omaha, Nebraska – Renter Rate: 43.4 percent, increase of 2.4 percent
  • Arlington, Texas – Renter Rate: 44.5 percent, increase fo 2.6 percent
  • Oklahoma City, Oklahoma – Renter Rate: 40.8 percent, increase of 2.9 percent
  • Fresno, California – Renter Rate: 53.5 percent, increase of 3.3 percent
  • Houston, Texas – Renter Rate: 56.9 percent, increase of 3.3 percent
  • El Paso, Texas – Renter Rate: 42.1 percent, increase of 3.4 percent
  • Fort Worth, Texas – Renter Rate: 42.9 percent, increase of 3.4 percent
  • Boston, Massachusetts – Renter Rate: 65 percent, increase of 3.6 percent
  • Los Angeles, California – Renter Rate: 64.1 percent, increase of 4.1 percent
  • New Orleans, Louisiana – Renter Rate: 53.7 percent, increase of 4.4 percent
  • Raleigh, North Carolina – Renter Rate: 50.9 percent, increase fo 4.4 percent
  • Tucson, Arizona – Renter Rate: 49.5 percent, increase of 4.4 percent
  • Sacramento, California – Renter Rate: 52.4 percent, increase of 4.5 percent
  • San Diego, California – Renter Rate: 54.3 percent, increase of 4.8 percent
  • San Jose, California – Renter Rate: 43.1 percent, increase of 4.8 percent
  • Baltimore, Maryland – Renter Rate: 54.3 percent, increase of 4.9 percent
  • Portland, Oregon – Renter Rate: 48.0 percent, increase of 5.1 percent
  • Tulsa, Oklahoma – Renter Rate: 50.7 percent, increase of 5.3 percent
  • Oakland, California – Renter Rate: 61.7 percent, increase of 5.4 percent
  • Chicago, Illinois – Renter Rate: 56.3 percent, increase of 5.6 percent
  • Denver, Colorado – Renter Rate: 50.0 percent, increase of 5.6 percent
  • Long Beach, California – Renter Rate: 62.3 percent, increase of 5.7 percent
  • Seattle, Washington – Renter Rate: 53.9 percent, increase of 5.8 percent
  • Dallas, Texas – Renter Rate: 59.2 percent, increase of 5.9 percent
  • Baton Rouge, Louisiana – Renter Rate: 53.2 percent, increase of 6.0 percent
  • Miami, Florida – Renter Rate: 69.9 percent, increase of 6.1 percent
  • Philadelphia, Pennsylvania – Renter Rate: 47.9 percent, increase of 6.1 percent
  • Jacksonville, Florida – Renter Rate: 43.4 percent, increase of 6.4 percent
  • Kansas City, Missouri – Renter Rate: 47.0 percent, increase of 6.4 percent
  • Columbus, Ohio – Renter Rate: 56.0 percent, increase of 6.5 percent
  • Washington, D.C. – Renter Rate: 60.8 percent, increase of 6.5 percent
  • Nashville, Tennessee – Renter Rate: 47 percent, increase fo 6.7 percent
  • Colorado Springs, Colorado – Renter Rate: 42.5 percent, increase of 6.9 percent
  • Indianapolis, Indiana – Renter Rate: 47.6 percent, increase of 7.0 percent
  • Milwaukee, Wisconsin – Renter Rate: 59.2 percent, increase of 7.0 percent
  • San Antonio, Texas – Renter Rate: 46.4 percent, increase of 7.2 percent
  • Minneapolis, Minnesota – Renter Rate: 53.3 percent, increase of 7.4 percent
  • Virginia Beach, Virginia – Renter Rate: 37.8 percent, increase of 7.4 percent
  • Phoenix, Arizona – Renter Rate: 47 percent, increase of 7.5 percent
  • Cleveland, Ohio – Renter Rate: 58.2 percent, increase of 7.7 percent
  • Charlotte, North Carolina – Renter Rate: 47.8 percent, increase of 8.2 percent
  • Atlanta, Georgia – Renter Rate: 58.7 percent, increase of 8.3 percent
  • Mesa, Arizona – Renter Rate: 40.7 percent, increase of 8.5 percent
  • Honolulu, Hawaii – Renter Rate: 58.3 percent, increase of 9 percent
  • Las Vegas, Nevada – Renter Rate: 47.3 percent, increase of 9 percent
  • Memphis, Tennessee – Renter Rate: 56.1 percent, increase of 11 percent

While the above list is mind-boggling at the percentage of people renting in major cities in 2016, it goes to show that housing prices are too high for people to afford to buy. They are choosing a lease over a loan. Rental property management in Sacramento proves to be an ideal investment and business venture with more than half of the residents identified as renters. Over a ten year period from 2006 to 2016, it saw a 4.5 percent increase in renters. Experts predict this number to increase as home prices are continuing to climb while inventory stays low.

Cities with the Most Shocking Numbers in the Rental Market

In the 2016 research study mentioned above by Zillow, the cities with the most shocking percentages of renters include San Francisco, New York City, Boston, Los Angeles, Oakland, Long Beach, Miami, and Washington, D.C., all coming in at over 60 percent. Notice that 50 percent of these aforementioned cities are located in California, where the rental market is strong. Memphis, Tennessee takes the cake with the highest percentage increase of renters from 2006 to 2016 with an 11 percent increase. The runner-ups were Las Vegas and Honolulu with a 9 percent increase.

Why are Housing Prices So High?

Sacramento rental property management companies have studied the reasons why housing prices are so high, making it unaffordable for even the first-time home buyer looking at a starter home. A Housing Outlook released by Forbes.com noted that a senior economist with Zillow ties the increased housing prices to a “tightened inventory, rise in prices, mortgage rates barely budging, and while new construction picked up at the end of 2017, it wasn’t at the starter price points where it was needed.” Economists also note that home prices are rising more quickly than wages, salaries, and inflation, tilting the more desired option for housing towards the rental market instead of home-ownership.

Sacramento Rental Property Management Going Strong

As the majority of residents in Sacramento continue to rent (at a 52.4 percent rate), real estate investors can feel confident in their investment and know that their financial portfolio is strong. While housing prices are at a high, there is still money to be made by purchasing a rental property. The demand for rentals is high enough in the area that landlords can still find high quality tenants. RPM Select is the expert rental property management company in Sacramento and helps landlords avoid the headache of managing a real estate portfolio. Sit back and relax while Select takes on the management side. Call us today.

Investing: Why Choose Single Family Homes Over Multi-Family Housing

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You made the wise decision to invest in real estate, a portfolio that will leave your financial goals limitless. If you have already done your research, you have decided which type of property to purchase. If you are at the beginning stages of deciding to invest, let the experts of the top Sacramento property management company, RPM Select offer their experience and research.

Why Single Family Over Multi Family?

Each has its pros and cons, but the answer is simple when it comes to making money. Single family homes make more rent money than an a single apartment or condo. You have a greater rental price markup for single family homes when you choose it as an investment over an apartment or condo. However, the tables turn when purchasing a duplex, triplex, or fourplex. When looking at vacancy rates, single family homes have higher occupancy rates and less turnover than multi family housing. This is generally due to the fact that the target audience for single family homes are families, with a few children. These children are enrolled in local schools, which entice the families to put down roots for longer periods of time than those who rent smaller spaces, like apartments, which have the flexibility to be more transient. Mortgage lenders see single family homes as lower risk investments than apartments. This is due to the fact that if the economy takes a turn for the worse, single family homes hold their value better than condos and apartments. Lenders accept lower down payments and will give lower interest rates to owners of a single family home over a multi family complex.

What Do Renters Look For In a Rental?

Sacramento property management companies know it is not rocket science when it comes to guessing what potential renters look for in a house. Aside from “location, location, location,” prospective tenants searching for single family homes typically want three bedrooms and two to three bathrooms. These clients usually have a couple children and desire a fenced backyard, close proximity to good schools, and a relatively quick commute to work. Many of the single family home renters are millennials which range in age from twenty-nine to thirty-six, which are in childbearing years, leading them to seek homes with multiple bedrooms. Millennials like modern, open floor plans, so if you are searching for an older home that does not offer an open floor plan, consider searching for a newer home if your budget allows, or find an older home that either already offers an open floor plan, or one that can be altered into an open concept for a relatively affordable price. Do your research on the schools in the neighborhood you are looking to buy. Schools with good reputations can easily sway a renter in the direction of your investment property.

How Sacramento Property Management Companies Capitalize on Technology

Single family home renters are made up of mostly millenials who, as property management companies know, are glued to their technology devices. According to a National Multifamily Housing Council 2017 study, 43 percent of residents who live is rental homes are in single family homes, while 36 percent reside in communities that offer five or more units for rent, meaning large apartment complexes. Select knows how to reach the target audience in the 43 percent. The quickest and easiest way to reach prospective tenants is to advertise your single family home rental online, across multiple websites. Some of these include Zillow, Trulia, Hotpads, Craiglist, Facebook, and local classifieds within your community. The more platforms you advertise with, the more quickly you will fill your vacancy with high quality tenants. Some Sacramento property management companies are even using technology to their advantage by taking it one step further and utilizing smart entry, allowing prospects to “show themselves in.” Using smart access technology allows management companies to let vendors and technicians into the property during the turnover process to make repairs and updates to the property.

Is There Room for Growth?

The United States Unemployment Rate is holding steady at a 49 year low. As more Americans are employed and their incomes rise, the more house they can afford to rent. The U.S. economy on a whole is healthy and job wages are continuing to increase. Sacramento property management companies and investors alike see that mortgage lenders have tightened the parameters on borrowers, steering those in search of a home toward renting rather than purchasing a home. Housing prices are and have been highly inflated during the 2017 and 2018 calendar years and housing experts do not expect housing prices to drop until at least 2020. This means prospective renters of single family homes still need a place to live, but cannot afford to buy, yet. Real estate investors should capitalize on the rental market while they still can.

Invest with a Single Family Home Purchase and Hire Select

If you are interested in growing your financial portfolio, investing in a single family rental home may be the right choice for you. The leader of Sacramento property management companies, Select, has your back from the beginning to the end. Select has over 35 years of experience in everything from advertising, to qualifying tenants, to managing the property, to the turnover process, to rent collection, and much more. It is a one-stop-shop for successful property investors. Call us today.