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Rental Agreement

Eviction Ban Expires: What It Means For Renters and Owners

After numerous extensions over the last 12 months, the federal eviction ban expired this past weekend. With millions of Americans facing eviction and landlords looking to catch up on delinquency a wide variety of questions surrounding the expiring ban have been asked.

In a recent article from Multi-Housing News, author Jeffery Steele outlines how the expiring eviction ban will affect delinquent tenants and landlords moving forward. Some major takeaways include statements from both sides of the eviction ban debate. Gary M. Tenzer, principal & co-founder of real estate capital advisor George Smith Partners, told Multi-Housing News:

“While the moratorium has been beneficial to many (residents) who have been unable to work and pay rent during the COVID pandemic, it has imposed an undue hardship on landlords who must continue to pay the operating expenses and mortgage payments throughout the moratorium”

Tenzer continued his sentiment by point out another extension to the eviction moratorium would have resulted in an increased amount of loan defaults and “inevitable” foreclosures.

Another interesting point in the article was from a study conducted by a non-profit organization called The Aspen Institute. According to their study, 6.5 million American households are behind on their rent obligations. The average debt is in excess of $3,000. Across the U.S. renters owe approximately $20 billion to their landlords. More than 15 million people live in households with overdue rental payments.

Click here for the Multi-Housing News if you want to read it in its entirety.


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Rent Control Battle in California and Beyond

“Certainly there is a housing shortage, so we need to be building housing, but what we are also seeking to address is the crisis of displacement…We’re seeing vulnerable communities — people of color, elderly folks, people with disabilities, single parents, low-income people and the middle class — being pushed out of California and becoming homeless.”

One of the hottest items on California’s November voting ballot is a rent control initiative called Proposition 10. The proposal intends to repeal a 23-year-old state law that tightly limits all forms of rent control within California. The desire for rent control in California has coincided with the rising cost of living throughout the state.

According to The Sacramento Bee, the nonpartisan Legislative Analyst’s Office (LAO) reports “Soaring housing costs have led to a net loss of 1 million citizens who have fled California from 2007 to 2016…and homelessness is higher here than any other place in the nation.”

Despite the widespread support from community groups like the AIDS Healthcare Foundation, California Teachers Association, California Nurses Association, and many others, the latest poll by the Public Policy Institute of California reports,

“A whopping 60 percent of likely voters say they will vote against Proposition 10, a measure on the Nov. 6 statewide ballot that would repeal the state Costa-Hawkins Rental Housing Act, which strictly limits rent control in cities across California. Repeal would restore broad authority to cities to enact any rent control law they choose.”

According to the LAO’s analysis of Proposition 10, the proposed repeals could result in more harm than good. LAO analysts warned of declined new rental construction, removal of units from the market, and the value of housing possibly dropping. Any of these factors would directly affect local government property tax revenue, which equates to ~$60 billion every year.  Furthermore, enacting new rent control laws would require millions of dollars per year to enforce, and result in a decline in income tax revenue, especially from the newly-affected property owners and investors.

It is important to consider how these restrictive laws and proposals affect citizens, property owners and investors, and a state’s overall economy. And while Proposition 10 is exclusive to California, and rent control laws vary from state to state, the negatives effects outlined in the LAO analysis showcases how impactful the ongoing battle of rent control is from a real estate professional, owner, or investor standpoint.

Click here to learn more about Proposition 10 and rent control.

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Tenant Incentives

Like any other business, multifamily properties have to provide desirable incentives to obtain and retain customers. And with competition being so high as of late, every property is looking to stay one step ahead of the others in the area. Having updated units and new amenities isn’t enough anymore, so properties have started offering various types of incentives to new and current residents to combat lower vacancy rates. Here are a few effective incentive programs to gain and keep quality tenants:

Early Payment Discount

Make paying rent attractive by rewarding tenants with a discounted rent for early payment. Even if it’s a small amount like $10-15 off their monthly rent, proactive tenants understand the discount can add up to a nice sum of cash at the end of the year. In addition, the early payment incentive helps lower delinquencies and attracts residents that are more likely to pay rent on time. It’s nice collecting extra cash from late fees, but that’s not the type of revenue, nor the target audience owners should rely on. Allowing tenants to pay rent online provides extra encouragement to pay early as they can send in their money electronically from the comfort of their home, or on the go.

Another fun way to reward early-bird payers is a monthly raffle. Anyone who pays their rent early gets their name added to the raffle, and at the end of the month the name drawn wins. Prizes can range from dinner and a movie for two, to gifts cards, or a free car wash. Furthermore, if it’s the holiday season, some popular prizes are a free turkey for Thanksgiving dinner, or a HoneyBaked ham for Christmas eve. The raffle program can be fun for everyone involved, engages the community, and is a great incentive for residents to pay rent early.  

Referrals

Tenant referral fees are an excellent way of bringing in qualified residents while saving money on advertising. A tenant referral program offers numerous benefits. Renters are motivated to act as ambassadors for their property by spreading the word of the advantage of their living community. Also, good tenants tend to know reliable people. This may not always the case, but there’s a high chance a tenant who regularly pays rent early or on time will not refer someone they deem unqualified or untrustworthy. When a tenant refers someone who signs a lease, their reward can come in the form of rent credit, unit appliances like a television or microwave, gift cards, or even cash.

Lease Extension  Once a tenant has proven to pay rent on time and take good care of their unit, the next step for management is to retain that tenant for as long as possible. Offering a reward for lease renewal is one of the most effective ways to achieve high rates of tenant retention. In general, tenants prefer monetary incentives, so lowering their rent will give them most motivation to stay. If there is no wiggle room on rent rates, giving tenants unit upgrades is a good substitute. Returning tenants often like to move into a newly renovated unit, but if there aren’t any available, upgrading their unit with brand new appliances has proven to suffice. Also, if the unit has the necessary connections, provided washer and dryers are in very high demand. Ultimately, management should do everything they can without breaking the bank to keep their best tenants.

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Tenant Turnover

Yesterday we talked about tenant retention and some characteristics that motivate them to renew their lease. Using the aforementioned strategies will certainly help minimize resident turnover, but even a property with desirable amenities and excellent service, there will always be a situation where a good tenant has to move out. As soon as a unit becomes vacant,  the following actions taken by management and ownership are crucial in terms of cost and revenue.  

Check out this article from Multifamilyexecutive.com that offers some beneficial tactics owners can use to offset the disadvantages of resident turnover and potentially turn a negative situation into a positive one.

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Tenant Retention

Property owners are always looking for a competitive edge when it comes to the never-ending battle of attracting and retaining good tenants. Naturally, having a clean property, attractive curb appeal, desirable amenities, and a convenient location are all major factors in bringing in new tenants and filling vacant units. But what does it take to get the best tenants to sign on the dotted line when lease renewal season rolls around? 

It’s a combination of a property’s physical amenities and the quality of service provided by a management team that motivates a resident to move out or renew their lease. We think it’s more about the intangibles, rather than the physical attributes the property offers that keep tenants coming back. If a property has a friendly, inviting community with a management team that prioritizes honest relationships and high-quality service tenants that value these characteristics in a property will be encouraged to remain a resident for, ideally, many years to come.

In an article from Multifamilyexecutive.com, author Melanie G. French, the Executive Vice President of Operations of Cortland Partners, offers a well said explanation on what it takes to retain tenants, build trust and cooperation among the community, and the importance of a property’s staff to demonstrate genuine care for the needs and wants of their tenants.

Click here to read French’s article in its entirety.