With so many home for rent and sale in the New Tampa area, many homeowners are holding vacant houses as the surplus inventory of homes is easily much greater then the demand. With more would be sellers turning to the rental market, an important question becomes "How should a homeowner evaluate a local property management company?" Well, there are many "How to hire a property manager" guides out there, so I will not try to rehash all of that material. What I will focus on are some of the key elements that to me are critical items in New Tampa for 2008.
First, we must look at the current housing market, which is still showing no signs of improvement in New Tampa. Prices continue to drop and more and more "short sale" listings appear at the bottom end of the market every day. Why is this important to note? Well, with houses not moving and prices falling, there are many Real Estate agents that are finding it really hard to make any money and looking toward other sources of income. While this is sometimes needed to "thin out the herd", in New Tampa there are so many homes available that many are deciding to try property management as an alternate source of income. While there is nothing inherently wrong with this, it is important to note that there will be some agents out there that really do not know what they are doing or are learning on the job while earning a fee. Because of some of the real risks a landlord faces, it will be important to find out if this is the case prior to signing on with someone "giving you a great deal" for property management or tenant placement services.
In any market, a vacant rental unit is the first problem a landlord wants and needs to be filled. This is no different in New Tampa, but the over supply in the current rental market makes filling the rental a real challenge. An experienced and realistic property manager will make sure your property is listed at a market price that will get the unit rented within 60 days. This is a big statement in a market that has 4-6 months worth of rental inventory. Many just have the unit listed at what the unit rented for a few years ago, not realizing the prices have fallen and the rent needs to be adjusted to the current market. Unfortunately, many landlords get "stuck" in a rental listing contract with an agent at a rental price that is higher and a commission that is lower then they were quoted by a respected property manager. While on paper this seems like the best way to optimize profit (higher rent, lower commission), when the unit sits vacant because it can not be rented at that price, the potential profit disappears and in fact the landlord will probably lose more money this way.
To address a vacancy, the property manager must provide a few critical items. First, proper guidance to the real market rent of the property. It really does not matter what the landlords expenses are, the market rent is the market rent. A tenant does not care that a landlord pays $2,000/month in mortgage, taxes and HOA fees on a 3 bedroom house in Heritage Isle. What a tenant cares about is that there are 4 houses that fit the same description that are in the $1,300/month range. Listing with the rent higher then $1,300/month on a comparable home will not help the landlord be less negative, it will only ensure the property is vacant as tenants move into more cost effective rental solutions.
The next important item a property manager must do to address a vacancy is to properly advertise a rental property. In New Tampa, there is no local newspaper that tenant prospects pick up to look for a rental home. Nearly all tenants looking for a home for rent in New Tampa do so using the internet. So, internet advertising is important, but proper internet advertising is the key. Many people use sources that has helped them find a place before, such as Craigslist and Rentals.com (formerly RentClicks). Anyone not using these resources at a bare minimum should be discredited as they are two of the top providers of real rental leads. The MLS is also a very important source for advertisement. As agents look for ways to earn a little money during this difficult time, many are taking on would be tenants to earn a little money. Exposure to these agents will also produce some tenants.
Most agents and New Tampa property managers will also list your New Tampa home for rent on their website. To figure out if this adds ANY value to your marketing needs, check to see if a tenant searching for a New Tampa Rental Home will find the agent or property management companies website. They will probably find the Rentals.com website with various searches on Google and the other search engines. However, if your rental agent or property management company does not show up on the first page of searches a tenant will use, the fact that the rental listing is on their site is of little or no value.
While placing a tenant is critical in New Tampa, screening tenants properly and removing a tenant that does not pay is equally as important. Find out who the agent or property manager screens and what they screen for. Any adult that occupies the property over the age of 18 should be screened, unless they are the child of the tenants in which case any child 21 or older should be screened. All tenants should have criminal background checked, including a sex offender search and an OFAC terrorist search. They should also have previous residences verified for proper on time payment and no damages, income verified to be what is stated on the application and a credit check. Any tenant that is not screened in a way that verifies all of these things is a potential liability.
Removing a tenant that does not pay is also critical, I will address this and other issues in part 2...
Tuesday, February 26, 2008
Saturday, February 23, 2008
Lease to Own in New Tampa
I have had a few inquiries about doing a lease to own on several of the rentals I currently have listed. Through several discussions, I have formed an opinion that a rent to own option has many risks to both the landlord and the tenant. This does not mean a lease purchase is not a good idea, but it is important to understand the risk.
There is risk to the tenant - or potential investor - looking to capitalize on the soft New Tampa Real Estate by locking up a low price on a home now without having to purchase it. A lease or rent to own contract generally includes some amount of money to be deposited with the seller toward the purchase price, with additional principal paydown coming with each rent payment. At the end of the option period, typically 1-3 years, the tenant / buyer will have paid a significant amount toward the purchase price that will be "equity" once they exercise the option and close on the home. However, with so many landlords being upside down on the mortgage, the chances of the landlord profiting from a lease to own much lower, specially if the purchase price is close to the market value today. Why would a landlord agree to such an option then? Well, the dishonest ones could let their home fall into foreclosure and keep the extra deposit and equity deposited by the tenant.
This to me is the single biggest risk for someone looking to rent/buy using a lease purchase option today. What do you do if the owner stops making payments and falls into foreclosure? I am not a lawyer and I am sure plenty of lawyers will explain how to legally handle this situation, but the bottom line is a option to purchase a property at some point in time in the future does not prevent a lender from foreclosing on a homeowner that stops making mortgage payments. So, if you get a lease purchase contract from someone desperate to get out of their home with a 3 year option to purchase at a great price, the deal still could be too good to be true. In fact, even if they honor the contract, if the purchase price leaves the seller needing to bring money to the closing table and they do not have the funds, the deal could still fall through and the money given to the seller toward the purchase price could prove to be hard to cover. It is hard to get money from someone that does not have any and in this market there are many landlords that made a bad investment that have used up all of their assets.
For landlords, there is also risk. Giving an option to a tenant prevents the owner from being able to sell the home on the open market until the option expires. With home values in New Tampa dropping to levels last seen in 2004-2005, giving an option at these prices may not be the best investment decision to landlords. If the prices go up, the tenant can exercise the option and the landlord will lose the equity gained. The owner could be upside down on the mortgage and want to sell quickly if prices go up, but will not be able to. If the prices go down, the tenant will not exercise the option and the landlord will still be stuck with a home worth less. Then the owner will be looking at possibly offering another option at a lower price in order to attract another buyer/tenant. So, the question is why would an owner want to give an option? The only real answer is to "lock up a tenant" and minimize losses on a rental home. There is a better way to accomplish this by hiring a property management company that can find and place tenants quickly.
There is also another risk of a lease to own tenant. The tenant buyer could never be able to exercise their option due to credit issues or debt that prevents them from qualifying for a loan. When this realization occurs, the tenant will change from one living in a home to one they will eventually own, to one that feels they "lost" the equity they put into the home. This tenant could start to treat the home much differently and cause significant damage. The tenant could also stop paying and force the owner to evict them.
In the New Tampa market, the surplus of inventory has caused both rent and sale prices to decline since last year. Gambling on one or the other moving in a direction that will make this something to profit from, is more of the same speculative behavior that has hurt the New Tampa Real Estate market to begin with. It is something I will personally discourage for all owners and tenants in 2008.
There is risk to the tenant - or potential investor - looking to capitalize on the soft New Tampa Real Estate by locking up a low price on a home now without having to purchase it. A lease or rent to own contract generally includes some amount of money to be deposited with the seller toward the purchase price, with additional principal paydown coming with each rent payment. At the end of the option period, typically 1-3 years, the tenant / buyer will have paid a significant amount toward the purchase price that will be "equity" once they exercise the option and close on the home. However, with so many landlords being upside down on the mortgage, the chances of the landlord profiting from a lease to own much lower, specially if the purchase price is close to the market value today. Why would a landlord agree to such an option then? Well, the dishonest ones could let their home fall into foreclosure and keep the extra deposit and equity deposited by the tenant.
This to me is the single biggest risk for someone looking to rent/buy using a lease purchase option today. What do you do if the owner stops making payments and falls into foreclosure? I am not a lawyer and I am sure plenty of lawyers will explain how to legally handle this situation, but the bottom line is a option to purchase a property at some point in time in the future does not prevent a lender from foreclosing on a homeowner that stops making mortgage payments. So, if you get a lease purchase contract from someone desperate to get out of their home with a 3 year option to purchase at a great price, the deal still could be too good to be true. In fact, even if they honor the contract, if the purchase price leaves the seller needing to bring money to the closing table and they do not have the funds, the deal could still fall through and the money given to the seller toward the purchase price could prove to be hard to cover. It is hard to get money from someone that does not have any and in this market there are many landlords that made a bad investment that have used up all of their assets.
For landlords, there is also risk. Giving an option to a tenant prevents the owner from being able to sell the home on the open market until the option expires. With home values in New Tampa dropping to levels last seen in 2004-2005, giving an option at these prices may not be the best investment decision to landlords. If the prices go up, the tenant can exercise the option and the landlord will lose the equity gained. The owner could be upside down on the mortgage and want to sell quickly if prices go up, but will not be able to. If the prices go down, the tenant will not exercise the option and the landlord will still be stuck with a home worth less. Then the owner will be looking at possibly offering another option at a lower price in order to attract another buyer/tenant. So, the question is why would an owner want to give an option? The only real answer is to "lock up a tenant" and minimize losses on a rental home. There is a better way to accomplish this by hiring a property management company that can find and place tenants quickly.
There is also another risk of a lease to own tenant. The tenant buyer could never be able to exercise their option due to credit issues or debt that prevents them from qualifying for a loan. When this realization occurs, the tenant will change from one living in a home to one they will eventually own, to one that feels they "lost" the equity they put into the home. This tenant could start to treat the home much differently and cause significant damage. The tenant could also stop paying and force the owner to evict them.
In the New Tampa market, the surplus of inventory has caused both rent and sale prices to decline since last year. Gambling on one or the other moving in a direction that will make this something to profit from, is more of the same speculative behavior that has hurt the New Tampa Real Estate market to begin with. It is something I will personally discourage for all owners and tenants in 2008.
Wednesday, February 20, 2008
Rent New Tampa passes 300 Visits in a day
The Rent New Tampa website, www.rentnewtampa.com, has reached a milestone by surpassing 300 visitors in one day yesterday. While we do realize 300 visits is not considered to be a large number in the website world, for this particular business it is a very significant accomplishment.
Rent New Tampa provides property management services and rental listings to New Tampa, which comprises about a 24 square mile area and a population of 25,000 or so. With this population as the target audience, plus the others wishing to move into the area, 300 visitors in a single day is a very big deal.
The tenant prospects for New Tampa homes for rent use the web to find their next home. The newspaper ad days are long gone. Rent New Tampa is the local resource New Tampa tenant sources can turn to, with over 7500 visits in the last 30 days. These visits have resulted in more then 3000 page views of our Featured New Tampa Homes for Rent - that is over 100 times a day each of our customers properties are seen by a tenant prospect looking specifically for a New Tampa Rental Home!
Rent New Tampa has long held the opinion that search engine optimization for "New Tampa rentals" was essential for any property management company to serve this market. Our dominance in this regard, out pacing powerhouses such as rentals.com and craigslist.org has helped us establish a loyal base that grows each day someone else searches Google, Yahoo or MSN for any type of New Tampa rental home. Other property management companies in the area do not even appear in the first 4 pages of a Google for New Tampa rentals - it could be further, after there was nothing on the first four pages I stopped looking as any tenant prospect would have long before.
Tuesday, February 19, 2008
New Tampa Property Management Blog Hits Page 2 on Google
The website for Rent New Tampa, Inc. - http://www.rentnewtampa.com - has long been #1 on Google for a search for New Tampa Property Management. When I checked this morning, this blog had moved into the 8th spot on page two of the search for New Tampa Property Management.
It is our intention to continue to provide current and relevant Property Management information about the New Tampa area specifically and hope Google will continue to smile upon this blog and get us onto the first page.
It is our intention to continue to provide current and relevant Property Management information about the New Tampa area specifically and hope Google will continue to smile upon this blog and get us onto the first page.
Sunday, February 17, 2008
Who is looking for a New Tampa Home for Rent?
Last year, I wrote an article titled "Who Is Looking For A New Tampa Rental Home?". Considering the market has changed a bit in the last year, I thought now would be a good time to revisit this subject and discuss the tenant prospects for New Tampa Homes for Rent.
Like last year, the slow New Tampa Real Estate market has led many would be sellers to become landlords. Since finding a tenant is generally the first order of business for most and the days of placing an ad in the local paper to find a tenant are over, knowing who is looking for a rental home and how to find them is very important.
There are many different types of people searching for a rental home. These reasons are typically overlooked by landlords that had not planned on renting their home, but the needs of these tenant prospects vary and one must demonstrate the ability to meet these needs in order to have them submit an application. A closer look at the types of people looking for a rental home in New Tampa will better prepare the owner for the reality of the New Tampa rental market.
Some of the rental prospects in any market are people with good income and excellent credit that have just decided to rent instead of buy. While many homeowners do not completely understand why people make this decision, every landlord wants the ideal tenant with good income, credit and no criminal background. The number of people that fall into this category has risen the past year as some are more fearful of buying as the prices were declining.
The surplus of rental homes available in New Tampa has created a new type of tenant... those that save a substantial amount on housing by renting instead of buying. This is most true on the higher end homes, but it certainly applies to almost anything in New Tampa right now. Many do the math and realize that for $2,000/month they can live in a home that would cost about $1,000/month more to live in if purchased. An example would be a New Tampa Pool Home offered for sale at $400,000, that is also listed for rent for $1,950/month. Even with a 20% down payment, the $320,000 mortgage would have a monthly payment of ~$1900 just to cover principal and interest. Typically, the taxes, CDD, HOA and insurance will amount to another $1,000/month or so. In this scenario, a family would save more then $10,000/year renting instead of buying. Since short term price appreciation of homes can not be expected in 2008, renting is simply the safer way to save.
Perhaps the biggest change from last year, however, has been the rapid increase of tenant prospects that are displaced homeowners that have been through a foreclosure, short sale or some other removal from a home they owned and simply could not afford. These tenants typically have poor credit scores from recent events and/or had bad credit but qualified for a home they could not afford due to loose mortgage standards. Dealing with tenant prospects that are moving because of failure to pay a housing payment in the past should be more of a concern for landlords. As the tenant prospect has already demonstrated poor judgment by purchasing a home they could not really afford, the landlord must be sure they are not once again making a poor judgment on renting a home they also can not afford. In many cases, these prospects are more concerned with the size they need, to match the home they are leaving, then the actual income they have to put toward housing. A landlord MUST be certain to make sure a tenant such as this can really afford to live in their home to avoid having to evict a tenant.
The rest of the tenant prospects should fit into one or more of these categories:
- Moving to the area, want to rent before buying and are real candidates to buy a home.
- Moving to area and need to rent before buying because their home is under construction. This is not as common in 2008 as it was in 2007, but it still does happen.
- Moving to the area and need to rent and are not necessarily potential buyers.
- Sold their home and need to rent for financial or other reasons.
- Don't like their current New Tampa rental home and want a better place to rent.
- Need a bigger rental unit then the one they currently reside in.
- Forced to move because Landlord sold or is planning to sell the home.
- USF Students that need housing in the area but away from campus.
- Separation and those in the middle of a divorce that need to stay locally.
- Credit issues limit some tenant prospects from being able to buy.
- Temporary transplants for a local job.
- Military transplants that are willing to commute. While MacDill is a bit of a drive for some, others are still drawn to the New Tampa community.
- Just prefer renting.
It will be important for the person responsible for finding and placing the tenant to know how to react to the needs of each tenant prospect. Remember, these are people looking for a place to call home, so any level of insecurity could cause them to go elsewhere. Many times the homeowners get to caught up in personal needs that they forget this simple fact.
New Tampa is still a market in transition and more agents are starting to look more closely at the rental market and providing tenant placement services to owners that could not sell their homes. However, being licensed and thus having the ability to charge a landlord to rent their house does not take the place of a properly trained professional that has a proven track record for finding a tenant. Beyond just identifying a tenant that is interested in a home, there are other aspects of placing a tenant that are critical to ensuring a successful landlord-tenant relationship. Make sure you only trust your investment to a professional property manager.
Friday, February 15, 2008
Featured New Tampa Homes for Rent Available for Immediate Occupancy
| »New Tampa Townhome Rental $1,200.00 | ||
 | Area: | Canterbury Trail |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2.5 | |
| Bed: | 3 | |
| School District: | Hillsborough | |
| Square Feet: | 1741 | |
| WaterFront: | no | |
| »New Tampa Condo Rental $795.00 | ||
 | Area: | Portofino |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 1 | |
| Bed: | 1 | |
| School District: | Hillsborough | |
| Square Feet: | 843 | |
| WaterFront: | no | |
| »New Tampa Home Rental $1,500.00 | ||
 | Area: | Pebble Creek |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2 | |
| Bed: | 3 | |
| School District: | Hillsborough | |
| Square Feet: | 1750 | |
| WaterFront: | no | |
| »New Tampa Home Rental $1,295.00 | ||
 | Area: | Tampa Palms |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2 | |
| Bed: | 3 | |
| School District: | Hillsborough | |
| Square Feet: | 1350 | |
| WaterFront: | yes | |
| »New Tampa Home Rental $1,950.00 | ||
 | Area: | Cross Creek |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 3 | |
| Bed: | 4 | |
| School District: | Hillsborough | |
| Square Feet: | 2850 | |
| WaterFront: | no | |
| »Land O Lakes Townhome Rental $975.00 | ||
 | Area: | Stage Coach |
| City / State / Zip: | Land o Lakes / FL / 34639 | |
| Bathrooms: | 2.5 | |
| Bed: | 2 | |
| School District: | Pasco | |
| Square Feet: | 1365 | |
| WaterFront: | yes | |
| »New Tampa Home Rental $1,295.00 | ||
 | Area: | Heritage Isle |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2 | |
| Bed: | 3 | |
| School District: | Hillsborough | |
| Square Feet: | 1480 | |
| WaterFront: | no | |
| »New Tampa Condo Rental $995.00 | ||
 | Area: | The Villas |
| City / State / Zip: | Tampa / FL / 33467 | |
| Bathrooms: | 2 | |
| Bed: | 3 | |
| School District: | Hillsborough | |
| Square Feet: | 1448 | |
| WaterFront: | no | |
| »New Tampa Condo Rental $1,075.00 | ||
 | Area: | The Villas |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2 | |
| Bed: | 2 | |
| School District: | Hillsborough | |
| Square Feet: | 1349 | |
| WaterFront: | yes | |
| »New Tampa Condo Rental $875.00 | ||
 | Area: | The Villas |
| City / State / Zip: | Tampa / FL / 33647 | |
| Bathrooms: | 2 | |
| Bed: | 2 | |
| School District: | Hillsborough | |
| Square Feet: | 1168 | |
| WaterFront: | no | |
Subscribe to:
Posts (Atom)