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Portland Rent Growth Moderates On Par With U.S.

By
John Triplett
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Portland rent growth has moderated and matches much for what is going on with rents across the U.S., Yardi Matrix says in the autumn report

Portland rent growth has moderated and matches much for what is going on with rents across the U.S., Yardi Matrix says in the early autumn report for Portland.

Portland’s multifamily sector showed steady improvement in 2022, the report says.

“Rent gains moderated, to 0.6 percent on a trailing three-month basis through August, on par with the national average, but the movement can be attributed to a typical seasonal softening.

“The occupancy rate in stabilized properties declined 30 basis points year-over-year as of July, but at 96.2 percent, it is still a tight rental market,” Yardi Matrix says in the report.

Rent trends

The overall asking rent in the Portland metro rose to $1,759, slightly above the $1,718 U.S. figure. On an annual basis, rates in Portland were up 9.9 percent, 100 basis points behind the national figure.

“Of the 57 submarkets tracked by Yardi Matrix, 26 posted double-digit year-over-year rent growth. In August, six submarkets had an average above the $2,000 mark, up from two a year ago. Lake Oswego (11.3 percent to $2,436) and Pearl District (3 percent to $2,121) remained the most expensive areas.

Portland rent growth has moderated and matches much for what is going on with rents across the U.S., Yardi Matrix says in the autumn report
Chart courtesy of Yardi Matrix

The economy

Yardi Matrix says, “Portland’s economy has made good strides since the peak of the health crisis but has yet to fully rebound to pre-pandemic levels.

“Unemployment stood at 3.6 percent in July, according to preliminary data from the Bureau of Labor Statistics but started climbing again from 3.1 percent in May. Still, its performance is only slightly below the state and the U.S., both at 3.5 percent in July.”

“Manufacturing, and especially semiconductor manufacturing, has been one of Oregon’s main economic drivers during the past decade, with the most recent expansion being that of Intel, in April. The company opened its $3 billion factory in Hillsboro, known as Gordon Moore Park at Ronler Acres, where it hired 2,000 employees in the past year. Intel’s decision to expand into Ohio pushed local leaders to form a task force reviewing the state’s legislation pertaining to the chip industry,” Yardi Matrix writes in the report.

Portland rent growth has moderated and matches much for what is going on with rents across the U.S., Yardi Matrix says in the autumn report.
Chart courtesy of Yardi Matrix

Population decrease

For the first time since 2010, Portland’s population decreased during the second year of the pandemic.

The metro lost 4,618 residents in 2021, a 0.2 percent demographic contraction.

Supply

Portland developers added 3,335 units through August.

“The construction pipeline remained robust, with 9,967 units underway and another 28,500 in the planning and permitting stages. Of these, 4,314 units broke ground this year, more than double the 2,009 units that started construction during the same interval last year. The pipeline composition changed slightly, with more fully affordable properties underway (26.7 percent of pipeline), but the bulk is still focused on the Lifestyle segment (73.3 percent),” the report says.

Get the full Portland report here.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

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Multifamily Rents ‘Hit the Brakes’ in September

Rental Price Drops Around The Country

Portland Rents Increase Again In October

What a Possible 2023 HUD Announcement Could Mean for Private Landlords

By
By The Editors
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What a possible 2023 HUD government announcement could mean for private landlords and use of criminal history in screening applicants

What a possible 2023 HUD announcement could mean for private landlords and applicant criminal history as often when HUD makes a policy for government housing, they slowly try to implement it into the private sector.

By David Pickron

Have you ever been punished for something you didn’t do or that was completely out of your control?   My guess is you have, and that the thought that flashed through your mind at the time went something like this: But I didn’t do anything wrong!  Frustration sets in as you try and figure out what you could have done differently, reaching the conclusion that sometimes these things are out of your control. The situation below might be one of those times.

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For property owners, although it hasn’t happened yet, this scenario may soon play out based on some recent actions being considered by HUD.

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On April 12, 2022, Marcia Fudge, Secretary of the U.S. Department of Housing and Urban Development, issued a memorandum to her staff with the subject line: Eliminating Barriers That May Unnecessarily Prevent Individuals with Criminal Histories from Participating in HUD Programs.  In short, HUD is trying to determine what criminal criteria HUD programs should use, if any, when qualifying an applicant.  At that time, she called for a six-month study period that ended October 14, 2022.  History shows, when HUD makes a policy for government housing, they slowly try to implement it into the private sector.  And even though it hasn’t happened yet, it may be coming.

This is where the “unfair” results kick in.  Think about those jurisdictions who have source of income as a protected class, where it is illegal to discriminate against people who use Section 8 vouchers as income.  As a private landlord, whether you want to or not, you are required to take Section 8 housing if your rents are in line with the standard rental rate of local housing providers.  If this happens, the government just took your private housing and turned it into government housing, and you must follow all of HUD’s rules and recommendations or else.

As an example, I have an income-producing rental home in Tucson, Arizona.  The market value of rent is $1,100 per month and a Section 8 voucher is willing to pay $1,100.  Section 8 rationalizes that your financial risk is covered by the government so there is no need for me as a private landlord to financially qualify an applicant any further.  The most I can require is three times the applicant’s portion of the rent, which is usually zero to begin with.  As part of my normal tenant-onboarding process, I then run the applicant through a background check to see if there is any criminal history and subsequently find this individual has several felony drug convictions.  Right now, I can decline this individual based on a “no-felony drug-conviction-in-the-last-seven-years” rule that is a key part of my rental-applicant criteria.  This is where it gets tricky based on what HUD could propose regarding criminal history because of the memo referenced above.  They are trying to justify mandating the removal of any criminal history search, claiming that a criminal history has no correlation with you as a private landlord receiving the rent because the government is covering that part.  That is a scary thought process.

As more jurisdictions vote to add source of income as a protected class, more private rentals will be sucked into government housing rules and criminal histories could become a thing of the past.  And it won’t stop there, as HUD will slowly try and use a similar disparate-impact argument in the other areas that we as private landlords use to protect our investments, forcing the private market to follow the direction of HUD, leading to the demise of criminal history and ultimately private landlords.

Knowing the Section 8 payment tables in your area and comparing them with market rent will help you decide if you want the government as a partner or not.  If you have homes or rentals that can demand higher rents than what the housing authority is willing to pay, you will be able to duck this discrimination claim for now.  But you never know how long that is going to last, as the market has something to say about it.

All these moves have made me look at landlords in the private market and get to the root of the HUD study by asking this critical question: Does criminal history affect a person’s ability to pay rent?  I accessed my own data sets from our tenant-background-screening company, Rent Perfect, and analyzed actual and factual numbers to answer this question.  We took all applicants who applied for a qualification to rent either a single-family or multifamily rental across all 50 states from Jan. 1, 2022, through Oct. 15, 2022.  See the graphic for specific results.  Generally speaking, applicants with NO criminal history are twice as likely to have a credit score over 600,, which translates to rent getting paid more consistently and on-time.  As a landlord, those are the type of odds that play in my favor.

What a possible 2023 HUD government announcement could mean for private landlords and use of applicant criminal history in screening applicants

Getting rid of applicant criminal history as a qualifying factor for HUD properties now, and inevitably for private individuals in the future, would put you and your property at risk financially and physically.  At Rent Perfect we know different criminal histories pose more of a threat than others, but we also know landlords are not the judge and jury and hold no special training on how to determine recidivism rates or risk based on each crime.  Our research results clearly show that no matter what the crime is, whether felony or misdemeanor, credit scores go down and collecting rent is riskier for those with a criminal history than without.

So, what do you do about it?  Rather than sulk in the corner – which may have been your childhood response to unfair treatment – we all need to band together and fight to protect our rights as private landlords.  Uniting your voice with a local Real Estate Investment Association (REIA) can help us as landlords stand our ground and protect our investments.  After all, we didn’t do anything wrong.

David Pickron is president of Rent Perfect, a private investigator, and fellow landlord who manages several short- and long-term rentals. Subscribe to his weekly Rent Perfect podcast (available on YouTube, Spotify, and Apple) to stay up to date on the latest industry news and for expert tips on how to manage your properties.

6 Trigger Words And Questions Every Landlord Should Listen For

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Prosecutors Decline To Charge Former Tenant Who Killed Landlord With Sword

By
John Triplett
-
Portland prosecutors have declined to charge a tenant who killed his landlord with a sword saying the former tenant acted in self-defense

Portland prosecutors have declined to charge a tenant who killed his landlord with a sword saying the former tenant acted in self-defense, according to reports.

The landlord was left dead in a September dispute with his tenants in Northeast Portland.

The tenant fatally stabbed Justin Valdivia, 46, with a sword when the landlord came into the home while dressed as horror villain Michael Myers from the movie “Halloween,” according to Portland’s district attorney’s office.

Valdivia was fatally stabbed in the living room of a four-bedroom house in the Eliot neighborhood.

Willamette Week obtained a memo from the Multnomah County District Attorney’s Office justifying prosecutors’ conclusion that the killing was self-defense.

“The memo lays out a bizarre story while explaining why prosecutors declined to charge anyone involved.  Valdivia, the owner of the property, lived with his wife in a second home recently built at the back of the lot. He rented the front house to four tenants, each paying $750 per month. The man who stabbed him was a former tenant who had just moved out and was now staying in the house as a guest,” Willamette Week reports.

Valdivia is accused of threatening his tenants with a knife, according to police reports cited by the Willamette Week, and tried to break into the house predawn one morning while drunk.

Former tenant killed landlord with sword

The former tenant stabbed Valdivia with a “saberlike” sword and grabbed his gun, and threw it away while Valdivia fell to the floor unresponsive, Willamette Week reported.

The weapon near his body recovered was a pellet gun painted in black to “resemble a real firearm,” the report states.

Both the detective and county prosecutor assigned to the case agreed the killing was justified. Valdivia was committing burglary while “wielding what appeared to be two dangerous and deadly weapons,” the memo states.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

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Rental Price Drops Around The Country

Portland Rents Increase Again In October

5 Things Your Company Can Do To Retain Top Talent in Multifamily

By
By The Editors
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The current workforce shortage brings up an important topic: What are 5 things your company can do to retain top talent in multifamily?

The current workforce shortage brings up an important topic: What does your company do to retain top talent in multifamily?

By Nicole Steltenpohl

The average industry tenure in multifamily is three years. At P.B. Bell, the average employee tenure is more than seven years and we’re proud of that.

Here are some things that we do to show our employees how valuable they are:

1. Onboarding – first impressions matter. At P.B. Bell, whether there are two people or seven people starting that week, they all start together.  Every first day at P.B. Bell starts with onboarding at our corporate office, which allows us to give consistent experiences and messaging for every new team member. While consistency is key, we try to make the first day fun and collaborative. In between core training and courses, we carve out time to get to know each new team member on a more personal level.  And it certainly helps that our executive team, including our CEO, stops by and says hi, creating the “family” feel that is integral to our success.

2. Instill your culture – values are more than just words. Onboarding introduces each new employee to the values and behaviors that make up our culture, but reinforcing these values and behaviors daily is critical.  Your culture can’t just be a sign hanging in the corporate office.  At P.B. Bell we have a Culture Club that is dedicated to ensuring that our culture thrives.  We have several programs that recognize and reward team members who demonstrate our values and behaviors through daily actions, and we honor those employees at our annual company events.

 3. Get creative in how you improve – ask and listen.  It doesn’t matter what we do if it isn’t impactful to our employees.  So, we are always asking what we do well and what we can do better.  We gather employee feedback throughout the year with confidential employee surveys and annual reviews.  We then listen to that feedback, continue doing what works, and focus on opportunities to improve the employee experience.

4. Show You Care – not just a value, it’s also an action item.  Recognizing and celebrating employees is a priority at P.B. Bell.  While lunch with the CEO to celebrate an employment milestone is nice, it isn’t the only tool we use.  We also spotlight employees who go above and beyond by living our values, and have several programs designed to show how much we care.  Whether it’s appreciation days (or weeks) where we take time to celebrate our employees for their efforts throughout the year, or volunteer days where we come together as a company to give back to the community, we are always looking for ways to say thank you.

5. Enjoy the ride – employees should look forward to work each day.  Having personal relationships promotes trust, open communication, and a better overall work experience.  We achieve this by encouraging informal social gatherings and providing opportunities for our employees to have fun and really get to know each other.  Whether it’s carving pumpkins to look like your executive team, chili cook offs, ice cream socials, or holiday themed events with terrific prizes, we enjoy just hanging out together.  Of course, we also have more formalized programs like our Meet and Eat program where an executive and members of the corporate team visit properties to simply have lunch and say hi.

Whatever you decide to implement at your company, we believe that culture is the key.  Figure out who you are and just be you.

ABOUT THE AUTHOR

The current workforce shortage brings up an important topic: What does your company do to retain top talent in multifamily?

Nicole Steltenpohl, Human Resources Director, P.B. Bell  is responsible for directing the full scope of human resources initiatives, including policies and procedures, benefits and payroll, talent recruitment and retention, development and training, employee relations, and company culture and growth. With 21 years of human resources experience, Nicole joined P.B. Bell in 2019. In her free time, Nicole enjoys spending time on the lake with family, exploring the culinary offerings throughout Scottsdale and Phoenix and volunteering her time for Hope Kids.

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Keeping Your Communications Compliant with Fair Housing

5 Ways to Communicate Better with Challenging Tenants

What to Look for in Property Management Software

Record-Setting Decline In National Median Rent In October

By
John Triplett
-
The national median rent fell by 0.7 percent month-over-month in October the largest monthly decline in the index started in January 2017.”

The national median rent fell by 0.7 percent month-over-month in October, according to Apartment List, “the largest monthly decline in the full history of our index, which starts in January 2017.”

“Our national rent index has now declined for two straight months, and is down by 1.1 percent since August.

“October’s record-setting decline marks a rapid cooldown which may signal that we’re entering a new phase of the rental market rollercoaster. It’s likely that rents will decline further in the months ahead, as rental market activity slows during the winter months,” Apartment List says in the report.

Rents fall in 89 of 100 largest cities

Rents decreased this month in 89 of the nation’s 100 largest cities, while an additional two cities saw rents hold steady, and only nine cities saw increases.

And nearly across the board, local rent growth has cooled down since last year – 96 of the top 100 cities have seen slower year-to-date rent growth in 2022 than they did over the same months of 2021, the report says.

Vacancy rate continues to grow

From April through August, “our vacancy index ticked up by just 0.2 percentage points, from 5.1 percent to 5.3 percent. But from August through October, it has increased by 0.4 percentage points, hitting 5.5 percent this month.”

The report says some Americans are moving back in with family or roommates, or delaying striking out on their own. This slowing household formation is “driving the cooldown that we are seeing on both the demand and supply sides of the market.”

The national median rent fell by 0.7 percent month-over-month in October the largest monthly decline in the index started in January 2017.”
Charts courtesy of Apartment List

Conclusion

Growth over the course of the year as a whole continues to pace ahead of pre-pandemic trends, “but we’re now seeing a marked shift in market conditions, with prices cooling and supply constraints continuing to abate. In the winter months ahead, we expect rental activity will continue to slow and we are likely to see continued modest price decreases to close out the year.

“That said, we’re still on pace to end 2022 with full year rent growth exceeding any year from 2017 to 2020,” the report says.

Read the full report here.

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18 Months of Outstanding Rent Growth Coming to An End

Multifamily Rents ‘Hit the Brakes’ in September

Rental Price Drops Around The Country

Portland Rents Increase Again In October

How Important Is A Prospective Tenant’s Credit Score?

By
Hank Rossi
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How Important Is A Prospective Tenant’s Credit Score?

A landlord asks how important is a prospective tenant’s credit score as the question this week for Ask Landlord Hank. Remember Hank is not an attorney and he is not offering legal advice. If you have a question for him please fill out the form below.

Dear Landlord Hank:

I have been a property owner/manager for last 20-plus years. I could write a book on the mistakes I have made! Such as thinking you’re a good judge of people? You got to do the work, you can’t be lazy.

I can’t get the property management company to answer any questions about a certain tenant. I do not believe the person I talked to and was given as a reference was legit. Do you place much value in credit checks? I have found that older people who rent often have bad credit. I honestly wouldn’t have any tenants if I used their credit as a no-go. Thanks for your feedback, Hank.

-Paul

 

Dear Landlord Paul,

I’m working in a vacation destination so we have a very strong rental market, but I also have many years of experience in a major metropolitan area in Georgia.

We are able to ask and get first, last and security deposit up front. We also require at least three times the rent in gross income, at least a 650 FICO score, clean background and good rental history.

We try to get at least five years’ prior residential history so we know we have a good quality tenant we can count on. In my opinion, good credit is very important as a factor to be considered in a tenant. Sometimes there are good reasons why someone’s credit is less than desirable, such as a bad divorce, etc., but those must be balanced with good income, rental history and clean background.

If someone has poor credit, sometimes we obtain an extra last month’s rent up front, just in case. I’ve made my share of mistakes in this business too, but if we learn from our mistakes we are ahead of the game. I’d rather hold out for a good tenant than take someone iffy. Best of luck!

Sincerely,

Hank Rossi

Each week I answer questions from landlords and property managers across the country in my “Dear Landlord Hank” blog in the digital magazine Rental Housing Journal.  https://rentalhousingjournal.com/asklandlordhank/

 

A landlord asks how important is a prospective tenant's credit score as the question this week for Landlord Hank from a fellow landlord
Landlord Hank says, “We also require at least three times the rent in gross income, at least a 650 FICO score, clean background and good rental history.”

Ask Landlord Hank Your Question

Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.

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Do I Have to Paint and Replace Flooring for a Long-Term Tenant?

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How Smoke-Free Policy In Housing Saves You Money

By
By The Editors
-
Protecting your residents and real estate investments begins with a smoke-free policy, and there are many benefits to getting started.

How a smoke-free policy in your rental housing can save you money on maintenance and other costs.

Department of Health and Human Services
Tobacco Prevention and Control

If you currently manage or have managed smoking-friendly properties, you have encountered the tedious and expensive turnover process of cleaning and refurbishing units damaged by smoking and smoking-related incidents.

In addition to turnovers, smoking and secondhand smoke exposure put your residents at risk for several health issues, including asthma, heart disease and cancer.[1]

Protecting your residents and real estate investments begins with a smoke-free policy, and there are many benefits to getting started.

Maintenance Savings

Allowing renters to smoke in their homes creates additional expenses and requires costly materials needed to repair, refurbish, replace and clean after smoking tenants leave.

Odors, stains on walls, burns in carpet and on countertops, and smoke residue are just a few of the damages to your time and money when preparing your property for a new resident. Aside from visible damages, thirdhand smoke embeds into walls and other surfaces, emitting toxic compounds long after secondhand smoke has disappeared.

A recent study found that properties that allowed smoking had nearly double the costs of smoke-free properties.[2] For example, compared to smoke-free units, cleaning and refurbishing costs can be up to $3,000 more in units with heavy smoking.[3]

And while having to shell out extra money for cleaning fees and updating damaged features and carpets may seem tedious but not very dangerous, the reality is that properties allowing residents to smoke have an increased risk of fires.

An estimated 7,600 smoke-related fires occur in residential buildings each year in the U.S.[4] However, fires caused by smoking are avoidable with a smoke-free policy.

When You Go Smoke-free, You Gain Several Cost-effective Benefits:

 Reduced risk of tobacco-related fires in your apartments

  • Lower fire and liability insurance premiums for the property
  • No expensive, smoking-related repairs when tenants move out
  • Less litter from tobacco waste like cigarette butts
  • Fewer administrative costs to address complaints about unpleasant odors and unhealthy air quality

Keeping You, Your Residents and Your Investments Protected

Smoke-free policies help property managers and owners protect their residents’ health and their real estate investments. Establishing a smoke-free housing policy does not ban anyone from smoking but requires that all residents and visitors abide by the policy while on the property.

Ready to go smoke-free? Find out even more reasons why and learn what steps you can take here.

[1] Danger of Tobacco, WayToQuit, Accessed July 2022.

[2] The Benefits of Smoke-Free Buildings, American Nonsmokers’ Rights Foundations, Accessed July 2022.

[3] The Benefits of Smoke-Free Buildings, American Nonsmokers’ Rights Foundations, Accessed July 2022.

[4] United States Fire Administration, “Smoking-related fires in residential buildings (2008-2010),“ Accessed July 2022.

How Thirdhand Smoke Affects Your Properties

How Do I Prove A Tenant Is Smoking Marijuana In Violation of Lease?

Steps to Make Your Community Smoke-Free

Why Secondhand Smoke Is Bad for Business

Why Homeowners Should Go Smoke-Free

Secondhand smoke is dangerous for your tenants

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Will Your Renters Play A Crucial Role In Elections?

By
John Triplett
-
Will your renters play a crucial role in elections as in the past renters have historically voted at far lower rates than homeowners.

Will your renters play a crucial role in elections as in the past renters have historically voted at far lower rates than homeowners.

By Chris Salviati and Rob Warnock
Apartment List

The 2022 midterms are less than two weeks away, and the nation’s renters could play a crucial role in determining the outcome, according to a report from Apartment List.

“We’ve argued in the past that increased political engagement among a coalition of renters could have the potential to swing elections, and the upcoming midterms could prove to be a turning point where such a movement gains momentum.

“Renters have historically voted at far lower rates than homeowners, but that gap has been narrowing in recent years. Mobilizing renters could be a winning strategy for Democrats, the party that renters tend to favor by a wide margin. But given their present state of economic frustration and disenchantment, this large voting bloc could present an opportunity for either party,” the report says.

Will renters play a crucial role in elections some key findings:

  • In the 2018 midterm elections, 40 percent of eligible renters voted, compared to 59 percent of homeowners. “Although this turnout gap is significant, 2018 saw the highest renter turnout and the smallest turnout gap of any midterm election that we analyzed, going back to 1990. Similarly, 2020 saw the highest renter turnout and second smallest turnout gap of any presidential election we looked at.”
  • In 2020, renters voted for President Biden by a staggering margin of 36.5 percentage points, and also favored Democratic candidates for the House of Representatives by a similar margin of 35.2 percentage points.
  • Among renters who are registered to vote, 49 percent say that rising housing costs have negatively affected their families in the past year, and 54 percent say that housing is a key issue for them in the upcoming midterms. Also, 61 percent of renters say that they are “very likely” to vote on November 8, compared to 80 percent of homeowners.

Will your renters play a crucial role in elections as in the past renters have historically voted at far lower rates than homeowners.

Why more homeowners than renters vote

Homeowners have a large financial motivation to vote when they perceive that the policies at stake could affect local property values.

Renters, on the other hand, face additional obstacles to voting.

For example, renters are more likely to be struggling financially, such that taking the time to vote may exact a greater cost. Renters also move more frequently than homeowners, which could make it harder to maintain an active voter registration. And renters are far more likely to be members of minority groups who have been plagued by a long history of voter suppression. As a result, there is a wide gap in voter turnout that has persisted for decades.

Can housing affordability be a mobilizing force for voters?

“Our survey also demonstrates how for those experiencing the effects of inflation, housing affordability can be a politically mobilizing force.

“Among renters who agree that rising housing costs have had a negative impact on their lives, 58 percent told us they have become more politically active over the past two years, while only six percent say they are less politically active. Interestingly, this mobilization is even stronger among the relatively small share of homeowners who are feeling the negative effects of housing inflation: Sixty-three percent say they are more active today, while only six percent are less active,” the report says.

What role could renters play in the upcoming midterms and beyond?

“Renter voices are significantly underrepresented in our nation’s politics, and boosting the voter turnout of this large demographic could have dramatic implications in the outcomes of elections,” the report says.

“The most recent few national elections offer evidence that such a shift has already been starting to take place. And with the housing affordability crisis having rapidly grown in magnitude since 2020, there’s good reason to believe that political mobilization of renters may continue to pick up steam in the upcoming 2022 midterms and beyond.”

Read the full report here.

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One Sure Way To Increase Tenant Selection Success Rates Part 3

By
By The Editors
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One sure way to increase the tenant selection process part 3 is by creating a tenant selection and screening policy says Rebekah Near

By Rebekah Near
CEO of Orca Information, Inc

Here we are at the 3rd article on creating a detailed Tenant Selection Policy (TSP).  We have covered the following:  1.  Why creating a detailed Tenant Selection Policy is important; 2.  Where to get help formulating such an affective policy; 3.  The Fair Credit Reporting Act and how it requires a landlord to include specific wording.  Now we will learn what tenant screening clients at Orca Information, Inc. have found the most affective in creating their policies.  One basic need is CLARITY!  When your policies are clear and concise, easy to read and understand you not only have informed rental applicants, but your staff is also informed.  The policy guides your applicants and your staff.  Take out the guess-work!  Eliminate confusion.  For a video to help train your staff on Tenant Selection Policies click this link.  https://www.youtube.com/watch?v=AtVZxvzfyOo

There are at least four categories for Tenant Selection Policies.  They are as follows:

  1. The Application Process – Guidelines for applying to the rental property
  2. Rules of the rental property and management company
  3. Potential Disqualifiers identified on the Background Screening Report.
  4. Disclosure documents explaining laws governing the application process – Tenant Rights!

Over the years I have studied many policies – to help landlords clean them up and make them easier to understand and compliant with laws and regulations.  The above 4 categories are more times than not, all mixed together – like a soup! Example:  The Application Process is peppered with reasons why a person could be denied tenancy.  Then stirred into the mix is information on the Security Deposit.  Then back to the Application Process.  Make it simple.  Keep the categories as clean and separate as possible.  Now, let’s break it down even further.

Step 1.  The Application Process:

Our clients often title this document, THE APPLICATION PROCESS or APPLICATION GUIDELINES.  This describes what steps the applicant needs to apply for the rental.

First and foremost is INCOME VERIFICATION.  Proof of Adequate Income could be the following:

    a) Most recent paystub with year-to-date income listed
    b) New hire letter stating salary, job title, starting date, etc.
    c) Self Employed – Tax returns for last two years
    d) Retired – Copies of deposit slips, Investment and/or Social Security earning documentation

Landlords will often first require the applicant to prove their qualifications in every way described in their rental criteria – other than proof of income.  A landlord will ask the applicant to begin by filling out a rental application and pay the non-refundable screening fee.  The application is sent to Orca Information or another screening company to process the Background Check.  The Tenant Screening Report can take several days to complete.  Once the screening report comes back to the landlord and the applicants are approved, then the landlord requires “Proof of Income”?  All that time and money for both parties can be a source of great frustration. Saving time and money for both landlord and applicant is smart.  Make proof of income the first requirement for qualifying!  If they do not qualify for income requirements the application process can stop immediately and Co-signer or Increased Deposit discussed before moving forward.

A LITTLE SECRET.  WANT TO GET YOUR TENANT SCREENING REPORT BACK FAST SO YOU CAN LEASE-UP THAT APPLICANT?  Here is how:  Once your applicant proves they have adequate income and their ID confirmed we recommend our clients have the applicant(s) fill out the rental application carefully and thoroughly.  Next the rental manager reviews the rental application.  Allow me to give kudos to the great rental managers who review the rental applications before sending them to Orca Information for processing.   Over the years we have seen these screening reports processed faster and sent returned completed faster when the rental manager makes sure all information is listed on the rental application and is correct.  Why is this?  I don’t know of a busier person than a rental manager.  Talk about multi-tasking!  That’s exactly why they take the time to review the rental application – they don’t have a lot of extra time on their hands!  In the long run this saves them time.

Yeah, yeah, yeah, I know – many management companies just let the applicant fill out everything online and the cool software absorbs all the information and spits out a great screening report. It is seamless.  Much less work for the managers…..NOT!  Someone at the rental office has to clarify the missing information on those applications AND/OR you end up with a terrible report but you don’t know it.  You do not know the report is missing a lot of important information.  Why would information be missing?  The super-software companies are NOT tenant screening companies.  The computer spits out the best calculations it can with the information given but often it is the wrong or highly limited information.  This results in renting to more troubled tenants.  Greater losses are at the end of tenancy (evictions).

The applicants will often fly through filling out the information required on the rental application.  They make mistakes, leave out important answers to questions, put down the wrong phone numbers for previous landlords.  Along with the applicant guess who usually gets a call from the screening company for help with gathering the required information?  The rental manager!  The process of screening now takes longer and requires more work. Want a quicker turn around time for tenant screening report?  Want a more accurate screening report?  Carefully review all the information on the rental application BEFORE sending in for the actual screening.

Second and just as important as Income Verification is Proof of Identification.  Watch out, this has become a little bit tricky since the passing of the law in WA State – a landlord can not REQUIRE a Social Security number.  In the past a government issued photo ID was required along with a Social Security card.  The SS card can no longer be required.  Neither can the SS number.  Instead, landlords are asking for (but not limited to) the following:  Government issued photo ID and another form of proof of identity such as a Passport or Visa.  There is a complete list of acceptable forms of ID’s titled, Alternative Documents for Screening.

This list was created by the Fair Housing Office of Seattle, King County.  You can find it on their website or by contacting me at [email protected]  Some of the leading landlord-tenant law attorneys in Washington State strongly recommend you include this form in your rental packet for applicants to view.

In the next article we will continue building a solid, clear and concise Tenant Selection Policy.

About the author:

Rebekah Near has been the owner and operator of Orca Information, Inc, a Tenant and Employment Screening Service located in Burlington, WA since 1995.  She also gives trainings and classes for landlords and property managers in multiple states.  She is not an attorney and the above is not legal advice.  For more educational videos to help train your staff, go to our website and click on the bar at the top titled, EDUCATION.  To contact Rebekah Near, send a message to [email protected]

One Sure Way To Increase Tenant Selection Success Rates

One Sure Way To Increase Tenant Selection Success Rates Part 2

Young American Renters Making Changes in Response to Inflation

By
John Triplett
-
Young American renters are already making trade-offs to address inflation and rent hikes and are considering further changes

Young American renters are already making trade-offs to address inflation and rent hikes and are considering further changes, according to a new survey from Grubb Properties.

Grubb’s State of the Young American Renter Survey polled 1,000 American renters aged 22-35 to gauge their response to the challenging economic environment.

“Young American renters are contending with an extremely supply-strapped housing market, which has made it significantly more difficult to find accessible apartments in desirable locations,” Todd Williams, Grubb’s Chief Investment Officer, said in a release.

“Grubb Properties’ emphasis on essential housing, geared to people earning 60 percent to 140 percent of AMI, had us wondering how Gen Z and Millennial renters are adjusting to this current economic reality. Our research shows that they are taking action and making trade-offs as necessary.”

Highlights of the survey:

  • 93 percent of respondents who experienced a rent hike have already taken action to address it, primarily cutting back on excess spending, looking for a new job, and looking for a new place to live.
  • If rents continue to rise, young renters are prepared to take bolder action, moving to a smaller apartment, relocating to a less expensive geographic area, or even moving home with mom and dad.
  • Inflation, in the form of both higher prices of goods and higher rents, is top of mind for young renters. When asked to rank their top economic concerns, higher prices of goods was top, followed closely by higher rents.
  • These financial concerns will drive young renters to the polls this November. Of the approximately two-thirds who indicated that they will vote, almost nine out of ten stated that their financial situation is influencing that decision.
  • Green buildings still matter, even as rents rise. The majority state that green features are at least somewhat influential on their rental decisions

The report says more than half (51 percent) of young renters reported they experienced a rent increase in the past year, with an average increase of 30 percent. Of these renters, less than one in ten (7 percent) said they had the resources to cover the increase without changing their lifestyle.

Young American renters are already making trade-offs to address inflation and rent hikes and are considering further changes

Green, Urban Living – and Pets — Still Hold Appeal 

Young renters aren’t willing to compromise on their environmental priorities. More than four out of five (82 percent) agreed that energy-efficient and environmentally friendly buildings are at least somewhat influential in their decision on where to rent, with 40 percent  stating that they’re extremely or very influential.

Similarly, 64 percent at least somewhat agree that proximity to public transportation is important in the rental decision process. Three out of four (75 percent) at least somewhat agree that living in an environment near shops, restaurants, and entertainment is important. This makes it even more critical for more housing at price points attainable to these young renters to be built in urban and connected neighborhoods.

Another compromise young renters are not willing to make is giving up their pet. Of the 74 percent of respondents who own a pet, most (58 percent) agreed that no matter how much rent increases, they would never consider a pet-free building.

Inflation Tops the List of Financial Concerns – and Drives Young Renters to the Polls

Inflation continues to be top of mind for young renters. When asked to rank their financial concerns, the rising prices of goods were cited by 30 percent of respondents as their number-one financial worry, followed by rent increases (25 percent), lack of savings (20 percent), job security (15 percent), and paying back student loans (10 percent).

Young renters report that higher rents also make finding a new apartment more difficult. When asked how easy or hard it would be to find an apartment in their price range, 64 percent said it would be at least somewhat hard.

“Grubb Properties is laser-focused on addressing this housing shortage,” said Williams. “We’re building new communities in some of the most supply-constrained areas, including Los Angeles, New York, the Bay Area, and Washington, DC. We believe that quality urban housing should be accessible to all.”

Survey Background

The Grubb Properties State of the Young American Renter Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 1,000 young apartment renters (defined as renters ages 22-35), between September 16th and September 29th, 2022, using an email invitation and an online survey. The data was weighted to ensure an accurate representation of young apartment renters ages 22-35. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

About Grubb Properties 

Grubb Properties, founded in 1963, is a vertically integrated real estate fund manager focused on the Essential Housing space through its Link ApartmentsSM brand. The company targets residents earning between 60% and 140% of local area median income (AMI), directly addressing a growing crisis for essential housing, while providing residents with exceptional living spaces. Grubb Properties maintains a long-term perspective and its careful and measured approach to real estate investment has delivered resilient and impressive returns. Grubb Properties has received numerous sustainability designations and recognitions, and undergoes annual ESG assessments through GRESB. For more information, visit www.grubbproperties.com.

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