By Grant Brissey
From budget-friendly rentals to pet-friendly policies, these home characteristics are among top priorities for future tenants.
What can you do to minimize vacancies? The first step is knowing what features renters want. Then, identify which of those features your property offers and highlight them in your listings. Our survey data from the Zillow Consumer Housing Trends Report shows that renters are pretty specific about what impacts their home decision. If your property can boast any of these most-desired features, make sure to call them out in your listings.
More so now than ever, affordability is key.
1. Staying within budget
Hands down, rent prices that keep them on budget is the top concern for most renters: 80% say itâs highly important.
2. Pet-friendly policies
Lots of renters acquired pets during the pandemic. Since 2018, the percentage of renter households that reported owning a dog has risen to more than a third, and those reporting a cat rose to almost 30%. Overall, 59% of renters in 2022 reported having at least one pet, up from 46% in 2018. Breed restrictions, whose efficacy has been questioned, may be barring a cohort of high-quality tenants.
3. Online rent payment
Demand for online rent payment capabilities has steadily grown over the last few years. In spring of 2019, 57% of renters said theyâd prefer to pay rent online. By summer of 2022, that percentage had increased to 68%. Meanwhile, only 56% of renters reported having the ability to pay rent online in 2022.
4. Cost-saving amenities
Shared amenity features have taken a backseat to affordability issues for many renters. Emphasize the cost-saving factor instead. Remind tenants that a community gym means theyâre saving money on membership at the fitness center down the street. A rooftop deck or garden space means they can entertain instead of going out. Appealing to the ways your property can help reduce their spend in other areas of their life could increase your perceived value.
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5. A walkable neighborhood
With outdoor spaces among the safest spots to gather over the last two years, itâs no surprise to see that 57% of recent renters valued a walkable neighborhood when searching for an apartment.
6. A short commute time
How Americans work has changed since 2018, but the desire to be close to work or school has remained fairly constant. 56% of renters surveyed in 2022 said their commute to work or school was highly important, similar to 58% in 2018.
7. Number of bedrooms
Also important to renters is finding a place that has their preferred number of bedrooms. A full 68% of renters say this is at least a very important factor in finding the right place to live.
8. Layout
Having their preferred floor plan or layout is highly important for 48% of all renters. It may be that after a few years of increased indoor time with family or roommates, the right number of walls and doors is now a growing concern.
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Property management professionals are dedicated to ensuring equal housing opportunities, which includes accommodating the diverse needs of residents. A key component of this commitment is understanding and responding to requests for reasonable accommodations and modifications. However, this raises the question: How do property management companies navigate unreasonable accommodation requests?
UNDERSTANDING UNREASONABLE ACCOMMODATION REQUESTS
There are two situations in which an accommodation request is deemed unreasonable. First, if it imposes an undue financial burden on the property. Secondly, if it requires a fundamental
alteration of your program or services. Letâs break down these two different criteria to better understand the implications as well as the best practices to employ when faced with such situations.
Property management professionals are dedicated to ensuring equal housing opportunities, which includes accommodating the diverse needs of residents. A key component of this commitment is understanding and responding to requests for reasonable accommodations and modifications. However, this raises the question: How do property management companies navigate unreasonable accommodation requests?
UNDUE FINANCIAL BURDEN
A request may pose an undue financial burden if it incurs excessive costs relative to the propertyâs resources. For example, a resident with a disability requests a comprehensive renovation of their apartment unit to make it fully accessible. This includes widening all doorways for wheelchair access, installing a roll-in shower, lowering all countertops and cabinets, and adding specialized accessibility equipment throughout the unit. This request, which involves significant structural changes, can be prohibitively expensive and
may even affect surrounding units. The response depends firstly on the property type. As we know, modifications are paid by the property if it is federally funded or subsidized, whereas the cost would be the responsibility of the resident in a conventional property. Also, the financial capacity of the property management company would come into play. If denying a request for
financial reasons, property managers must be prepared to substantiate the financial burden, a process more challenging for larger companies or properties given their greater access to resources.
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FUNDAMENTAL ALTERATION OF THE PROGRAM
A fundamental alteration to a propertyâs program is when a request would require a property to provide services outside its existing scope. For example, a resident with a disability requests that the property management company provide on-demand personal assistance services. This includes tasks like cleaning and assistance with getting to and from their parking area. In general, a request like this goes beyond typical property management responsibilities, making
it a fundamental alteration to its program or services offered.
ONE-SIZE DOES NOT FIT ALL
These types of requests may seem to set a particular precedent in the minds of housing providers. But caution is needed. Each request should be evaluated separately and carefully and shouldnât be arbitrarily denied. Ensure that you are working well within the realms of federal, state, and local laws. If you are unsure, then consulting with a fair housing attorney is always a best practice.
DENYING A REQUEST – THE NEED FOR DOCUMENTATION
Even if a request is deemed unreasonable, itâs crucial to engage in an interactive process with the resident to explore alternative solutions. Documentation of steps taken is imperative. An interactive process can take on many forms but generally includes discussing alternatives to the request to see if a resolution can be achieved. Alternatives usually include moving to another unit or help acquiring additional assistance. Whatever a property chooses to do, they should document their attempts to work with the resident should their actions ever be called
into question.
UNREASONABLE ACCOMMODATION REQUESTS – KEY TAKEAWAYS
While property managers are committed to accommodating the needs of residents, requests requiring extensive and costly renovations that can pose an undue financial burden or a request that would require a property to provide services outside its existing scope may prove to be unreasonable. That being said, when dealing with accommodation requestsâwhether
reasonable or unreasonableâclear policies and procedures are a must. Treat each one with individual consideration and be sure to communicate each step of the process with the resident making the request. And of course, careful documentation and ongoing training should be part of every companyâs requirements.
Provided by Kathelene Williams, The Fair Housing Institute
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- Generation Z, the only renter-majority generation, eclipsed 5 million households in 2022 and will become the largest renter demographic by 2030.
- Gen Z faces more significant barriers to homeownership than their parents did, including elevated interest rates, a higher cost of living, and a limited supply of quality housing.
- One in three Gen Z adults say that homeownership at any point seems to be financially out of reach.
Gen Z Grows Up and Moves Out
Generation Z, a demographic age group of Americans born between 1997 and 2012, includes about 20% of the population, or 68 million members. As they grow up, the members of Gen Z are beginning to move out on their own and form new households. In 2022, there were 5.4 million households of Gen Z renters in the U.S. By 2030, Gen Z is expected to become the largest demographic of renters in America.
In 2022, Gen Z, not all of whom are of working age, made up 12.8% of the total U.S. workforce. But, Gen Z is on pace to outnumber baby boomers among full-time workers by the end of this year, Glassdoor projects.
However, many in Gen Z are rent-burdened and believe homeownership may not be in their future. With an average individual salary of $33,800 per year, many live paycheck-to-paycheck. A 2022 Freddie Mac survey found that about one-third of Gen Z felt that owning a home would not be possible in their lifetimes, up from 27% in 2019.
Sometimes called Zoomers, Gen Z is interacting differently with the rental market than millennials. They tend to be more interested in personal fulfillment and happiness rather than wealth and influence. Bucking a long-standing trend, these young adults have been opting for more space and lower-cost housing located outside of cities.
Zoomers Face Bigger Barriers to Homeownership
As the members of Gen Z reach adulthood, they enter a housing market that has changed considerably since their parents first bought a home.
Elevated interest rates: Since 2022, the Federal Reserve has raised the federal funds rate 11 times to tame inflation. In January 2024, the interest rate on a 30-year fixed-rate mortgage averaged 7.22%, up from near-zero in March 2022 yet below the average rate over the last 40 years.
Higher cost of living: From 1999 to 2022, the average price of rent in the U.S. spiked 135%, while average income increased 77%, according to Moodyâs Analytics CRE.
Low supply: Currently, the U.S. has a deficit of about 3.2 million homes.
Higher housing price points: The average new home mortgage payment is 52% higher than the average rent on an apartment, which is higher than at any point since at least 1996.
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Gen Z Sees Renting as an Attractive Option
Today, one in three Gen Z adults believe homeownership is not attainable in the future. But it doesnât seem to be phasing them. They show high rates of satisfaction with renting. More than three-fourths of those surveyed by Freddie Mac said flexibility was a key benefit of renting, while 63% cited how it can be less stressful than homeownership. Other survey respondents mentioned how renting offers the opportunity to live in attractive locations where the cost of owning a home is high.
Interested in personal fulfillment, Gen Z values the flexibility and reduced responsibilities central to the renting lifestyle, giving them a greater ability to pursue their passions.
The Outlook
As many Americans delay homeownership, Generation Z is embracing renting as a lifestyle choice and the commercial real estate industry has taken notice. In communities across the country, new single-family rental and build-to-rent communities are being built with features attractive to young people, including high-speed internet connections, green spaces, and dog parks, which aim to improve tenant retention and ultimately strengthen the rental housing marketâs supportive tailwinds.
Source: Arbor
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Partnering with a local utility provider can help increase energy efficiency, streamline operations, and reduce resident turnover.
While amenities have been a popular way to attract prospective residents of multifamily properties, some of todayâs most important features, including those focused on health, energy efficiency, and proptech, can make all the difference.
And there is a huge opportunity to meet these growing resident demands. According to the American Council for an Energy-Efficient Economy, the potential exists to improve the energy efficiency of U.S. multifamily properties by 15% to 20% and save $3.4 billion in utility costs.
Save Energy and Reduce a Propertyâs Carbon Footprint
According to the 2022 National Multifamily Housing Council/Grace Hill Renter Preferences Survey Report, about 2 out of 3 renters say smart thermostats and water-saving systems are essential, and that energy-efficient appliances, enhanced indoor air quality, and healthy building certifications sway their decisions to lease.
Keeping up with these growing demands from residents for sustainable and proptech solutions can be tough, especially when budgets are slim and buildings are older. However, there are helpful programs, rebates, and energy assessments offered from local clean energy providers like National Grid.
With programs and incentives designed for property managers to meet the needs of air sealing, LED lighting, Wi-Fi thermostats, heat pumps, low-flow showerheads, and more, National Grid helps their customers transform buildings into smarter, lower energy-consuming high-occupancy properties.
For example, Selah Realty wanted to reduce the natural gas consumption for water heating at a multifamily dwelling in Brooklyn, New York. With the help from National Gridâs Direct Install program, they installed low-flow showerheads, faucet aerators, and thermostatic radiator valves, and reduced use by up to 30% with an annual estimated savings of 16%.
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Improve Resident Experience
The worry about how a home can negatively affect health is real, with 54% of renter households reporting concerns about indoor air quality, according to Harvard Joint Center for Housing Studies-The Farnsworth Group Healthy Homes Surveys. (And this concern isnât just because of the COVID-19 pandemic, as indoor air quality was the greatest area of concern in the groupâs 2018 survey.)
In addition, nearly 2 out of 3 Gen Z renters say apartment technologyâsmart locks, solar-powered systems, smart thermostatsâis extremely important, according to ButterflyMX. Plus, 40% say they wonât rent a property if it doesnât have green practices, according to MRI Software.
Streamline Property Operations
Years ago, Fannie Mae released a study that showed efficient properties spent an average of $165,000 less in annual energy costs, and that median energy use was higher when owners paid for all energy costs. With the recent rise in fuel costs, those numbers havenât improved for property owners. And, just in the two years from 2020 to 2022, total operating expenses have increased 13% for multifamily properties.
With so much pressure to upgrade to smart systems, budgets are strapped for many. By taking advantage of energy assessments and rebates from a local utility provider like National Grid, not only will the future annual energy consumption be reduced, property management staff can save timeâanother crucial competitive advantage.
Any extra time that property managers can spend on residents may be the best way to retain them, with a great property manager being the biggest reason why renters renew leases. According to an AppFolio report, 57% report itâs the main reason why they would renew. Plus, 2 out of 3 potential renters say that the property managerâs reputation is important when evaluating a potential property.
By delivering the desired proptech, energy-efficient, and health-focused amenitiesâand taking the time to connect with those residentsâmultifamily property managers will be in a stronger competitive position to attract and retain their residents in the future.
Source: Multifamily Executive
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Should you aim for diversification in your real estate investments? What about your stock investments?
Oddly enough, many real estate investors never bother to ask that question. They just assume that all real estate investments require a lot of money and that each niche requires so much skill that you can only master one.
Theyâre wrong on both counts, and it adds risk to their investment portfolio.
Warren Buffettâs Take
Berkshire Hathaway CEO Warren Buffett famously said, âWe think diversification isâas practiced generallyâmakes very little sense for anyone that knows what theyâre doingâŚit is a protection against ignorance.â
I disagree.
Donât get me wrong: I have nothing but respect for the Oracle of Omaha. Heâs built an incredible career out of choosing stocks and other investments.
But guess what? Youâre not the near-prescient investment analyst that Warren Buffett is, and neither am I. Most of us canât pick winners with the consistency that he can.
That goes for professional investment managers, too, not just part-time or retail investors. Itâs why actively managed mutual funds historically perform worse than passively managed ETFs.Â
And donât tell me about how different real estate investing is from stock investing or how the same principles donât apply to you. Most novice real estate investors lose thousands of dollars on their first few deals. Itâs tuition to learn the ropes. Even after getting some expertise under your belt, real estate investors still end up making costly mistakes sometimes, or have market conditions fall out beneath their feet.Â
Real Estate Lends Itself to Narrow and Deep
Real estate is expensive. If you buy a property by yourself, youâll likely need $50,000 to $100,000 between the down payment, closing costs, cash reserves, and possibly the initial repair costs. And if you invest passively in real estate syndications, you usually need a similar amount for the minimum investment. That makes it hard to diversify when each individual asset requires so much capital.
Likewise, active real estate investing requires niche expertise. If you invest in Section 8 properties, mobile home parks, self-storage facilities, or in any other niche for that matter, you need to master the skills and knowledge required to succeed in that niche. That, too, makes it hard to diversifyâyou canât just learn a new niche overnight and expect success buying up luxury retail properties in primary markets.
Andrew Helling of Helling Homebuyers sums up the consensus argument:Â
âDiversification limits your ability to understand specific market niches and often causes you to miss out on opportunities that come with a concentrated investment strategy. While itâs riskier, I prefer to go all-in on local deals that I really understand. These are easier to manage, quicker to visit, and require less work, since I know the local market very well.â
You can see why real estate investors typically opt for a handful of similar properties in a few markets. In other words: narrow and deep, as opposed to wide and shallow.
Contrarian Take: Why I Go Wide and Shallow
Markets are unpredictable, and my crystal ball is no clearer than anyone elseâs. In fact, every time Iâve tried to get clever with investments, the universe has served me up a big slice of humble pie.
Iâve seen real estate deals go south after all the numbers on paper looked great. Iâve seen syndicators fall apart after many people I respect recommended I invest with them. And Iâve seen white-hot housing markets collapse in value after nothing but positive buzz from pundits and investors alike.
So, I invest $5,000 in a new passive real estate investment every month as one of hundreds of members of SparkRentalâs Co-Investing Club. In the last year, Iâve invested in multifamily properties, mobile home parks, retail, storage, industrial, and moreâall with different syndicators and investors in different markets across the U.S. Most of the deals we review each month are real estate syndications, but some are funds or notes.
âSpreading investments amongst various property types can protect your return when certain sectors retract or underperform,â explains Ryan Martinson of WhatsMyPayment.com. âWhen a particular segment booms, diverse investors participate in the upside.â
Risk Mitigation Strategies
Specifically, my diversification strategy protects me from risk in the following ways.
Markets
You might scoff now, but in 2006, big real estate players from New York and Washington, D.C., were plowing huge amounts of money into Baltimore real estate. The city had a renewed sense of optimism at the time, with crime rates slowly but steadily decreasing and lots of money pouring into low-income neighborhoods.
As a Baltimore native and a naĂŻve young real estate investor, I, too, jumped on the bandwagon. Then I got my butt handed to me in 2008.
All that outside money disappeared virtually overnight. Up-and-coming neighborhoods slipped back into decay. And a few years later, in the wake of riots, crime rates increased again.
The details differ as you look at other real estate markets around the country, but the lesson is the same: Sometimes, markets reverse course unexpectedly. I lived in San Francisco briefly in 2009 and loved it (even if it already flashed warning signs for sociopolitical issues by then). Everyone speculated on San Francisco properties for two decadesâonly to see values crumble over the last few years.
Austin, Texas, and Boise, Idaho, were white-hot a few years ago and then had a terrible 2023. In the â90s and â00s, people had written off Rust Belt cities in the Midwest, only to have them resurge later.
The bottom line: You canât always predict where a market will turn next. So donât put all your eggs in one basket.
Property types
After the Great Recession, everyone said self-storage was the ultimate risk-free real estate investment. In a recession, people downsize and need storage, right?
Until you overbuild them and the fundamentals of supply and demand catch up with you.
As an aside, it actually turns out that while self-storage isnât very correlated with home prices or unemployment, it is heavily correlated with home sale volume. People rent storage units when they move, and in the near-record-low transaction volume of the last year, storage has suffered.
Again, I canât predict what will happen in a specific industry or for a specific property type. To be frank, I actually just recently learned about how dependent storage is on home sale volume. But it goes to show you that even the big Wall Street institutional funds, which have poured money into storage over the past few years, often get it wrong.
And if they often get it wrong, you better believe you will sometimes, too, and probably more often.
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General partners/syndicators
When we first launched our Co-Investing Club, I asked a lot of experienced real estate investors, both active and passive, about the sponsors (syndicators) they recommended. I heard a lot of names, but two names kept coming up again and again. These two big names had an immaculate reputation and plenty of experience and deal volume.
Guess what? Theyâve been by far the two worst-performing syndicators we invested with in our investment club. In fact, theyâre the only two that have given me any cause for concern.
You can look at an investorâs track record and ask others in the industry about them. But you just canât predict how a general partner will perform when market conditions change. And spoiler alert: They always change sooner or later.
Today, the rule of thumb we try to follow in the Co-Investing Club is a one-year âprobation periodâ after our first investment with a sponsor. We want to see how well they communicate, how they handle hiccups, whether they start distributions on time, and so on. We donât mind investing again with a sponsor we know, like, and trust, but we try to space them out because diversification spreads out risk.
The wisdom of crowds
Iâm no longer so arrogant as to think that I can spot winners every time or even most times. This means I rely on the wisdom of thousands of other investors.
Before investing with a new sponsor, I ask about other passive investorsâ experiences with them on the Left Field Investors or BiggerPockets forums. Then my cofounder from SparkRental and I get on a âpre-screeningâ call with them. If we still feel good about them, we invite them in front of our Co-Investing Club so we can all grill them together.
Every time we vet a deal from a sponsor, we collectively ask better questions. We focus more on risk and how many ways the sponsor is mitigating it than on the potential returns.
In one deal, a member happened to live five minutes away from the apartment complex in question. She gave us a local perspective on the neighborhood and the demand for this type of housing there.
In another deal, a member who works in the insurance industry pointed out just how badly the sponsor had underestimated insurance costs.
Lean on others as you diversify. Through group investments with others, I get to benefit from their expertise, not just my own.
Dollar-Cost Averaging vs. Timing the Market
I practice dollar-cost averaging in both my stock investments and my real estate investments. Every week, my roboadvisor pulls money out of my checking account to invest in a broad portfolio of ETFs. And every month, I invest $5,000 in a new passive real estate deal.
I donât have to worry about timing the market. When other investors ask me if now is a good time to invest, I basically reply that theyâre asking the wrong question.
I canât predict the stock market or the real estate market. Either could collapse tomorrow or shoot for the stars. But by continuing to invest month in and month out, I make sure I maximize my time in the market rather than timing the market.
Plus, I enjoy cash flow in the meantime, rather than sitting with a ton of cash on the sidelines waiting around for a dip that may take years to appear.
A Numbers Game and The Law of Averages
Last year, our investment club invested in 13 deals, in line with our goal of around one a month. One or two of these investments will likely underperform or lose money. Others will overperform and exceed expectations (some already are). Most will fall in a bell curve in between and average out to strong annualized returns in the long term.
At the end of the year, I didnât wring my hands and worry about how this or that deal was doing. They just added up to numbers on a page, all averaging each other out.
But if I had invested all of my funds in a single property or deal, you better believe Iâd be thinking about that one deal all the timeâespecially if it was losing money or underperforming.
âBy abiding by the law of averages, investors are typically able to lower the risk of downturns in fluctuating markets,â explains Nate Johnson of NeighborWho. âInstead of an âall or nothingâ approach, diversifying helps give investors a financial safety net while helping to ensure a consistent trajectory towards financial growth.â
And hey, even Warren Buffett canât pick winners every time. For all his talk about how diversification is for investors who donât know any better, Berkshire Hathaway owns stakes in over 60 businesses.
By spreading smaller amounts across many property types, in many markets, with many syndicators, I can sleep at night knowing that the law of averages will protect me. Call me an ignorant investor if you like, but I feel pretty good about a bell curve of returns on my many investments.
Provided by Bigger Pockets
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By Meghan Wentland
Because your primary expense on rental properties will be maintenance and repairs, a home warranty can save a lot of time and moneyâas long as you read the policy thoroughly.
Q: I have both homeowners insurance and a home warranty on my primary residence and require that my tenants carry renters insurance for my rental properties. Does a home warranty for rental property make sense, or is it an unnecessary expense?
A: The security deposit you collected from your tenants and the renters insurance they carry will protect you financially from damage caused to the unit while the tenants are in residence, but just like in your primary home, a home warranty for landlords covers different expenses than homeowners insurance does. Think about why you carry both on your primary home: The homeowners insurance covers damage and loss that result from weather, water, fire, theft, and other covered events, while a home warranty is essentially a service contract that covers repair and replacement of major home systems and appliances that fail due to age or normal wear and tear. Together, they form a kind of security system for your investment and your business. As a landlord, you know that one of the bigger expenses involved in rental properties is maintenanceâunless youâre very knowledgeable and managing your rental properties is your only job, the near-constant need for plumbers and electricians for blown circuits, leaky water pipes, and bigger problems such as broken washing machines and HVAC issues can be crushing both financially and in terms of the time it takes to choose and hire qualified technicians. As long as youâre on top of regular maintenance and read your contract carefully, choosing to home warranty rental property you own might save you quite a lot of money, especially if you find yourself wondering âDoes renters insurance cover appliances?â and realizing that the answer is no.
A home warranty covers appliance and system repairs or replacementsâto a certain extent.
Home warranties come in several different packages. Normally home warranty companies offer one package that covers whole-house services, such as electrical, plumbing, heating, and cooling; one package that covers major laundry and kitchen appliances; and one that covers both. If you own a number of rental units that are all about the same age, the ovens, refrigerators, dishwashers, water heaters, clothes washers, and dryers in those unitsâall of which are your responsibility to keep in good working orderâmay begin to fail around the same time, from basic hard use. Financially, this could mean that youâll experience a disastrous sequence of expenses as one appliance after another needs repair and/or replacement, and that in some cases you might pay for a repair and then a replacement of the same appliance. A home warranty purchased for each unit you rent can cover the majority of those repairs and replacements for roughly the cost of one or two repairs or replacements.
The landlord has to purchase the rental home warranty for renters; because they arenât responsible for the upkeep of the property and donât own it, the renters canât opt to purchase a warranty on their own. Youâll pay the cost of the warranty contract, usually for a period of 1 year. Written into that contract will be the appliances and systems covered, the maximum payouts, and the cost of each service call. A plus here is that the service call, while an added expense, will cover the entire cost of the assessment, attempted repair, and if necessary, the replacement of the item. You wonât have to pay a plumber to try to repair the water heater, only to find out the problem is electrical, then pay an electrician to check it out and tell you that the unit needs to be replaced. The service charge will cover the repair or replacement to the extent the contract allows.
One reason some homeowners balk at buying a home warranty is that theyâre concerned that they wonât be able to choose the style or quality of the appliance that they prefer and have it covered by the warranty. As a landlord, youâll certainly want to keep the units modern and up to date, but you might not be as worried about the style or color as you would be in your own home, so the warranty is an even more sensible idea.
If you have a rental unit in the same place as your primary residence that is less than 750 square feet, you can cover it with a Guest Unit add-on to your own homeâs warranty.
This can be a great savings for the landlord renting out a part of their home or a small apartment in a separate unit on their home property. If the unit is small (especially if itâs the only one you have), paying full price for a home warranty contract might not be cost-effective. Luckily, if the unit is less than 750 square feet, you can add it to the home warranty policy you carry on your own dwelling as a Guest Unit line item for significantly less cost than purchasing a separate policy just for the unit.
Cost considerations will depend on a number of factors, including the age of the property and its systems.
If the rental unit is older and the mechanics and appliances havenât been updated recently, a home warranty is a straightforward protection of your investment; these units are more likely to have age-related issues that a an insurance policy wonât cover. But donât discount the benefits of a home warranty for newer homes as well. While a newer home with more recently installed systems and appliances is less likely to suffer from age-related wear and tear, newer units are often built with computerized control panels, automated systems, and smart-home integration, all of which can fail if a single component fails. These technologically advanced units offer convenience and efficiency, but they can also be extremely expensive to repair and are less likely than older appliances and systems to stand the test of time. Youâll want to weigh the cost of the warranty and service calls against the repair and replacement costs of the units you currently have in place to see what financial benefit the warranty would provide.
A home warranty for a rental unit is tax deductible.
Depending on how youâre registered as a landlord, your entire premium and service charges may be considered an operating expense. These expenses can be claimed on a tax return as a deduction from your total income, thus reducing your tax burden. Especially if you have a large number of rental properties, this total can add up quickly and add to the money you save on repairs and replacement by reducing how much tax you owe. State tax deductions will vary based on where you are registered as a landlord, but itâs likely that youâll be able to save some extra money through federal and local deductions.
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A home warranty on a rental unit can save you a lot of money on repairs and maintenance.Â
By covering repairs, maintenance appointments, and replacement, a home warranty prevents you from having to shell out cash on demand whenever something goes wrong at a property youâre renting out. If you make one or two claims against the warranty, it will have come close to paying for itself (one significant system replacement might more than cover the tab), and when the tax benefit is added to that, youâll start saving real money.
In addition, though, the warranty will save you time. A landlord is always on call when a tenantâs toilet clogs or bathtub backs up, the AC goes out on a hot summer day, or the dishwasher wonât drain. The tenants might feel bad about calling and potentially disrupting a family birthday party or vacation, but theyâll call, and itâs your responsibility to make the necessary arrangements for a service call and repair, or to go check out the problem yourself before you incur a charge from a professional. The best home warranty companies take care of that for you; either you or the tenant make an initial call, and then the home warranty company takes it from there, arranging for the professional repair person to contact your tenant for scheduling and handling the rest of the repair in exchange for a service fee. If you live far away from your rental properties, this service is even more valuable, potentially saving hours on the phone and making it less likely that youâll end up hiring a contractor who takes advantage of your distance by doing shoddy work. That peace of mind is provided to you, not to mention the return of potentially full days of coordination and shopping for replacement parts or appliances (or even whole systems). And, youâll save money.
When choosing a home warranty for a rental property, be sure to read the fine print.
This is a critical point, because failing to read the contract carefully can result in unpleasant surprises at the worst momentsâsurprises that are often the reason people are suspicious of home warranties in the first place. They donât cover everything. First, the warranty only covers the systems and appliances listed in the contract, and nothing else. Second, the cost of the service visit is also set in the contract, along with how many individual visits (or what length of time) is included in each visit. Third, every warranty has coverage limits. There are two kinds of limit: a maximum payout per event, usually specific to the system or appliance, and a maximum payout per policy annually. This can cause distress if you havenât read the policy carefully and are expecting that an entire failed HVAC system will be replaced free of charge, only to discover that the replacement will cost $10,000 and the policy states a maximum payout of $7,000. Thatâs still $7,000 you donât have to come up with and very much worth the cost of the home warranty, but the remaining $3,000 due can be upsetting if youâre surprised that itâs not covered. Similarly, some policies will cover insect infestationsâbut only for certain kinds of insects. It will be a rude awakening when you file a claim for a huge termite infestation and find out that termites are excluded from your warrantyâand that it was right there in black and white for you to see.
In addition, most home warranties have requirements that must be met in order to remain valid. If youâre a landlord, youâre probably accustomed to making quick fixes yourself to save the cost of a professional, especially for easy things. Or perhaps you trust that your tenants will take care of common maintenance tasks and cleaning. Unfortunately, those DIY fixes or potentially delayed maintenance can invalidate your warranty and allow the company to deny claims. And perhaps the home you purchased to rent out had been in disrepair for some time; while some home warranty companies have an amnesty program that doesnât penalize new owners for maintenance failings of previous ones, not all do, so you could find that the years of no maintenance or upkeep before you even owned the property render your claims invalid. Again, these conditions will be clearly spelled out in the contract (and if they are not, you should ask about them to make sure you havenât missed something).
If, however, youâve carefully read the contract and are aware of the conditions and limitations, a home warranty can offer financial savings and peace of mind to what many see as the most onerous part of being a landlord: the time and expense of maintenance and repairs.
Provided by bobvila.com
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Even as consumer affairs agencies at the state, local and federal levels crack down on fake online reviews, potential renters are using these evaluations more and more often to make their choices.
Thatâs one of the numerous key findings in the latest study of rentersâ habits by ApartmentRatings and SatisFacts Research. The 2023 Biennial Online Renter Study, now in its 12th year, includes the feedback of more than 28,000 renters nationwide to determine their behaviors and preferences when it comes to apartment living.
That apartment hunters are tuning to online reviews is a notable shift, the study reported, particularly among those ages 18 to 34. Recognizing this âtop of tunnelâ behavior, where renters look at reviews at the start of their apartment hunt as well as during the decision making process, is âcrucialâ for landlords â especially those charging higher rents.
Renters are paying attention
Renters who plan to pay at least $1,750 a month are doing the most research when compared to other renters before ever contacting a potential place to live. More than four in five looked at both a propertyâs website and its online reviews before moving forward, the study found.
Importantly, the study also notes that 70 percent of renters look for negative reviews, an indication, it said, of the âdesire for balanced and unbiased information.â Renters, it added, âvalue a comprehensive view that considers both positive and negative aspectsâ and are unwilling to trust a review site featuring just positive evaluations.
Renters arenât naĂŻve, though. They realize that no place is flawless. While they take the time to read the critiques, they also look to see how the property responds âas an example of your commitment to customer service,â according to the renter study.
The SatisFacts and ApartmentRatings study found that people look to see how a property responds to a review, good or bad. Roughly seven in ten respondents think a response is an indication of great customer service and about the same number say a project likely does not have great service if it fails to respond.
Still, there is a healthy skepticism among renters, who are concerned about being manipulated, the study also found. âAs deceptive tactics used to create reviews become more sophisticated,â it says, renters are finding it more difficult to distinguish between fake comments and the real thing.
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Transparency matters
To protect renters and other consumers from being duped, the Federal Trade Commission has proposed regulations that would outright ban fake reviews and testimonials. The rule would also prevent anyone from suppressing honest negative reviews and from paying for positive reviews, which deceives consumers looking for real feedback and undercuts honest businesses.
In another key finding, renters want landlords to be more transparent about their mandatory fees. Approximately one in five respondents reported not being informed about all the charges associated with their current lease and four in five said that property managers need to come clean up front rather than hide extra fees.
This finding âcannot be overstated, especially in light of the regulatory focus on junk fees in the rental housing market,â said the report, which calls for more clarity in fee structures.
âThe study results indicate that renters appreciate transparency and may be more inclined to consider communities that are clear and open about their pricing structures,â the report says.
Whether it is on a communityâs website or its newsletter to residents, potential renters want to see what life would be like should they choose to lease there, the study found. At the same time, save for higher-end renters, the management companyâs brand is not usually a primary factor in the rental decision.
In another finding, approximately nine out of ten renters in almost all age groups â from 18 to 65-plus â said they would frown on any company that treats its employees poorly.
Finally, the report said the renters who responded to the online survey indicate theyâd do things a bit differently the next time around. More than half said they would visit their next place in person and almost half said theyâd do more research into the property management company before pulling the trigger.
Source: Multi-Housing News
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As a landlord or property manager, understanding the intricacies of smoking policies in rental properties is crucial. This comprehensive guide dives into the multifaceted aspects of managing smoking tenants, including legal considerations, tenant rights, and practical enforcement strategies.
Legal Landscape: Smoking and Protected Classes
Understanding the legal aspects of how smoking is treated in the context of rental properties is crucial for landlords and property managers. Hereâs a more detailed look:
Fair Housing Rules and Smokers: The Fair Housing Act, a pivotal piece of legislation in the United States, aims to prevent discrimination in housing. It enumerates specific protected classes, such as race, religion, national origin, sex, disability, and familial status. Smokers do not fall within these categories. Courts across various jurisdictions have upheld this view, clearly indicating that landlords are within their rights to impose no-smoking policies without fear of violating fair housing laws.
State-Specific Smoker Protection Laws: While federal law does not protect smokers, there is a patchwork of state-level laws that offer varying degrees of protection to smoking tenants. In 29 states and the District of Columbia, laws have been enacted that classify smokers as a protected class, to some extent. These laws vary significantly in their scope and application. They may, for instance, prevent employers from discriminating against smokers but do not necessarily apply to housing. Therefore, itâs important for landlords to be aware of the specific laws in their state and how they might affect their ability to enforce no-smoking policies.
Differences in Enforcement: The application and enforcement of these state laws can significantly differ. In some states, these protections are robust, while in others, they are more symbolic. Knowing the nuances of state law is essential for landlords to navigate this landscape effectively.
Tenant Rights and Smoking Regulations
The rights of tenants regarding smoking in rental properties are also a complex issue:
Absence of Federally Protected Smoking Rights: At a national level, no law explicitly grants tenants the right to smoke in rental properties. This absence of federal protection means that, generally, landlords have considerable leeway to restrict or prohibit smoking on their properties without infringing on tenantsâ legal rights.
Fair Housing Act Considerations: Itâs critical to understand that the Fair Housing Actâs primary goal is to prevent discrimination against protected classes. Since smokers are not a protected class under this act, landlords are not discriminating based on this law when they prohibit smoking. This distinction is important because it allows landlords to implement no-smoking policies as a part of their property management strategy without the risk of legal challenges based on federal discrimination laws.
Impact on Tenantsâ Health and Safety: The decision to prohibit smoking is often rooted in concerns about health and safety. Secondhand smoke can pose significant health risks to non-smoking tenants. Similar to noise complaints, smoking can be a source of disputes and discomfort in multi-tenant properties. By restricting smoking, landlords are often seen as taking steps to ensure the health and well-being of all their tenants.
Local and State Regulations: Besides federal law, local and state regulations can have a substantial impact on smoking policies in rental properties. Some cities and states have more stringent regulations that may restrict smoking in certain types of housing or areas. Landlords need to be aware of these local ordinances as they can further define what is permissible regarding smoking in rental properties.
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Implementing and Enforcing No-Smoking Policies
Incorporating No-Smoking Clauses in Leases: Clearly defined no-smoking clauses in lease agreements are pivotal. These should explicitly state the restrictions and consequences of violating the no-smoking policy.
Uniform Application and Enforcement: To avoid discrimination claims, itâs imperative that no-smoking policies are applied uniformly to all tenants. Consistent enforcement is also key to maintaining the policyâs integrity and effectiveness.
Managing Existing Tenants Who Smoke
Approaches to Monitoring and Compliance: Employing smoke detectors specifically designed to detect cigarette smoke can aid in monitoring compliance. However, privacy concerns must be taken into account, especially when using security cameras in common areas.
Addressing Violations and Potential Eviction: When a tenant breaches a no-smoking clause, landlords typically begin with a formal warning. Continued violations can lead to eviction processes, contingent on the terms outlined in the lease agreement.
The Case of E-Cigarettes and Vaping
Extending Policies to Include Vaping: As e-cigarettes and vaping become more prevalent, landlords should consider updating lease agreements to encompass these forms of smoking. The effects of vaping on property and other residents can be similar to traditional smoking.
Practical Tips for Landlords
Clear Communication: From the onset, landlords should communicate their smoking policies clearly to prospective and current tenants. This ensures that all parties are aware of the rules and their implications.
Legal Consultation: Itâs advisable for landlords to consult legal professionals, particularly when drafting no-smoking clauses and policies, to ensure compliance with local and state laws.
Handling Exceptions and Accommodations: While enforcing no-smoking policies, landlords should also be prepared to handle exceptions or requests for accommodations in a fair and legal manner.
Conclusion
In summary, tenants who smoke are generally not considered a protected class under federal law, specifically the Fair Housing Act. This means landlords have the legal right to impose no-smoking policies in their rental properties without violating federal discrimination laws. However, itâs important to note that in 29 states and the District of Columbia, there are smoker protection laws that may offer some level of protection to smoking tenants, although these laws vary in their scope and application, and often do not directly impact housing policies. Therefore, while federal law largely supports landlords in restricting smoking in their properties, itâs crucial to be aware of and understand any specific state laws that might affect this issue by sourcing a legal professional.
Source: Multifamily Insiders
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By Glenda Taylor
If your most recent property tax assessment caught you by surprise, you have options beyond simply paying it. With a little research and a lot of determination, you can get your property taxes lowered. Here’s how.
1 Lower Your Tax Bills
Property tax rates are decided at the county level, and the money collected is used to pay for schools, streets, and public safety. If you want to own a house, you already know that youâre probably going to have to pay property taxes. What you may not know is that you might be able to decrease the amount of taxes you owe. So, donât just fume about a high tax billâdo something. Scroll through to discover ways to lower your property taxes and keep more of your hard-earned money for yourself.
2 Review Your Property Tax Card for Errors
Your homeâs tax card is the official record of your property. It contains information such as your homeâs assessed value, square footage, the year it was built, and the number of bedrooms and bathrooms it has, but tax cards often contain errors. Obtain a copy of your tax card from your local county assessorâs office and go over it carefully. If you find errorsâif, for instance, it lists more bedrooms than you actually haveâpoint that out to the assessor and ask for a reevaluation of your tax.
3 Appeal Your Tax ValuationâPromptly
Most county assessors limit the amount of time you have to appeal your tax valuation after they mail out notices; in some jurisdictions, the period is as little as 30 days. If you fail to appeal within that time frame, the window of opportunity closes, and youâll have to pay the higher tax. The appeal process typically involves filling out a form detailing why you believe the assessorâs valuation is too highâfor example, perhaps the house has sustained structural damage.
4 Get Rid of Outbuildings
Structures on your property, including storage sheds, she-sheds, and greenhouses, may also be assessed for taxes. That said, some counties and towns tax only permanent structures with foundations, or only those above a certain size. But if your property tax bill includes a couple of storage sheds that you donât really need, consider getting rid of them. If you decide to remove them, notify your county assessorâs office so it can update your property tax card.
5 Check to See If You Qualify for Property Tax Relief
Not all states offer property tax relief, but many do offer reductions for homeowners who are seniors, veterans, or disabled. In addition, certain types of property, such as property used for agricultural purposes, may qualify for tax breaks. These reductions are decided at the state level, but you wonât automatically get themâyou need to apply. Call your county assessorâs office to find out if you qualify for any tax relief programs.
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6 Move to a Less Expensive Area
Property tax rates vary widely from state to state and from county to county. If you live in a county with high property taxes, you may be able to buy a house in a neighboring county and pay much less in property taxes. You may end up with a longer commute, but youâll save on taxes.
7 Compare Tax Cards of Similar Homes
If youâre sure youâre paying more than you should in property taxes, you stand a better chance of having your tax lowered if you can demonstrate that houses similar to yours are being assessed at a lower value. Tax cards are public information, so go through the ones of homes like yours (same square footage, age, style, and number of bedrooms and baths). If you can show that your property is valued higher than other similar properties, the assessorâs office may reduce your valuation.
8 Have Your Property Independently Appraised
County assessors and real estate appraisers value properties in different manners, but if a real estate appraiser values your home at less than the county assessor does, you can often get your valuation reduced. Youâll pay $250 to $400 for an independent appraisal, but if it substantially reduces your homeâs assessed valuation, you could save thousands every year.
9 File for a Homestead Exemption
A homestead exemption provides tax relief for a primary residence in the wake of a bankruptcy or death of a homeowner. Many, but not all states, offer homestead exemptions, but requirements vary. You typically have to have lived in the house for more than a year and must meet certain income requirements. If you qualify, the county assessor will be able to tax only a portion of the value of your property.
10 Invite the Assessor Over
Sometimes the best way to show the assessors that your house is not worth as much as they claim is to ask them to come see for themselves. The key here is to accompany the assessor and point out all the problems she may not notice, such as cracks in the foundation, structural problems, water damage, and other significant defects.
11 Hire an Expert
Navigating the appeal process can be complex and time-consuming. Fortunately, if youâre not up to it, there are experts who can help. Both tax attorneys and property tax consultants can challenge your property valuation to get your taxes reduced. Youâll have to pay a tax attorney up front for the time spent on your case, while a property tax consultant takes a cut of your tax savings, usually 50 percent of the first yearâs savings.
Pay Less
Who doesnât want to pay less in property taxes? With this advice in hand, you can begin the process of lowering your property taxes.
provided by bobvila.com
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By LAUREN LIEB
Landlords and investors across the country are encountering extreme increases in insurance premiums. Renewal premiums are increasing anywhere from 20% (at the low end) to 200%+ of the previous yearâs premiums, which is putting landlords in a precarious situation when looking at how to afford such astronomical increases.
WHY ARE INSURANCE PREMIUMS GOING UP SO MUCH FOR LANDLORDS?
Various factors are causing the steep increase in insurance premiums in the multifamily industry, and according to insurance companies, those increases arenât likely to go away this year â or next.
Climate Change
The primary reason for heightened rates is tied to the increase of both the severity and the frequency of catastrophic weather-related events. The GulfCoast states all the way up the Atlantic have faced a large increase in claims and payouts due to hurricanes. The West Coast has been inundated with large wildfire claims, since the wildfire season is no longer being contained to the hotter months, but instead are occurring year-round.
Increase in Tenant Lawsuits
Higher claims due to tenant-caused damage and liability lawsuits are also directly impacting the industryâs premium trends, especially for properties that donât require or track their tenantsâ renterâs insurance. That gap leaves the landlordâs policy to be primary on a claim they may not be responsible for.
Inflation
Properties are also facing higher replacement costs, which are directly tied to insurance premiums, which are in turn due to inflation, labor costs, supply chain issues, and increased timeframe of construction.
Insurance Providers Exiting the Market
Due to an historically high claims payout history for the multifamily industry, some insurance carriers, who had previously specialized in multifamily, have also pulled out of the industry all together, causing less competition in the market. Most of the standard carriers remaining have put a cap on the age of the building they deem as allowable risks, which has put properties older than 30 years at a severe disadvantage when approaching the standard market.
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HOW CAN YOU PREPARE FOR INSURANCE INCREASES
For investors, itâs important to underwrite deals with an insurance agent who is knowledgeable about the industry trends. Assuming a cost-perdoor that last year would have been $500, is now going to likely be double that today. Underwriting without the input of an expert will cause certain strife when budgeting.
Itâs also important to take insurance costs listed in Offering Memorandums with a very large grain of salt. Rarely are those figures on the mark, and without the specific details of what the seller was insured for, it is essentially comparing apples to oranges.
Those with or preparing to work with lenders also need to pay specific attention to what the lenders are requiring regarding insurance requirements. Those with government-backed loans will need to budget for the additional coverage that must be carried when working with those lenders.
Lastly, be sure to shop for insurance if you havenât received a quote in the last 2 years. An insurance broker can help you determine if you are in fact getting the best insurance rate possible and what improvements you can make to your property to reduce your premium.
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