Entries Tagged 'Rent' ↓

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Back in March I talked about how the Michigan legislature was trying to destroy real estate values in the state with a new tax system. Well, they passed the tax and now it is in effect.

Take a wild guess who it is going to hurt the worst. You got it, landlords and real estate firms.

So a state with a worse than moribund real estate picture is now adding a huge tax to those who are willing to buy real estate. There are some real rocket scientists in the Michigan Statehouse these days.

The first filings of estimated liability under the MBT were due in April, and some real estate firms are seeing six- or eight-fold increases in taxes, said Kirk Profit, lobbyist for Government Consultant Services Inc.

He’s been retained by some local firms to push for changes in the tax, which replaced the Single Business Tax this year.

Profit said the credits in the MBT for personal property, payroll and research and development don’t benefit property owners and managers.

“There’s not a lot of that activity,” he said.

So you have real estate that is dropping like a rock and raising taxes by 6–8 times for the landlords that might be thinking about buying real estate in the state? Smart, huh…

“It’s going to take away a lot of your profit,” he said. The temptation is to pass along those costs to tenants through higher rents, but that might not be possible today, Chaconas said.

“I’m not sure you can get away with that because the market is soft,” he said. Profit predicted that will be the only option for many landlords. “You’ll probably see a dramatic increase in rents,” he said. via MLive.

Sure, increase rents from what. The economy in Michigan is in the toilet, real estate is not far behind, and you have a social welfare system that is bankrupting the state.

No wonder why we have so many former Michigan residents living in Georgia now, they just might be the smart ones.

Looking to invest in real estate, the rental market may be your best friend right now. As homeownership costs are still outpacing the cost of renting by nearly 10 percent and purchasing a home is difficult in a tight capital market, renting is still the option of choice for many. Investment News has an article today talking about the opportunities for either investing in REITs or personal rental properties while the housing market is still slow.

Despite falling home prices, Mr. Leupold said that it is still far cheaper to rent than to own a home in today’s market.
“If you look at the ratio of homeownership costs to rent, it’s out of whack from its historic level by about 5% to 10%,” he said. “This means rents could increase 5% to 10% before you get back into the historic equilibrium.”
All this appears to bode well for apartment REITs, and investors have taken notice. Apartment REITs have been on a tear so far in 2008, generating total returns that included dividends of 17.9% for the year to date through last Thursday, according to the National Association of Real Estate Investment Trusts. via InvestmentNews

If the surge in demand in rental units is a surprise to any of you please go back into your dark room and close your eyes.

Shelter is a base item in Maslow’s Hierarchy of Needs. As they say, if you have food, shelter, and water you can live. So it is no surprise that as the credit crunch is making housing harder to purchase and those being foreclosed upon are looking for rental housing. These folks are not going to just grab the nearest cardboard box and move under the interstate.

They will be living in rental units. And guess what, this will place a demand on the lower end real estate that is on the market right now as investors and landlords add to their inventory.

But shhhh!!!, don’t let others know that this is how the turnarounds start. We do not want any optimism out there.

Demand for rental apartments is up even as the market for offices, retail space and lodging struggles, according to a PricewaterhouseCoopers survey released on Monday.

Home buyers are having a tough time getting loans amid tighter credit standards. At the same time, prospective buyers are holding out for better prices and apartment developers have slowed or stopped their building plans, according to PricewaterhouseCooper’s quarterly Korpacz Real Estate Investor Survey.

“Because you have so many people losing their homes or not able to buy homes, there’s been an overall increase in the (apartment rental) sector,” said Susan Smith, editor-in-chief of the study, which surveys 125 real estate investors and specialists from pension funds, mortgage bankers and insurance companies.

Rental apartments “is the only sector benefiting from what we’re going through right now,” she said.  Reuters.

As home sales slow down, people are still needing a place to live. This pressure on the rental market is creating a rapid increase in price across the country. Add to that the inabilty of renters to get subprime and alt-a financing is increasing the pressure on the rental market.

So moving forward we should expect to see the continued rise in rental rates across the country until the renters rates and the price of housing find an equillibruim.

Top 10 Rental Markets With Fastest Rising Rates, 2nd Quarter 2007

1. San Francisco, CA $1,757 - 3 % Increase
2. San Jose, CA, $1,473 - 2.4 % Increase
3. New York City, NY  $2,657 - 2.1 % Increase
4. Seattle, WA $973 - 2 % Increase
5. Oakland-East Bay, CA., $1,300 - 1.8 % Increase
6. Orange County, CA, $1,493 - 1.7 % Increase
7. Washington, D.C., $1,301 – 1.7 % Increase
8. Baltimore, MD $945 - 1.7 % Increase
9. New Haven, CT. –  $1,065, 1.6 % Increase
10. Philadelphia,PA $981 –  1.6 % Increase

via Business Week

Are you thinking of moving to Manhattan? Well, if you are open up the check books and prepare to pay for it. Rents in Manhattan are skyrocketing and the classic entry level unit, the studio, is averaging nearly $2,000 a month. Thats right, the claustrophobic no bedroom, no kitchen, no nothing but a room and a bathroom with some cookware mashed in is averaging over $2,000 per month.

Think of it this way, the average is 2,000 a month, I wonder what the top end is on a studio in Manhattan?

NEW YORK (AP) - If you’re looking for a Manhattan apartment, be prepared to shell out about $2,000 a month—unless, of course, you’d like a bedroom to go with it.
Studio apartments in New York’s most expensive borough went for an average of $1,995 a month last year, according to an analysis released Friday by Citi Habitats, a Manhattan rental brokerage firm. That’s up from $1,659 in 2002.
The average rent for a one-bedroom apartment shot up to $2,737, compared to $2,227 in 2002, and two-bedroom apartments climbed to $3,893, from $3,198 in 2002. Three-bedroom apartments saw the largest percentage increase: more than 36 percent, from $4,059 in 2002 to $5,534 last year.
The increase did nothing to decrease demand. The overall rental vacancy rate for Manhattan last year was less than 1 percent.
The report reflects that “we’re the center of everything,” said Citi Habitats spokesman Christopher Dente. “There’s a lot of relocation—thousands of people are coming in.” via AP

College housing typically is fairly expensive, and if you live in a city that has high housing costs, it can be prohibatively so. There is a new trend on the horizon for properties near college campuses that have a shortage of housing on campus, mini-dorms. The idea is that you take a pre-existing single family home and remodel it so that it has many individual dorm style rooms with a common area. The resulting housing can accomodate more students at a lower cost near the university.

The 3 un-named developers are onto something here. Neighbors are not thrilled with the idea, but this is a great free market idea in my opinion and one that should be explored by those who specialize in near campus student housing.

According to NBC 7/39, the people behind this and similar conversions are three recent college grads, and they have plans to buy even more property.

Residents in Pacific Beach met with City Attorney Mike Aguirre and City Councilman Kevin Faulconer Tuesday night to voice concerns.
The issue in their neighborhood is a home being renovated in the 1200 block of Chalcedony Street. The three-bedroom house is being converted to a nine-bedrooms. The city approved a permit to add the extra rooms to the home, but some homeowners said there needs to be restrictions for single-family homes.
The conversion of single-family homes into so-called mini-dorms has been a hot-button issue in the College Area, near San Diego State University. The owners buy a home, add rooms and rent it out to multiple tenants, usually students.via KNSD

Let’s face it, on  the low end housing prices are stagnating, mortgage opportunities are decreasing, and demand is just not  there after the run of flips and speculation created excessive inventory. To some this is depressing but to the landlords this is music to  their ears.

And thus, I declare 2007 The Year of the  Landlord. If the bubbly folks are right, the carnage of homes that  will  be foreclosed upon is going to increase drastically, and if they are wrong there are still going to be  many who last year could have qualified for a loan but are now out of the pool. The decimation  of the sub prime market has shown that it will be years before  the industry finds a way to lend to low end borrowers.

Since housing is a need, and low end housing is moving poorly, the opportunities for smart landlords will increase. The pure numerical increase in people renting will create a shortage of rental units in our present inventory. And where there is a shortage you will find the opportunity for increased rental rates.

So those of you that are looking to be a landlord, get out and learn the business. I have linked to an article at The Real Estate Journal about some of the things you need to know, but a great series of posts can be found at The Bloodhound Blog by Michael Cook. He is doing a great job of  creating a  blueprint on how to  be a successful real estate investor and landlord.

More Americans are hanging out “for rent” signs. Some were forced into the business after buying investment houses or condos at top dollar during boom times that they now can’t sell. But many are discovering their inner landlord on purpose, often buying properties well below prices from a year or two ago.

It can be lucrative. For the first time in several years, rents are rising in many places, in part because the subprime-lending crisis is making it harder for people with marginal credit records to secure mortgages, increasing rental demand.

Shantay Wakefield and Gerald Taggart, a couple in Fairview Heights, Ill., have bought two rental properties in the past two years. The two 30-year-olds figured they would be income-generating investments, though they didn’t foresee the pitfalls via the RealEstateJournal

Life is ironic. A noted Trenton, New Jersey pediatrician has been accused of discrimination because he would not rent an apartment above his office to families with children. Is it because the doctor dislikes children? Not on your life.

The doctor has spent his life taking care of children. He also knows that the apartment is located on a busy street where there is no access to recreation for the children and in his opinion it is an unsafe place to raise children. But common sense in the face of an overzealous bureaucracy is no match.

The internet ad the doctor took out was picked up by the New Jersey Division of Civil Rights and now the doctor is facing a 10,000 fine, all because he used common sense and wanted to protect children from living in a place that was not conducive to the health.

And lets flip the coin. Say the doctor had rented to a family and one of the children were hurt in front of his building? Would he be liable? Would the city back him up by telling the parents that the doctor was unable not to rent to them? The poor pediatrician, he never had a chance in the face of mindless bureacracy. Read their press release here, kind of one sided, eh?

Such a restriction is a violation of anti-discrimination laws, according to the state Division of Civil Rights, which on Thursday said it would pursue action against Badawy and two real estate agents — Elizabeth Romero and Fausto Diaz — who helped him rent the space using an Internet ad.
“New Jersey law prohibits housing discrimination on the basis of familial status, and we will not tolerate discrimination against parents with children — whether it happens in person or through online advertising,” Division on Civil Rights Director Vespa-Papaleo said.
In its written response to the state, On the River Realty said that its agents attempted to honor the wishes of the owner without recognizing the ramifications of the ultimate conduct.
Now that the state has established what’s called a “finding of probable cause,” the case will be transferred to a judge for conciliation — a process designed to resolve cases without trial. If conciliation fails, the judge will conduct a nonjury trial or hearing. If found guilty of discrimination, Badawy and the real-estate agents each face up to a $10,000 fine. via the Home News Tribune Online

If you are fed up paying very high rental rates and are ready to go to a location where things may be a bit slower and more laconic, then these cities that have the Top 10 least expensive rental markets in the United States may be right up your alley.

via CNN Money

It does make me wonder though, when you make a good part of your living on the internet and where one lives is not the greatest priority, why people end up living in the expensive cities when they could be living elsewhere at a much higher standard of living.

New York City heads the list of the most expensive rental market for 2006, and rents are expected to increase in 2007 across the country. The slowdown in real estate purchases will lead to an almost 14 percent increase in rents in the 3 year ending in 2007.

New York also led the country with the highest occupancy rate at 97.3 percent followed by Los Angeles at 97.2 percent.  

Average Rent in 2006

via CNN Money