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Rent Payment Methods Landlords Should Offer Tenants Apart From Cash

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Cash is a popular way to collect rent in the United States. However, while it may be liquid, cash payments are not always reliable. Renters may easily default on the payment. They are also prone to human error. What other rent payment methods should landlords consider?

 

Why Offer Other Rent Payment Methods?

Offering various landlord rent payment methods provides many benefits for both the landlord and tenant. Here are some reasons why it’s a good idea:

  • Convenience. Other rent payment methods are more convenient than cash because tenants do not need to visit the landlord regularly to make payments.
  • Security. Other payment methods are more secure for both the landlord and tenant. Meanwhile, cash is prone to theft and loss.
  • History. Other payment methods provide a digital trail landlords and tenants can track to ensure payments have been made.
  • Reduced Administrative Work. Non-cash methods allow landlords to process payments faster. They also require less or no reconciliation work on the landlord’s part.
  • Less Risk of Late or Missed Payments. Non-cash methods are easier to track and reduce the likelihood of missed or late payments.

 

Other Rent Payment Methods to Consider

What other rental payments methods should landlords consider? Here are the best payment methods to try.

 

1. Cashier’s Check or Bank Draft

Cashier's Check or Bank DraftLandlords who want physical rent payment methods for tenants can consider cashier’s checks and bank drafts. The tenant only needs to obtain these from financial institutions like credit unions or banks. Afterward, the institution will write the bank draft or cashier’s check against their funds instead of the renter’s funds. This guarantees that the landlord will receive the money as cashier’s checks and bank drafts do not bounce.

Cashier’s checks and bank drafts require the tenant to have the rent amount on hand. The bank or financial institution takes the money from the renter’s account before they issue the cashier’s check or bank draft, making it secure for all parties involved. However, banks and financial institutions charge a fee to issue bank drafts and cashier’s checks.

 

2. Certified Check

One of the best landlord payment options is the certified check. It’s similar to cashier’s checks in that a financial institution will verify whether or not the renter has enough money in their account. Once verified, the teller will certify the check with a signature or stamp. Certified checks are secure because they guarantee the landlord will receive the funds. However, they also cost money to obtain.

On the other hand, certified checks are not as secure as bank drafts and cashier’s checks. This is because they only certify that the account has enough funds upon writing. It does not always guarantee that the funds are available upon withdrawal. Nevertheless, many banks hold the amount to ensure the check clears.

 

3. Money Order

Money orders are one of the most secure physical rent payment options. Renters can get them from banks, convenience stores, groceries, pharmacies, payday loan stores, check-cashing stores, and the United States Postal Service (USPS).

With this method, the institution will write both the landlord’s and renter’s names on the money order and include the issuer’s name. Tenants must prepay the money with a guaranteed payment method like a credit or debit card. The landlord will then simply collect the money prepaid to the issuer.

Money orders are secure because they are prepaid and cannot bounce. They’re like a gift certificate the landlord can cash in once rent is due. However, issuers often charge fees for money orders, which can be cumbersome and financially impractical for renters to use.

 

4. Bank Transfer

Electronic payment methods are convenient for both the renter and landlord. They eliminate the need to meet and exchange documents or cash physically. For this reason, the bank transfer rent payment has become popular among many landlords and tenants. Bank transfers are similar to direct deposits in that money is transferred from one bank to another.

 

5. Cash App or Venmo

Online rent payment options like Venmo and Cash App are ideal for many younger tenants. This is because many millennials and Gen Z use these apps for most transactions. It’s convenient, intuitive, and often quick. Moreover, it’s usually entirely secure because these apps offer transaction encryption.

In addition, landlords can easily send payment requests to tenants using these apps. These may serve as reminders to tenants to pay their rent on time. Some apps also allow renters to set up automatic payments so they never miss a deadline. However, keep in mind that business transactions like these may come with a fee.

 

6. PayPal

rent PayPal paymentPayPal for rent collection has become a popular choice for landlords. This is because PayPal is relatively universal and even works with international clients. When using PayPal, renters only need to enter their landlord’s phone number and email address to transfer funds. They can do it at their convenience and without having to ask for the landlord’s bank details.

In addition, PayPal often charges no fees for transfers via digital wallets and bank accounts. This makes it convenient to use PayPal to collect rent. On the other hand, keep in mind that the app may charge fees for credit and debit card payments.

 

Exercise Caution When Using Online Payments

Landlords who want to use online rent payment methods should exercise caution. While it’s tempting to list the renter as a “family or friend” to avoid business transaction fees, these types of payments often come with few protections. It may be wiser to designate these payments as business transactions to ensure they cannot be easily reversed or canceled.

Moreover, designating professional transactions as personal transfers may violate the platform’s terms and conditions. The landlord may eventually face liability if they are dishonest with their transactions.

 

Better Flexibility for Landlords and Tenants

Non-cash rent payment methods offer more flexibility for both landlords and tenants. Some of these payments offer more security for the landlord and guarantee that they will receive the payment. Meanwhile, others are convenient for both parties and no longer require them to meet physically.

Are you in need of a property management company to manage your rental properties? Find one today through our online directory!

 

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What Does A Landlord Look For In A Credit Check?

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Credit checks are handy screening tools that provide landlords with more insight into the tenant’s financial history and responsibility. What does a landlord look for in a credit check? Should tenants have a certain credit score or history to find a place? Let’s find out.

 

Why are Credit Checks Important?

Credit checks are an important part of the tenant screening process. It can provide landlords with an in-depth understanding of the tenant’s financial health. Credit checks can tell the landlord whether the tenant has been responsible for past payments. Eviction histories can also uncover whether the tenant will give the landlord problems later on. Past behavior often predicts future outcomes, after all. While landlords can evict delinquent tenants, the process is often long and tedious.

 

What Does a Landlord Look for in a Credit Check?

Landlords often screen potential tenants before they rent out property. Evictions are costly, after all, and can run a landlord thousands of dollars in eviction fees. One of the most common things landlords consider is the tenant’s credit score and history. What do landlords look for in a credit report? Here are some of the most common things they keep an eye out for.

 

1. Low Credit Score

What credit score do landlords look for? In truth, there is no set credit score landlords look for. While high credit scores are preferable for most landlords, tenants do not need an unreasonably high score just to rent a property. However, what they might need to think about is whether or not their credit score is too low.

This does not mean a low credit score will immediately disqualify a tenant. It doesn’t offer a holistic perspective of the tenant’s financial history or status. Responsible landlords will look at the credit report as a whole and determine why the score is low before deciding. Nevertheless, low credit scores can raise concerns and lower a tenant’s chances.

 

2. Late Payments

A tenant credit check might include checking whether or not a tenant has made any late payments. If the tenant consistently pays credit on time, then landlords don’t have to worry as much about future payments. However, if there’s any indication that the tenant has repeatedly paid credit cards, utility bills, and loans late, then landlords might be more wary.

 

3. Large Debt

A tenant credit report might indicate how much debt a tenant has. If the debts are too high, landlords may reconsider their options. Debts might hinder the tenant’s ability to pay rent every month, resulting in late or delinquent payments.

However, landlords may be more understanding depending on the type of debt someone has. For instance, student loans are pretty common among the entire population. It’s not necessarily considered irresponsible. Meanwhile, someone might be less trustworthy if it involves excessive credit card debt.

 

4. Gaps in Payment

A credit check for landlords might show 7-10 years of a tenant’s history. Landlords should look for lapses in payments on credit cards or other loans. More consistent tenants are more favorable.

 

5. Derogatory Marks

Derogatory marks include accounts in collection, bankruptcies, car repossessions, and credit card charge-offs. Landlords may consider these red flags in a tenant’s credit report as they may show financial irresponsibility.

 

6. Past Rental Delinquencies

Landlords often check rental histories when checking the rental history report. What does a landlord look for in a credit check? One of the biggest ones is past rental delinquencies. If a prospective tenant owes an outstanding debt to a previous landlord, it can be a red flag.

This usually happens when a previous landlord reports a tenant to a credit bureau. It appears on their credit report and serves as a warning for other landlords. Landlords can then call the references in the rental history report to ask about the potential tenant’s history.

 

How do Landlords Look up Rental History?

There are multiple ways landlords can look up someone’s rental history. Here are the most common methods.

 

1. Ask the Renter for a Copy

The simplest way is to ask the potential tenant for a copy of their credit report. Tenants are entitled to free annual credit reports from three credit reporting agencies. It’s straightforward and eliminates unnecessary fees. However, some tenants may fabricate their report to make it more favorable for them. Some tenants may also provide an outdated copy of their credit report to mask recent delinquencies or derogatory marks.

 

2. Get the Report from a Credit Agency

Landlords can request a credit report from a credit agency. This is a more time-consuming and tedious task, and it’s often only a good option if the landlord has multiple rental properties. Follow all the relevant credit report-related laws and ask a lawyer before proceeding.

Getting the report from a credit agency may require the landlord to undergo an identity check, business background check, and property inspection. This process can be taxing for individual property owners. For this reason, only rental property companies and landlords with a large portfolio go through it.

 

3. Use a Third-Party Platform

Landlords can use third-party platforms to run credit checks. Many can look through online databases to find the tenant’s potential criminal history. Some may even provide in-depth information about the tenant’s debt levels, financial history, eviction history, and ability to pay rent.

 

Tenant Screening Services4. Opt for Tenant Screening Services

Some organizations and rental property management companies offer tenant screening services to landlords. This way, landlords no longer need to do the legwork of looking through databases or reviewing reports. It’s quick, efficient, and convenient. Moreover, it’s usually cost-effective as it reduces the time it takes to review a potential renter’s history, speeding up the time it takes to choose a renter.

 

Choose Wisely

What do landlords look for in a credit check? There are many factors to consider when checking a potential tenant’s credit and financial history. Nevertheless, while it’s time-consuming, it always pays to be careful and choose wisely.

Do you need a rental property management company? Look for one today through our online directory!

 

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Why Decline A Tenant And How To Do It The Right Way

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Landlords typically receive several tenant applications for their rental properties. As you might expect, landlords cannot accept multiple applications for one unit. They have to choose a rental applicant and deny the rest. How can landlords decline a tenant according to the law? What are the best practices? Let’s answer these questions below.

 

Valid Reasons to Deny Rental Application

If your question concerns how to legally decline a tenant, then you must first understand that there are invalid reasons to decline a tenant. The Fair Housing Act provides legal protection for people in certain classes. This means landlords cannot decline a rental application because of the tenant’s race, color, national origin, disability, familial status, religion, sex, gender identity, or sexual orientation. Violating any fair housing laws could lead to liability.

Outside of these categories, landlords may decline a tenant application for several valid reasons. Establishing criteria beforehand is good so you know exactly what you’re looking for. Landlords can use these criteria to streamline the screening process and remain compliant with local, state, and federal regulations. The criteria can also be used to justify a landlord’s choice of tenant.

What are some valid reasons to decline a tenant? Here are some common examples.

 

how to legally decline a tenant1. Low Credit Score

Landlords often set a minimum credit score for tenants. After all, no landlord wants a tenant with unmanageable debt. It could hinder their ability to pay their rent in the long run. The higher the score, the better the odds of approval.

Conversely, a bad credit score is a good reason for landlords to decline a tenant. Many landlords set the minimum at 650. However, landlords can set a lower or higher limit as long as it’s reasonable.

 

2. Unclean Criminal Record

Landlords often screen tenants before they decide to sign a rental contract. They check the applicant’s criminal history. If a landlord finds anything sketchy about the tenant, they may reject the application.

Consider checking the National Sex Offender Public Registry and the Most Wanted Databases to make sure the tenant isn’t doing anything shady. Landlords can also use a professional screening service to conduct a more thorough investigation. Doing this keeps the landlord free from liability.

 

3. Past Evictions

It’s essential to check a tenant’s eviction history from previous rental properties. Tenants who have been evicted in the past are more likely to be evicted again, after all. Landlords may take previous evictions as warning signs that could lead them to reject a rental application.

 

4. Unstable Employment History

It’s important to determine whether or not the tenant can meet their financial obligations. For this reason, landlords may check an applicant’s employment history to verify their financial capability. They may reject rental application submissions if the tenant is unemployed or has an unstable job.

 

5. Inadequate Income

Landlords may ask for proof of income to verify the applicant’s capacity to pay. This is important as landlords must determine whether the tenant can afford to pay rent in addition to their living expenses and unforeseen costs. A good ratio is an income three times as high as the rental price.

 

6. Negative References

Landlords often check a tenant’s history by consulting their previous landlords. If a former landlord gives a bad review or provides negative feedback, landlords may take that as a warning sign to reject the application.

For example, a former landlord may say the tenant frequently made late rental payments. Some landlords may also tell you how the tenant caused trouble with their neighbors, broke the rules, or even damaged the rental property.

 

how do you politely decline a rental applicant7. Incompatible Lifestyle With Rental Rules

A landlord has the freedom to disallow smoking or pets within their rental property. After all, these can be a liability for the landlord as they can cause disruption and property damage. If an applicant intends to live with pets or smoke in their unit, the landlord has the right to reject them.

However, keep in mind that landlords may need to make an exception for pets that are certified support animals. Animals that the tenant needs for physical or emotional support are protected under Fair Housing Laws.

 

8. Better Options

Landlords who receive multiple applications may choose the best candidate among the applicants. In this case, they may have the right to reject the other less qualified applicants.

 

How to Decline a Tenant Application

What can a landlord do when they want to deny a renter? How do you politely decline a rental applicant? Here’s what you need to know about how to decline rental application submissions.

 

Send a Letter

The Fair Credit Reporting Act (FCRA) states that landlords must give a rental application denial letter to applicants if they take adverse action against prospective tenants based on any consumer report.

Consumer reports include eviction reports, background checks, credit reports, and credit scores. Meanwhile, adverse action consists of a denial or an increase in the applicant’s requirements based on their profile. A landlord can increase the applicant’s requirements, also known as “accept on condition,” by doing the following:

  • Requiring a guarantor or co-signer
  • Increasing the security deposit (within the limits set by state law)
  • Raising the rent price

The FCRA requires landlords to deliver the adverse action electronically, in writing, or orally. Written notice is preferred because it serves as physical evidence of the notice. Applicants won’t be able to assert that they didn’t receive the notification.

Sending a rejection letter is also good practice, regardless of the reason for denial. It’s a good precautionary measure and ensures the landlord complies with the law. Moreover, it allows the landlord to be transparent with the applicant about why they were rejected.

 

What to Include in a Rejection Letter

According to the FCRA, landlords should include the following information in the rejection letter:

  • The reporting agency’s name, telephone number, and address
  • A statement that the reporting agency did not decide and cannot provide reasons for the landlord’s decision
  • Notice that the prospective tenant may dispute the report’s completeness or accuracy
  • Disclosure that the prospective tenant may receive a free copy of their report if they request it within 60 days

 

Exercise Caution

Landlords can decline a tenant for any number of reasons. However, they must ensure that the reason for rejection does not violate any laws. Moreover, it’s best to send a formal rejection letter to applicants who don’t make the cut.

Are you looking for a qualified rental property management company? Find the best one today using our online directory!

 

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Can Tenants Get The Boot When Smoking In Apartments?

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Smoking in apartments is a contentious issue that has caused many disputes between landlords and tenants. However, both federal and state laws have something to say about smoking — even in private spaces like rental units. In addition, landlords may prohibit smoking under the rental agreement and an apartment smoker will face consequences should they ever break the rules.

 

Smoking in Apartments and Tenants’ Rights

Can I smoke in my apartment? A lot of tenants ask this question as many assume they should have the right to do what they want in their own homes. However, tenants do not have a universal right to smoke in their rental units. Moreover, no federal or state law universally grants people the freedom to smoke wherever or whenever they want.

Apart from this, federal, state, and local governments often restrict various types of smoking. Let’s take a look at each regulation and how they affect a tenant’s right to smoke.

 

Federal Law

The federal government regulates both tobacco and marijuana. Let us discuss the former first. Tobacco is generally legal and federal regulations do not restrict its use in private rental property. However, there is a restriction when it comes to public housing.

According to the U.S. Department of Housing and Urban Development (HUD), public housing agencies (PHAs) must prohibit certain types of tobacco in all indoor areas, including tenants’ units, and in all outdoor spaces within 25 feet of a building.

Because of this policy, PHAs must ban using pipes, water pipes, cigars, and cigarettes. However, the HUD leaves it to them to decide whether to ban e-cigarettes. PHAs are also free to create more stringent anti-smoking rules or regard their property as a smoke-free apartment complex. Regardless of their choices, though, tenants who live in public housing cannot smoke in their units.

Meanwhile, marijuana is not legal under federal law. Using it even privately may expose tenants to federal offense charges.

 

State Law

Apart from federal law, states and cities have enacted their own laws and ordinances regarding tobacco and marijuana use.

 

Tobacco

Tobacco in RentalMany states prohibit or restrict tobacco use around multiunit buildings because smoke can easily travel across shared spaces. State laws may even consider buildings with only two units as “multiunit buildings.”

State laws generally do not ban tobacco use altogether. Instead, it is prohibited in common areas and a specific percentage of units. However, some states and cities do have regulations restricting smoking in all rental properties, including single-family residences.

It’s important to note that anti-smoking laws vary in how they define “smoking.” Some rules may ban the use of cigarettes, cigars, and pipes but not other forms of smoking. However, if the laws in your area are unclear about how smoking is defined, it’s best to assume all forms of lighting and inhaling substances are included. Hence, it may also apply to vaping and e-cigarettes.

 

Marijuana

Now that we’ve addressed tobacco, let’s answer the question: can you smoke weed in an apartment? It’s best to assume all anti-smoking laws apply if marijuana is illegal in your state. If the state you live in makes no mention of marijuana, it’s best to err on the side of caution. This is because many laws define “smoking” as smoking any plant.

On the other hand, if your state allows medical or recreational marijuana, it’s best to refer to the relevant ordinance. If you want to be absolutely sure, consider contacting your city manager’s office.

The laws against smoking in apartments can be a bit blurry in terms of medical marijuana. Marijuana is illegal under federal law. If your state also bans cannabis, landlords have the right to stop tenants from smoking it. However, if medical marijuana is legal in your state, landlords who forbid its use may face a discrimination claim. Tenants may file a lawsuit, and courts may consider it a fair housing violation.

In this case, the best course of action is to remain silent on medical marijuana. If you want to control smoking within your rental property, consider banning all forms of smoking instead. Landlords can base these prohibitions on secondhand smoke and concerns about unpleasant odors.

 

Can You Get Evicted for Smoking in a Non Smoking Apartment?

Can You Get Evicted for Smoking in a Non Smoking Apartment?Is smoking grounds for eviction? It depends on several factors. Firstly, let’s assume the landlord has enacted a no-smoking policy as part of the apartment’s rules and regulations.

If tenants smoke in non-smoking apartments, smoking inside apartment units may be grounds for eviction only after repeated violations. However, if the landlord has included the no-smoking policy in the lease agreement, tenants can be evicted for smoking.

What about marijuana? Can I get evicted for smoking weed in apartment complexes? Even in apartments that allow smoking, marijuana use may be grounds for eviction. Landlords can do this if the lease agreement has an “illegal activity” clause since smoking marijuana is a crime under federal law.

However, keep in mind that eviction based on illicit activity clauses tends to vary depending on the circumstances. Many judges will not evict the renter if the renter does not have a history of crime or if the act is minor. This is especially true if marijuana is not banned under state law.

 

Frequently Asked Questions

Is Smoking in Your House Illegal?

Personal dwelling spaces are not considered public spaces and are not regulated under laws that prohibit smoking in public areas. However, smoking may be unlawful if you live in a multi-unit or public housing property.

 

Why Do Landlords Prohibit Smoking?

Landlords prohibit smoking to prevent secondhand smoke, prevent stains and odors, limit fire hazards, reduce neighbors’ complaints, and decrease insurance premiums on fire. However, it may also breach their duty to keep rentals habitable.

 

Know the Law

Tenants should understand the federal, state, and local laws before smoking in apartments. Moreover, they should review the lease agreement terms and the apartment’s rules and regulations before they smoke — or better yet, before they sign the lease agreement.

Are you in need of a reliable rental property management company? Find one today through our online directory!

 

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Fair Housing Violations Landlords Should Steer Clear Of

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The Fair Housing Act exists to eliminate discrimination when it comes to housing accessibility. It applies to housing providers, including landlords and property managers. What fair housing violations should you be aware of? Let’s find out.

 

What is the Fair Housing Act?

The Federal Fair Housing Act (FHA) protects people from discrimination regarding the sale, rental, or financing of housing. Lenders, sellers, landlords, and other housing-related service providers cannot discriminate against a person based on the following characteristics:

  • National Origin
  • Color
  • Race
  • Religion
  • Disability
  • Familial Status
  • Sex, sexual orientation, and gender identity

Some states have versions of the Fair Housing Act in addition to the federal law. State versions might include additional protections or elaborate on certain provisions.

 

Common Fair Housing Violations to Watch Out For

Landlords often set rules for tenants and applicants to prevent property damage and foster a peaceful living environment. Some of these include pet rules and tenant screening requirements. While these seem harmless policies, landlords may accidentally commit fair housing violations while implementing them. Here are some examples of housing discrimination to avoid.

 

1. Property Advertisement

What is an example of a fair housing violation? One of the most common examples involves property advertisement. Every landlord wants an effective ad to market their rental property. However, they have to be careful about the type of ad they put out. Certain ads might inadvertently discriminate against people of different classes.

For example, an ad might say, “This is a Christian home.” Even if Christian people make up a majority of the locals, the ad discriminates against others with a different religion. Another example would be an ad stating the property is only open to English-speaking individuals. While the landlord might not be good at speaking other languages, they should still be open to people of different national origins.

 

2. Discriminatory Tenant Screening Questions

Can a landlord refuse to rent to someone based on tenant screening results? Yes, they can — but only for the right reasons. For example, landlords are generally allowed to reject applicants with multiple evictions. They may also deny someone who does not have a good enough credit score.

On the other hand, landlords must craft screening questions that cannot be mistaken for discrimination. Both the application form and interview should be free of discriminatory remarks. For example, the landlord might ask whether an applicant is retiring soon. Age is a protected class under the FHA, so the landlord should avoid asking this question.

Landlords typically do not intentionally commit fair housing violations. Often, their questions arise from genuine curiosity or hospitality. For instance, a landlord might want a friendly conversation and ask about an upcoming wedding. They might also ask how many children a person has. Though they seem innocent, questions like these may be considered discrimination as they touch on familial status.

 

3. Refusing Reasonable Accommodations

People with disabilities are protected under the FHA. Thus, it is considered a Fair Housing Act violation if a landlord refuses an applicant because of their service animal. Inconvenient as it may be, landlords must make reasonable accommodations for service animals and people with disabilities. Otherwise, they could be held liable for discrimination.

 

4. Denying Tenancy Based on Certain Characteristics

Fair Housing Law violations naturally include discrimination against tenants and applicants based on specific characteristics. They cannot refuse to rent or lie about housing availability for someone because of their protected class. Additionally, because of those characteristics, they cannot provide different facilities, services, terms, rent prices, or privileges.

These also apply to evictions. Landlords cannot evict a tenant or their guest simply because they might not be white or straight. As a rule of thumb, landlords must treat everyone equally regardless of these characteristics. The only factors to consider should be those relevant to the tenancy, such as employment, income, eviction, or criminal history.

 

5. Neighborhood, Building, or Section Assignments

Landlords may own multiple properties within a neighborhood or building. While they can generally do what they want with the property, they cannot assign people to specific units or sections of a neighborhood because of their race, gender, and other protected characteristics. For instance, landlords cannot assign tenants to one side of the building because of their race.

 

6. Retaliation for FHA Complaint or Investigation

Tenants and applicants may report fair housing violations or assist with fair housing investigations. When this happens, landlords may be tempted to retaliate against those tenants and applicants. They might delay maintenance or impose stricter rules against the tenant. However, this is a big no-no because it is also considered a violation.

 

7. Maintenance Request Bias

Landlords cannot discriminate against maintenance requests based on certain characteristics. For example, a landlord might have certain prejudices against tenants with pets. Denying a maintenance request or delaying it because of their bias is illegal. Likewise, they cannot show favoritism toward people of certain races, national origins, religions, or other characteristics.

 

Penalties for Fair Housing Violations

Penalties for Fair Housing ViolationsHUD housing violations carry civil penalties. First-time offenders will incur a maximum $21,663 penalty. As you might expect, succeeding Fair Housing Act violation penalties are steeper. If someone violates the FHA again within five years, the maximum penalty they might pay is $54,157. Those with more than two violations within seven years can expect to pay a maximum fee of $108,315. On top of these fines, landlords may need to pay the following penalties:

  • Punitive damages if the intent is discovered to be willful or malicious
  • Compensatory damages for the tenant, including out-of-pocket expenses they incur to look for alternative housing
  • Non-economic damages awarded for mental anguish, psychological injuries, and humiliation

In addition, the court may issue injunctions if needed to stop irreparable and immediate harm. The HUD also keeps these charges publicly available, which might harm the landlord’s reputation and prospects.

 

Avoid Fair Housing Violations

Landlords have a right to set rules and deny applicants who do not meet their criteria. However, they must be careful not to make any fair housing violations. As a landlord, you must review federal and state fair housing laws to ensure you remain compliant.

Do you need professional help with FHA compliance? Hire a property management company today through our online directory!

 

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Summer Maintenance For Landlords: Getting Rental Homes Summer Ready

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A landlord’s primary responsibility is to ensure their rental property remains safe, comfortable, and appealing to tenants. For this reason, it’s essential to conduct proper maintenance whenever the seasons change. What parts of the property should you maintain when the weather gets warmer? Here are the most important parts of summer maintenance for landlords.

 

Summer Maintenance for Landlords: What to Pay Attention To

What are the most essential tasks for property maintenance in the hottest season of the year? Here is a summer home maintenance checklist for landlords to help keep your property in shape.

 

1. Gutter Inspection and Cleaning

summer home maintenance checklistThe first thing you should include on your landlord’s summer maintenance checklist is inspecting and cleaning the gutters. Gutters play an important role in redirecting rainwater from the unit’s siding, landscaping, and foundation. This is important because water damage can compromise the property’s structural integrity.

Start by looking through the gutters and removing twigs, leaves, and debris. Landlords can do this by hand with gloves or use a gutter scoop. Afterward, look for rust, cracks, and other signs of damage. You may need to call a professional to repair or replace the gutters to prevent leaks.

Also, check if the gutters are properly attached to the property. Check the downspouts for blockages and use a garden hose to flush out obstructions. Stubborn blockages may require a deep clean.

 

2. Air Conditioning Maintenance

Air conditioning (AC) units are used frequently in the summer, so it’s crucial to ensure the HVAC systems work. Inspect your AC units for leaks and visible damage, and clean the filters and condenser coils, too.

You may need to hire an HVAC technician to do a comprehensive checkup. This includes checking the thermostat, inspecting electrical connections, and servicing the internal mechanisms. A proactive approach is key to longevity, so schedule professional inspection and maintenance work annually.

 

3. Property Insulation

Summer property maintenance for landlords also includes ensuring proper insulation. This will stabilize indoor temperatures and prevent the AC systems from working harder than they need to, saving a lot of money on electricity bills in the long run.

Look for areas where there may be compacted insulation. Pay special attention to walls and attics, especially their floor joists. We also recommend inspecting the doors and windows for gaps. Consider installing door sweeps to reduce the airflow underneath the doors. As for windows, we recommend sealing gaps between the frame and wall with caulk. Deteriorated or missing weatherstripping should also be replaced.

There may also be gaps around the AC unit. In this case, consider using foam sealing strips to prevent air leaks. If you need a more comprehensive evaluation, you can hire a professional energy auditor to help you.

 

4. Pest Control

Warm weather invites various pests into the home, so pest control is especially important in the summer. Make sure to monitor the home for signs of infestation. The property may have holes in wooden walls and floors or droppings. Remember to also check common entry points like gaps in doors and windows, cracks in the foundation, and utility pipe openings.

Preventive measures like sealing entry points, applying soil or wood treatments, and ensuring the property is clean might be helpful. A professional pest control service may also address existing infestations and exterminate the pests.

 

5. Outdoor Maintenance

property maintenance for landlordsProper outdoor maintenance and landscaping can help extend the lifespan of your property. Trim overgrown bushes, trees, and lawns to keep the property visible and safe. Plant native plants that are more resistant to pests.

Finally, landlords can consider adding a rainwater harvesting system to reduce water consumption. These systems also irrigate the garden, reduce flooding, and prevent soil erosion.

 

6. Carbon Monoxide and Smoke Alarm Testing

Carbon monoxide and smoke alarms protect the health and safety of your tenant. These systems usually have a test button that sounds the alarm. The detectors are working if you press the button and the alarm rings. However, if the sound is weak or there’s no sound, you may need to replace the batteries.

If the alarms don’t ring despite inserting new batteries, it may be time to replace the entire unit. Remember to also check the manufacture date on the devices. Carbon monoxide detectors need to be replaced every 5-7 years, while smoke alarms need to be replaced every 10 years.

 

7. Dryer Vent Cleaning

Dusty dryers are fire hazards, especially in the summer months when the weather is warm. Remember to clean the dryer vent and remove any lint and other debris that has built up over time. This will reduce the fire risk and help the laundry work more efficiently.

Before cleaning the dryer, unplug the unit and disconnect the duct from the back. Use a brush kit to remove the lint from the duct, vent, and vent cover. You can also use a vacuum cleaner to remove debris from areas around the unit.

 

8. Ventilation

Ventilation is key to keeping your tenants comfortable during the summer months. Vents can regulate air quality by reducing moisture and allowing fresh air inside. Inspect and clean all the vents and vent covers to keep the property ventilated. Remove any debris that might obstruct the flow of air.

Landlords can also ask tenants to use exhaust fans to eliminate indoor odors and humidity in various rooms. Attic vents should also be unobstructed to let hot air escape. If the tenant does not use air conditioning, consider installing ceiling or window fans to promote air circulation.

 

9. Plumbing Inspection

Plumbing InspectionThe plumbing system needs regular evaluation and maintenance. Begin by checking all the faucets and sinks for signs of leaks and damage. Flush all the toilets to make sure they’re refilling and draining correctly. Likewise, look for signs of leaks at the base.

Exposed pipes may also have signs of damage, corrosion, and leaks. Remember to check all of them — including those in crawl spaces and basements. The water heater should also be inspected for signs of rust and leaks. Landlords should drain these yearly to keep sediment from building up.

Again, hiring a licensed plumber to conduct a comprehensive inspection and address problems may be best. They should ensure that the plumbing system meets all local regulations and codes.

 

10. Sprinkler System Inspection

Sprinkler systems should be at their most efficient in the summer. To ensure they’re working well, check the valves and clear the sprinkler of debris. If the sprinklers are damaged, you might need to repair or replace them. It’s also crucial to check the pressure to ensure efficient water usage.

 

Providing a Better Living Experience

Summer maintenance is essential for landlords to provide tenants with a good living experience. It can encourage good tenants to renew their lease agreements and remain in the property for a longer period. Moreover, it preserves the property’s lifespan and keeps costly repairs and replacements to a minimum.

Do you need help managing your rental property? Check out our online directory to find the best management company in your area!

 

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Rental Property Maintenance Guide For Landlords

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Landlords have numerous responsibilities when it comes to running a rental property. One of the most important is rental property maintenance. Why is it essential, and how can landlords deal with it? Let’s find out.

 

Why Is Rental Property Maintenance Important?

Property maintenance for rentals is crucial for several reasons. Firstly, proper maintenance is vital for finding good tenants. After all, you can’t rent out a dilapidated and unlivable property. Poor upkeep can significantly reduce the rental price even if you make it somewhat livable.

Secondly, maintenance is crucial to maintain your property’s value. This can boost its competitiveness in the rental market, allowing you to drive up the price. It can also help your property remain desirable should you decide to sell your property down the line.

Finally, rental property maintenance is often required by the law. Landlords are legally obligated to keep the property clean and habitable. Otherwise, the tenant may retaliate in several ways.

Tenants may withhold their rent payment, hire a third party to perform the maintenance task, or even call local law enforcement regarding the rental property repairs. They may also evict themselves and file a constructive lawsuit against the landlord, resulting in significant financial losses.

 

Dividing Responsibility: Rental Property Maintenance for Landlords and Tenants

While rental maintenance is usually the landlord’s responsibility, some things fall under the tenant’s duties. Often, landlords outline the tenant’s maintenance responsibilities in the lease. These can include minor fixes and maintenance like changing lightbulbs, replacing air filters, and routine cleaning.

The landlord’s maintenance responsibilities can vary between states. However, they are typically expected to take care of the following:

  • Routine interior and exterior inspections
  • Essential mechanical systems such as electrical systems, plumbing, heating, and cooling
  • Structural items such as sidewalks, driveways, attics, and roofs
  • Safety systems such as carbon dioxide detectors, smoke detectors, radon detectors, and sprinklers
  • Fixing major repairs to the property, such as leaks, clogs, broken locks, and mold
  • Common area maintenance in multifamily properties
  • Rekeying locks between tenants
  • Pest infestations

In contrast, tenants are generally expected to keep the property clean and in good condition. Most lease agreements contain terms and conditions that require them to take care of the following:

  • Cleaning interior structures such as walls, floors, and ceilings
  • Emptying the trash, cleaning appliances, and preventing mold
  • Avoiding damage that does not result from regular wear and tear, such as tampering with structural or safety systems, damages from unauthorized pets, sub-renting, and using the property for illegal purposes
  • Reporting concerns as they arise to prevent major repairs and damages

 

How to Maintain a Rental Property

What should you include as a landlord in your rental home or apartment maintenance list? Make sure to include the following to protect your investment.

 

1. Regular Inspection

rental property Regular InspectionLandlords should conduct routine maintenance inspections on their rental properties. They should check for major damages or smaller issues caused by wear and tear. This also includes checking systems and making sure they are operational.

If your property needs a significant inspection, consider hiring a rental maintenance company that offers inspections as a part of their services. They can often assess the deeper parts of your property and tell you whether or not there are structural damages to the foundation or growing mold in unseen places.

 

2. Routine Cleaning and Maintenance

Landlords are often responsible for cleaning the common areas and conducting regular maintenance activities. For instance, the landlord may need to landscape the multifamily property yard or pick up trash around the area.

 

3. Repairing Mechanical Systems

Mechanical systems such as heating, plumbing, electrical, and gas appliances often need regular maintenance. When enough time passes or if an accident happens, these systems may require repairs and replacements. Remember to fix any broken heater or appliance and ensure they are operational.

 

4. Flooring and Painting

Flooring and Painting rental maintenanceLandlords are usually responsible for re-painting the property and ensuring the flooring is in good condition. Generally, landlords repaint properties after a tenant leaves. However, they can also repaint the rental home if enough time has passed.

As for flooring, landlords should pay special attention to rental properties with carpeted flooring. These are usually more susceptible to damage as they catch more dirt and suffer more scratches over time. Remember to have the carpet flooring cleaned annually by a professional who offers rental property maintenance services.

 

5. Seasonal Rental Property Maintenance

Each season brings its own set of maintenance challenges. For example, pipes and floors are prone to freezing in the winter and may need defrosting. Meanwhile, the spring season often increases the population of mosquitoes and other bugs, requiring more stringent pest control.

Keep all of these seasonal changes in mind and create a seasonal maintenance schedule to protect your property. Consider practicing preventive maintenance, such as winterizing pipes and flushing the water heater before winter.

 

How Much Is Rental Property Maintenance?

The average maintenance cost for rental property will vary based on several factors. Typically, landlords use four methods to budget for their rental property maintenance.

 

1% Rule

The 1% rule suggests setting aside 1% of the total value of your rental property for annual maintenance. Hence, if the property is worth $300,000, yearly maintenance costs will be around $30,000. This rule is effective because it factors in the cost of labor and materials, which generally go up with house prices.

 

50% Rule

The 50% rule states that property maintenance management companies should allot half their rental income to maintenance. The other half is used for other fees such as insurance, utilities, and taxes. For instance, a property manager who takes $1,000 monthly should allot $500 to cover maintenance and other fees.

 

Square Footage FormulaSquare Footage Formula

Landlords can calculate their budget by using a formula based on square footage. This formula assigns $1 in value to each property’s square footage. The landlord then sets aside the total value annually for maintenance. For instance, if the property is 1,300 square feet, the landlord should save at least $1,300 yearly for maintenance.

 

5X Rule

Landlords can also use the 5X rule, which entails multiplying the monthly rent by 1.5. That amount will be the landlord’s maintenance budget for the entire year. So, for example, if the monthly budget is $2,000, the landlord should allot $3,000 for annual maintenance.

 

Stay On Top of Maintenance

Rental property maintenance is not always easy. Sometimes, you spot problems early; at other times, they go unnoticed until they become huge problems later. For this reason, it’s usually best to hire a professional to inspect the property annually to prevent significant damage.

Are you in need of professional rental management? Check out our online directory to find the best one in your area!

 

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How To Determine A Fair Rental Rate Plus Factors To Consider

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Setting the proper rental rate can make or break a landlord’s success in the rental market. An inappropriately priced rental unit can discourage tenants from renting or lead to potential losses. It’s important to strike a balance to make the most out of the rental property.

 

Factors to Consider: How Much Should I Charge for Rent?

There is no set rule or standard when it comes to determining a rental price. Each rental unit will have a different appropriate price. It will all depend on various factors like amenities, location, market value, size, and others. Let’s break down each consideration below.

 

1. Property Value

How do you calculate real rental price?How do you calculate real rental price? Landlords can often use the property’s overall worth to determine the base rental price. It’s a useful tool for landlords who don’t know where to start. Typically, the rental price of a property should fall between 0.8% and 1.1% of the home’s value. For example, if the home’s value is at $250,000, the rental price should be around $2,000 to $2,750 monthly.

However, bear in mind that the actual price or value of the property will affect the rental price. Landlords can usually charge around 1% of the property value if the actual price is below $100,000. Meanwhile, landlords will want to stick to the lower end of the percentage range if the house is over $375,000. Charging too much might discourage potential tenants.

 

2. Local Rent Rates

How much to rent a house for a month? One of the best ways to determine the rental price is by examining the local rent. What do other landlords in the same area charge? It’s important to get a feel for the local market so you know you’re not over or underpricing.

However, make sure the properties you’re surveying are similar to your own. For example, if you’re renting out a 1-bedroom apartment, you should likewise figure out the average price for 1 bedroom apartment places around the area. Looking at the average rent prices for single-family homes will bloat your estimate. Make sure to compare homes and units that are similar in the following ways:

  • Amenities
  • Lot size
  • Number of rooms and bathrooms
  • Year built and most recently remodeled

Apart from surveying other landlords, you can also research rental estimates by zip code. Websites like Apartments.com and HUD’s fair market rents may help. You can also speak with local real estate agents to get a good idea of your location’s average rental prices.

 

3. Rent Control

Some areas have government-mandated rental caps. Moreover, these laws may also indicate how much you can raise your rent and how often. Make sure to review the laws in your state so you’re not violating any local regulations. You can also ask a lawyer or legal professional for advice or guidance.

 

4. Features and Amenities

How much should I charge for rent for a room or apartment? One big factor to consider when you determine rent price is the property’s features and amenities. If the rental property has many bedrooms, bathrooms, finishes, furniture, and appliances, you may be able to charge higher. Similarly, you can charge higher rental rates if the apartment, condominium, or community has amenities like gyms, pools, on-site parking, or co-working spaces.

 

5. Neighborhood Quality

Even if the rental property has all the right features, amenities, and property values, it may not be worth much if the neighborhood is bad. Make sure to assess whether the area has high crime rates. This can significantly reduce the amount you can charge to rent out your property.

Location and positioning may also impact the rental rate. For example, if the property is close to a busy intersection, tenants might not be as willing to pay a high price because of the noise and chaotic environment. Conversely, they may be willing to pay a premium for properties in good neighborhoods or attractive locations.

 

6. Demand and Seasonality

determine rent priceEven with a high property value or local rental rates, the overall demand might affect the rental price you can set. In a bad economy, there’s a higher demand for rentals as people are not able to afford housing. Small and cheap apartments will be in particularly high demand as people want to live somewhere affordable.

In addition, the time of year may also affect the demand and how you calculate rental rate. For instance, large properties are often more in demand before the school year starts as families want to settle in a home before their kids attend classes. Changes in the season may also affect demand. You’ll often see rental prices dropping in the winter as landlords want to attract more tenants during the season.

Generally speaking, you’ll want to lower the rental rate when demand is low. Conversely, you can charge higher rates when the demand is high for the kind of rental property you’re offering.

 

7. Rental Cost

Home or apartment rent prices should never be lower than the cost of maintaining and managing rental property. After all, it’s pointless to rent out a unit if it’s not going to earn you money. It would be even worse if you’re at a financial loss in the end. Hence, make sure to consider all the following associated expenses:

  • Maintenance costs
  • Property management fees (if any)
  • Mortgage payments (if any)
  • HOA fees
  • Vacancy period costs
  • Taxes on rental income and the property

 

8. Market Testing

Even if you consider all these factors, it can still be hard to determine the right rental price. In these cases, it might be wise to simply test the market to land on a good rental rate. You can charge high initially to gauge interest. Be prepared to negotiate at this point. However, if nobody seems to be interested, you can gradually lower the price to find the sweet spot.

 

Why Is Charging an Appropriate Rental Rate Important?

Charging the appropriate rent prices is important because it can attract quality tenants. These tenants are more likely to pay rent on time and not miss out on any payments. They’re also more satisfied, making them more likely to maintain the property and stay for longer.

Moreover, charging the appropriate rate can maximize profits. Overpricing will lead to extended periods of vacancy while underpricing may result in lost income. Finally, setting the right price can lead to positive reviews online and boost the rental property’s reputation. This can attract more tenants in the future.

 

A Fair Deal for Everyone

Setting a suitable rental rate for your property is the key to succeeding in the rental market. Getting this wrong can lead to unwanted consequences like lost income, dissatisfied tenants, or not attracting tenants at all.

Are you finding it difficult to appropriately price your rental property? A property management company might help with that. Look through our online directory to find a trustworthy one today!

 

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How To Make A Rental Application Form That Complies With The Law

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A rental application form is a useful tool for property owners to screen tenants without conducting numerous interviews. However, landlords should be careful about what they include or exclude in these forms to avoid liability.

 

How to Make a Rental Application Form

Rental application forms provide landlords with important information about potential tenants. Here’s how to create a tenant application form that complies with the law.

 

1. Background Information

The rental application should provide background information on the property and the landlord. This eliminates the number of questions the applicant might have about the property and tenancy. It also weeds out any tenants who might not be interested in certain tenancy types. Include the following information:

  • Landlord’s name and address
  • Property address
  • Type of tenancy (periodic vs. fixed-term)

In addition, it’s essential to obtain basic information from the applicant. Consider adding the following to the rental application form:

  • Applicant’s full name and current address
  • Home phone number
  • Cellphone number
  • Work phone number
  • Birthdate
  • Social security number
  • Government-issued ID number (e.g. driver’s license number)

The landlord can perform a background check on the applicant during screening using the above information. Make sure to inform the applicant of the reason you’re asking for this information.

 

2. Fees and Deposits

rental fees and depositsIt’s important to outline the fees and deposits you might ask the tenant for, such as pet deposits or parking fees. However, remember that some states have laws that limit the amount you can collect as a security deposit.

For instance, the laws in California limit security deposits to twice the rent for unfurnished homes and thrice the rent for furnished units. However, this only applies until July 1, 2024. After that date, the limit will be one month’s rent except for landlords who own a certain number of residential properties and units for rent.

Finally, clearly outline whether the charges are fees or deposits. The former are generally non-refundable, while the latter entitles the tenants to refunds.

 

3. Custom Inclusions

Landlords should be clear about their preferences and rules. For example, they should indicate whether or not waterbeds, co-signers, or smoking on the property is allowed. They should also add whether or not they require verification letters or references. Lastly, it’s best to include custom information or questions about the tenancy in the house rental application form.

 

4. Employment History

As a landlord, you may want to verify whether or not the applicant can shoulder your monthly rent expenses. Therefore, you may collect information on their employment history. Ask for the following:

  • Current employer’s name and address
  • Supervisor’s name and contact number
  • Applicant’s job title
  • Start date
  • After-tax monthly income

 

5. Sources of Income

Applicants may have other sources of income such as social security, inheritance, annuities, or severance payments. Leave a space at the bottom so they can note whether or not they have other income sources.

 

6. Rental History

Apart from their work history, it’s essential to determine whether the applicant has a clean rental history. Ask about their current or past property managers, landlords, and evictions. Collect the following information:

  • Previous landlord’s name and contact details
  • Monthly rent paid/being paid
  • Date of move-in and move-out

 

7. References

Landlords should be thorough about tenant screening. Thus, asking for personal references in the rental application form is often a good idea. The applicant can include the names of their family, friends, and professional contacts to vouch for them.

If you want a more comprehensive check, you can also mention that you accept cover letters, resumes, or other supplementary material. Applicants can attach it to their rental application form before submission.

 

8. Other Information

Landlords do not always need other information about an applicant. However, asking for them optionally to further verify the applicant’s character and eligibility can be helpful. Here are some things you can ask for:

  • rental application formsEmergency Contact. This can be helpful in emergencies. Ask for the contact’s name, number, and relationship to the applicant.
  • Other Occupants. Applicants can include information on other occupants who might move in with them, such as family, friends, partners, and roommates.
  • Pets. If the landlord accepts pets, ask about the applicant’s type of pet. Include restrictions on types of animals, breed, number of pets, age, and weight.
  • Vehicles. If the unit has parking, landlords can ask about the applicant’s vehicle so they know what to expect. Ask about the make, color, model, and year. Moreover, ask for the license plate numbers.

 

9. Authorizations

Landlords should add two authorization paragraphs toward the end of the home rental application form: the “Consumer Report Disclosure and Authorization” paragraph and the “Information Release Authorization and Acknowledgements” paragraph.

The former paragraph authorizes the landlord to get the potential tenant’s credit report. Meanwhile, the latter paragraph authorizes the landlord to verify the other information the applicant has provided in the rental application, including the following:

  • Income and employment
  • Public court records
  • Bank account information
  • Rental and eviction history
  • Criminal background

In this section, you can also ask if the applicant has:

  • Been convicted
  • Declared bankruptcy
  • Been evicted
  • Broken a lease agreement

If the applicant signs the authorization, they allow personal references, past landlords, former supervisors, credit representatives, and bank representatives to release the information related to the applicant. The landlord can use the information to verify what the applicant has said about past evictions, leases, convictions, and bankruptcies.

 

10. Signature and Fees

The landlord should include a dotted line where applicants can sign and date the document, whether it’s a physical or online rental application form. In addition, the application form should outline any associated fees for completing the form. Landlords can use these fees to run background checks, credit checks, and other administrative tasks to process the application.

 

Legal Considerations

Landlords might think the authorization section is all they need to comply with legal requirements. However, there are certain things that landlords should avoid to ensure compliance.

 

Fair Housing Act

Firstly, landlords should not discriminate against any applicants based on certain characteristics according to the Fair Housing Act. Protected classes include race, sex, color, religion, family status, or disability (physical and mental).

Additionally, many courts prevent age-based discrimination under the family status category. State law may also add other protected classes to the list, such as income source, sexual orientation, and marital status.

 

Screening Process Disclosure

In states like Texas and Washington, landlords are required to explain their screening criteria and selection process. The landlord can include this in the rental application form or attach a separate page.

Landlords must explain what criteria an applicant must satisfy to be accepted. These can include thresholds or limits for credit scores. Some landlords may also want tenants with clean criminal and rental histories. Moreover, landlords should indicate how long the application process will be and how they will notify the applicant.

 

Fair Credit Reporting ActCredit Reporting Laws

The Fair Credit Reporting Act (FCRA) outlines specific processes for obtaining tenant credit reports. Under the Act, companies and other entities cannot provide information in a consumer report if the person asking does not have a purpose specified in the FCRA.

 

Privacy Laws

Landlords should always respect an applicant’s right to privacy when collecting their information or running background checks. Follow the proper procedures and obtain consent. Never leave out the authorization parts of the form so you can avoid legal liability.

In addition, it’s important to safely store and dispose of sensitive information and use it only for legitimate purposes. Otherwise, the landlord might face a lawsuit or other charges.

 

Application Fees

Some states limit the amount a landlord can charge for tenant applications. Remember to research the applicable laws in your area before charging any fees.

 

How to Promote a Fair Application Process

Landlords should be careful with tenant applications and screening. To ensure they are not held liable for violations, landlords should always use standardized applications to ensure the consistency of collected information. Consider using an online platform to streamline the process.

Furthermore, do not use discriminatory language or ask discriminatory questions in the form. Stick to only relevant and necessary questions about the tenancy.

Lastly, screening criteria should be established and applied consistently to all applicants. Use only objective criteria and base them on tangible factors such as employment status, rental history, and credit history. If an applicant meets certain requirements, the landlord should consider them even if they dislike or are partial to specific characteristics.

 

Proper Applicant Screening

Landlords should properly screen applicants using well-drafted rental application forms. However, just because landlords are generally allowed to run background checks doesn’t mean they should abuse this privilege. They should be careful about violating any disclosure or discrimination laws in place.

Do you want to create a flawless rental application form with a comprehensive — but compliant — screening process? Consider hiring a professional property management company through our online directory!

 

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2024 Annual Rental Housing Report Key Takeaways

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Harvard’s annual rental housing report reveals a lot about the condition of the market in the U.S. This year, it unveils the cooling of the rental market and several other trends.

 

Annual Rental Housing Report Key Takeaways

The Joint Center for Housing Studies of Harvard University annually releases a report regarding the country’s rental housing market. The 2024 America’s Rental Housing Report has several notable trends and key takeaways.

 

Softening Rental Markets

According to the report, apartment growth has stalled. The rental market rapidly increased during 2021 and 2022. However, rent growth for apartments with professional management fell during the third quarter (Q3) of 2023. It dropped from 15.3% to just 0.4%.

This decline was widespread and affected most areas, regardless of geography. Only 1% of the markets reported a rent growth of 10% in Q3 of 2023. This slowing demand has stabilized the rental market after 18 months of turbulence. The deceleration is good for renters, though rental home prices are still much higher than pre-pandemic levels.

 

Record High Unaffordability

2024 america's rental housing reportDespite the slowdown in rent growth, renter households are still more cost-burdened than ever due to the rental market overheating during the pandemic. Thus, there is a much greater need for rental assistance.

In 2022, a record-high number of renter households (approximately 22.4 million) spent over 30% of their income on utilities and rent. Among cost-burdened households, there were 12.1 million that consumed over half of their income. The number of cost-burdened renters has reached 50% — up by 3.2% from 2019.

Moreover, there has been a dwindling supply of low-cost rental units. Yes, many new apartments may become available according to the 2024 rental market predictions. However, they are usually high-end apartments that have a high asking price. This is unhelpful to cost-burdened renters.

According to Whitney Airgood-Obrycki, the rental housing report’s lead author and a senior research associate for the Joint Center for Housing Studies, what they are building is at the high end. This is because there has been an increase in the cost of construction. There is also a lot of demand from higher-income renters. In the last decade, most new apartments cost $1,400 monthly or higher. It’s unaffordable to a bulk of the country’s renters.

In addition, older apartments — often more affordable — require more significant investment to address several inadequacies. Some of these include climate risks and inaccessibility. Investors find these challenging given the market’s current environment, increasing operating costs, and rising interest rates.

According to the annual rental housing report, millennials, baby boomers, and the strong demand from Gen Z must ensure this slowdown doesn’t last long despite the difficult conditions.

 

Homelessness is at a Record High

During the pandemic, financial support was provided to those who needed it. This temporarily decreased eviction filings and provided a safety net for overburdened renters. However, these pandemic-era renter protections are slowing down, and many have expired. As a result, housing instability is rising once again. Unsurprisingly, there has been a spike in homelessness.

Roughly 653,000 people were experiencing homelessness in January 2023. That’s up by approximately 12% from the previous year. Moreover, it’s 48% higher than the homelessness rate in 2015. Harvard researchers noted that this increase is the highest single-year increase in the nation’s unhoused population record.

 

Income Unable to Keep Up With Rent Increases

The declining supply of apartments with low rental prices only exacerbates renters’ financial burdens. According to the annual rental housing report, only 7.2 million units had rental contracts under $600 in 2022. This maximum rent is affordable to those in the $24,000 annual income bracket. That makes up roughly 26% of all renters.

If we adjust for inflation, the U.S. has lost 2.1 million affordable units since 2012. The trend accelerated when the asking rent price spiked during the pandemic. Over half a million low-rent apartment units were lost between 2019 and 2022.

Since 2001, median rents have almost continuously risen in inflation-adjusted terms. They are 21% higher as of 2022. However, renter incomes have only risen 2% during the same time.

 

Financially Vulnerable Renters Make Difficult Choices

According to the Consumer Expenditure Survey in 2022, financially burdened renters have been forced to make difficult choices due to their tight budgets. For example, the survey reported that extremely cost-burdened renter households spent 39% less on food. They’re also spending 42% less on healthcare than unburdened renters.

Meanwhile, other overburdened renters may choose to live in overcrowded spaces or structurally inadequate homes. This further threatens their health and well-being.

 

Reinvestment Needed for Aging Stock of Rental Housing

The annual rental housing report states that the current supply of rental housing units is older than ever. In 2021, the median age was 44 years. That’s 10 years older than what it was two decades prior. As a result, there may be problems when it comes to structural inadequacy, habitability, and safety.

Granted, there have been changes to building construction standards. Moreover, property owners have repaired many existing units to minimize the problem. Nonetheless, there is still a large number of rental units that do not meet the minimum standards. Property owners must reinvest in repairs and maintenance costs to keep them in good condition.

 

High-Interest Rates Slowing Market Activity

Interest rates rose into 2023, and building and purchasing multifamily properties cost more. In addition, there has been an increased cost of equity due to high treasury yields. Apartments must offer greater returns on investment to keep up with Treasury notes.

As a result, there has been a downturn in borrowing and transaction activity. Half of the banks surveyed by the Federal Reserve reported declining demand for multifamily homes. Moreover, almost two-thirds of multifamily lenders created heightened criteria for underwriting due to hikes in interest rates and uncertain property performance. Mortgage borrowing for multifamily properties was down 48% year over year in Q2 of 2023.

 

Gen Z Driving Rental Demand

Millennials are still a significant source of demand in the rental property market. However, they are aging and entering their prime homeownership years. The current market is already bearing witness to this transition.

Instead, Gen Z is now fueling the growth in rental households. The number of members in this generation is slightly smaller but still large enough to drive demand. The members of Gen Z are those born between 1995 and 2009.

 

Adjusting to the Trends

The annual rental housing report has shed much light on the current market trends. Landlords and property investors would pay attention to these trends to protect their investments and make the right purchases moving forward.

Are you a property owner in need of professional rental property management? Look for a reliable property management company through our online directory!

 

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