Insights on Owning Rental Property During the Pandemic
The pandemic has certainly impacted all areas of our lives. What has remained relatively strong amidst the uncertainty has been the housing market. Mortgage interest rates are at record lows. Inventory of homes for sale remains low, resulting in sellers routinely receiving multiple offers on homes quickly after listing.
The rental market has been a different beast altogether. Mortgage protections are not available to landlords in the same way they are to homeowners. Many rental property owners have tried to get creative with their property management style in order to stay afloat while also working with tenants impacted by the pandemic.
Given the unknowns of the months ahead of us, these factors will be worth keeping a close eye on in the coming months if you own a rental property:
- Changes in government protections for renters. Whether its payroll protections, rent subsidies or a local eviction moratorium, many renters have been supported through the recent hard times when it comes to their monthly financial obligations. While this attempt at stability has been good for many renters, some of these protections may be coming to an end soon, and many renters will face the struggles of disproportionate cost burden in the COVID-19 economy. With all the movement in local and temporary regulations due to the pandemic, it can save a lot of headaches to seek the help of a property management company, so you know you’re a compliant landlord while focusing on your own day-to-day priorities.
- Changes in the labor market, and its effect on renters. Job growth is one of the key factors of rental market health in any city. Today’s rental market has been served a major blow by the pandemic, leaving the unemployment rate at record highs. While protections for renters have temporarily provided relief for those who have lost their jobs or have been furloughed by their companies, landlords have absorbed the impact. Additionally, while homeowners have experienced some relief around their mortgage obligations, those same measures have not applied to commercial property owners.
While protections are short for landlords and rental property owners, it doesn’t hurt to take advantage of resources that have your interests at heart during the pandemic uncertainty. The professional property managers at Tradewinds Properties can relieve a great deal of the stress of managing rental property through the pandemic.
Tradewind Properties is here to help you take the headache out of managing your rental property. As a Tradewind client, your most difficult task is checking your monthly statement. Contact us!
As a landlord, you have two major concerns: keeping your rental property occupied, and keeping it in good shape so it appeals to tenants. Tradewind Properties takes care of the first concern for you, so let’s focus on the second.
Each tenant will have ways to make your rental property feel like home to them, as they should. But as the landlord, what changes should you allow and when should you say no?
To put it simply, think about which changes will be either reversible when current renters move out, or a clear upgrade that will improve the value of the property.
For example, changes that will make tenants happy, but are reversible, could include:
- Changing the blinds.
- Swapping out light-switch covers.
- Painting the walls. This one can be a triumph or a disaster. It is best to either approve any colors the tenants are suggesting, or arrange a fee for the walls to be painted back to original upon them moving out.
- Replacing shower heads, specialty light bulbs, or other easy swaps.
- Light fixtures, although it is recommended that a licensed electrician be hired for this job.
- Custom built-ins for the closets.
- Any baby-proofing.
Generally-speaking, most major upgrades should come out of your wallet, as the owner of the property. But small changes to the rental can be the tenants’ choosing (and on their dime), and will help give them a say in how their living space feels. Assuming they gain your permission and that the upgrades improve the value of the property, consider giving a thumbs up to these:
- Replacing drawer pulls and other hardware.
- Deep cleaning the carpets, power spraying the deck, or other major cleaning endeavors.
- Painting walls or cabinets (see above).
- Installing shelving in the garage, mud room, laundry room, etc.
- Upgrading the kitchen sink to include a retractable kitchen faucet, an in-sink soap dispenser, or adding a garbage disposal.
- Bringing in their own appliances that they will leave behind (assuming they’re a step above what you currently have).
- Bathroom upgrades like towel rods, towel hooks, or a medicine cabinet.
- Installing ceiling fans (again, with the help of a professional).
- Planting herbs, bulbs or flowers in garden.
When to Say No
Sometimes what seems like a fabulous idea to some is either too permanent, too hazardous, or too ugly to allow in your rental property.
- Cut-outs for an A/C unit.
- Fire pits or other fire hazards.
- Basketball hoops installed on the exterior. Chances are good the next tenants might not be as keen on a game of hoops.
- Anything that diminishes the functionality or character of a place, such as painting over original brick, closing off a fireplace, or adding an awning which only keeps light from getting in the windows, etc.
- Changing the locks or security system. Unless you mutually agree to change the locks, and the landlord takes the lead, this is obviously a big no-no.
Please note that safety issues, repairs and major upgrades are part of a landlord’s responsibilities. The staff at Tradewind Properties can help you manage all of these, including emergency handyman visits for repairs.
Keep an open line of communication with your tenants, and be open to suggestions for how they can make your property feel like home. It’s beneficial to both parties if tenants and landlord are satisfied and in agreement.
If you have any questions about becoming a landlord, or renting out your property, Contact Tradewind Properties. We are here to help!
If you’re considering renting out your home, but you’re unsure whether there’s a market for renters, consider these reasons why a home can be an even better fit for potential renters than the usual apartment.
No shared walls, and no upstairs or downstairs neighbors! Add in the personal space of a yard, garden, patio, or deck, and your tenants suddenly have much more privacy than they would in an apartment.
The amenities available to apartment dwellers are very different from what a single family home can offer, and often appeal to different types of tenants. Apartments often have great amenities like indoor or outdoor pools, party rooms, exercise rooms, or shuttle buses. But a home competes with these by offering in-house laundry, private garages, and private yards or gardens.
From the size of closets, to the garage stall, bedrooms, and outdoor space for children and pets, single family homes generally mean more space. If the budget allows, many tenants will gladly choose a bit more breathing room.
Some potential tenants may incorrectly assume that a single family home rental means working directly with the homeowner. Depending on the homeowner, this experience can be less consistent and less responsive than a management company.
Tradewind Properties is the answer to that, as we manage all components of the rental for homeowners, from finding tenants and performing background checks, to collecting rent, to answering maintenance calls if something needs repair.
Although the Twin Cities is less bound by this generalization, apartment buildings are often located in more urban areas, and single family homes for rent are often farther away from the city-center. You can certainly find single family homes for rent in quiet areas of Minneapolis, and apartment buildings dot the suburban landscape throughout the Twin Cities. For those looking for a quieter, suburban place to call home, a single family home can be the perfect fit.
6. Personal Styling
A homeowner, and by extension their tenants, have more freedom to make decisions about the property without needing to follow apartment complex guidelines. Whether you’d like to paint, install a satellite dish, or display your collection of garden gnomes, it will be easier to have those conversations if you’re renting out a single family home.
Considering renting out your home or purchasing a rental property?
Our team of realtors will meet with you to determine your goals and get those rent checks coming in!
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Minnesota’s Red-Hot Rental Market
The housing market in twin cities certainly seems to be heading in the right direction. The number of new buyers hitting the market is on the rise. And the corresponding increase in demand, combined with a dwindling supply of inventory, has helped boost the area’s median sales price of single family homes to roughly 6.5% over the last year.
There has also been a spike in the number of new apartment buildings going up around town. In 2014, the metro area saw an increase of nearly 5,000 new units added to the apartment market. The forecast for 2015 predicts that we’ll likely see another 2,000 – 3,000 before it’s all said and done.
Yet despite these two key economic factors, the twin cities rental market remains red hot, with no signs of slowing down anytime soon. This may seem contradictory to the previously cited statistics. But the demand for rentals continues to climb. In fact, even with the increase in supply, the overall vacancy rate for the twin cities is right around 5.6%. The apartment sector alone is even more impressive, boasting a ridiculously low rate of roughly 2.5%.
As it is with most economic upturns, job growth is the key cog for fueling the rental demand. The Minnesota market was one of the least affected areas following the nation’s recession of recent years. And a steady job growth rate since then has helped the local economy to bounce back nicely. While the national unemployment rate sits right around 5.5%, Minnesota is sitting pretty with a rate of 3.7% – the lowest it’s been in 13 years.
And as the job growth rate continues to steadily grow, so too does the state’s population. New jobs attract more people, which in turn drives the demand for housing. So as long as these trends keep trending upward, the Minnesota rental market will remain rock solid.
Call the trusted source for Sales, Leasing and Property Management in the twin cities. Please contact Tradewind Properties today for a FREE consultation and home rental or sales analysis.
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