Rent.com released its annual property managers’ report, which captures rental market trends by synthesizing the opinions of apartment property managers nationwide. In the 2012 survey, property managers provided insight on drivers for vacancy rates, expected rent increases, how rate increases are managed across tenants, and features which are most important to renters.
What Primarily Drives Vacancies?
Rent.com found in our most recent survey that relocating and buying a home have taken the lead as the primary drivers of vacancy rates; this is a significant change from two years ago when job loss was the primary driver. Since 2010 there has been a 30 percentage point decrease in property managers who cited job loss as a primary driver of vacancy rates.
The decrease in property managers citing job loss makes sense in the context of the unemployment rate reports that the Bureau of Labor Statistics provides. In August 2010, the unemployment rate was approximately 9.6 percent, but since then has dropped to 7.8 percent for September 2012.
Is the Rent Too Darn High? Maybe for NEW tenants …
Most (62.6 percent) of the property managers surveyed predicted that rents will rise over the next 12 months and 72.3 percent of property managers surveyed said they are actually planning to increase rental rates at their properties over the next 12 months.
If the past year is any indication, tenants moving into a new property will face steeper rate increases than renters who choose to renew their existing leases. Apparently, it pays to stay! According to property managers, the average rental rate increase for new tenants in the past 12 months was 20 percent greater than the average increase for renewing tenants.
The survey also looked at exactly how much property managers expect rents to increase for both new and existing tenants over the next year. Not surprising, for new tenants, the percentage of property owners indicating a significant price increase of $100 or more per month was much larger. In fact, it was double. Twelve percent of property managers said they raised rents by $100 or more for new tenants as compared to just 6 percent of property managers for renewing tenants.
What a Property Manager Wants.
When vetting a potential tenant, we learned that 46 percent of property managers reported that the minimum acceptable gross income to rent ratio for standard applicants is three times or more the monthly rental rate; while 30 percent will accept a gross income of 2.5 times the monthly rental rate.
Additionally, 74 percent of property managers ranked gross income to rent ratio as an important or very important factor in order for a renter to secure an apartment in one of their communities. Just edged out of the top spot was credit profile and payment history, which 72 percent of property managers ranked as important or very important. Surprisingly, nearly 60 percent of property managers told us that a high credit score is actually not important. Renters take note. When it comes to qualifying for your next apartment it’s best to have your financial house in order with a qualifying income level and a credit profile showing a good history of on time payment, but don’t sweat it if your credit score isn’t 750.
What’s the simplest way to negotiate savings on your monthly rental rate?
Half (50 percent) of all property managers said sign a longer lease agreement, for example, 18-24 months vs. 12 months. Just over 8 percent said that setting up automatic debit payments can help as well which ensures that they are paid early or on time each month. This can also help you avoid ugly late fees which will save you money! Lastly, it’s clear that renewing your existing lease may just keep more money in your pocket this year.
The survey found that 45.1 percent of property managers say according to feedback from prospective renters, allowing pets is the most important feature in their next property; as compared to 28.4 percent who say a dedicated parking space takes priority for renters. This is notable considering nearly 30 percent more American households have cars than pets!**
Additionally, 47.5 percent of property managers said according to feedback from prospective renters that a washer/dryer in the unit is the most important apartment amenity while just 9.2 percent said good closet space was on the top of renters’ wish lists. This is particularly interesting in light of a recent survey Rent.com took of NYC renters that found closets were the primary feature they were looking for!
The survey was conducted among Rent.com’s property customers representing approximately 30,000 rental communities and 2 million rental units.**According to the 2011-2012 APPA National Pet Owners Survey, 62% of U.S. households own a pet. According to the U.S. Department of State, 95% of American households own a car.