An Unusual Perspective on Rental Rates
Fill it with great furniture
Much has been written lately about Denver's rental market. Depending on the day and the publication, the Denver market is either hot, hot, hot or lukewarm or downright cold.
Here’s what we are seeing in the Cherry Creek market.
Anyone who lives or works in Cherry Creek is aware of the unprecedented number of “high-end luxury rentals” currently under construction. Some communities are completed and many more are slated to debut in Spring of 2018. This trend has resulted in downward pressure on the individual rental market in Cherry Creek. Owners are having to adjust to more days of having their rental property sit vacant on the market. They are giving up luxuries like “no pet” clauses and are faced with having to accept roommates and more.
These are all adjustments currently being made to remain competitive as tenants find themselves with more choices from luxury communities and incentives such as free rent, flexible lease terms and amenities. Tenants are savvy these days and are using these luxury community perks to negotiate pricing.
Some owners are more flexible these days; they want to capture tenants for longer lease terms. In one recent example, a homeowner was being transferred out of the country, faced two expensive options – she could ship her furniture abroad or she store it for several years. Instead, she looked into the possibility of renting her home as a fully furnished rental.
The furnished rental market is a very specific niche. In this case, the furnishings were good quality and with a little judicious pruning it was feasible to secure a tenant while solving the problem of whether to store or ship her furniture.
The key to successfully marketing tactics for furnished rentals is knowing the proper avenues for marketing them. The traditional routes rarely work. Within two days of posting on several proprietary websites, with a specific audience more suited to this kind of rental, a tenant was secured.
The homeowner was thrilled; she was able to complete her transfer knowing she had a guaranteed tenant for a full three-year term. A rental of $7,500.00 per month was also secured because of the quality of the furniture that came with the living space, representing a 25 percent increase over what she originally hoped to achieve.
Here’s another example of competitive strategies in the Cherry Creek rental market: A six-unit complex’s ownership group decided to use half of it as fully furnished rentals and left the other three units unfurnished. All three units have been upgraded in comparable fashion. The furnished units fetch $3,250 per month and the unfurnished units get $2,250 per month.
QUALITY IS KING
Tenants are paying a premium for fully furnished, short-term rentals, and they expect quality. The days of putting grandma’s old sofa in place and calling it good are over. Furniture, linens and dishes must be constantly checked and replaced as needed. Cable, internet and utilities must be included. For short-term rentals, leases are rarely less than three months in duration and always include the right to renew. Short-term tenants include visiting nurses and physicians, families displaced by a property emergency, executives moving to town, temporary assignments, etc.
This rental trend is not expected to slow in the future; in fact, it’s quite the opposite. The proof is in the continuing stream of tenants seeking and securing properties, fully furnished and nicely appointed.
It's a new day in Denver's rental market and there’s a new type of tenant in town. Recognizing these facts will help any property owner trying to list a rental they want to rent quickly and rent well.
Holly Toenjes is the president of InTransit Properties and recognized as a seasoned leader in the Denver-area real estate scene. Well known to bankers, investors, buyers, renters, sellers and the business community at large, Holly possesses an uncanny ability to asses virtually any given real estate puzzle – and solve it effortlessly. She has sat on a number of business, philanthropic and artist boards and currently invests in and navigates a wide variety of real estate transactions from luxury properties to condominiums, to mountain homes to the rentals.