Know Your Rental Market: Knowledge Scores the Best Tenants
The glut of luxury rentals is creating problems for property owners
Although Denver and the surrounding area's rental market is strong, there is now a distinct softening.
The major reason for the market softening is the glut of “luxury rentals” hitting the market in 2019. We see them in nearly every neighborhood along the Front Range ̶ familiar corner gas stations and neighborhood spots are rapidly replaced with skyscraper-type, modern-finished apartment buildings.
While many of these complexes are pricey, they offer amenities that single family, townhomes or condos simply don’t have. A rooftop patio and pool, surrounded by luxurious chaise lounges, community bars and high-tech grills, complete with stunning views of the Colorado mountains are irresistible to many; the availability of which is making potential tenants more amenity driven when selecting a rental property.
And for the modern record, amenities like dog-walking services and weekly social evenings full of games, cocktails and tenant/neighbor comradery are new hooks designed to lure potential new tenants.
Putting a house on the rental market and having ten qualified applicants within the first hour no longer exists. Gone are the days of tenants trying to outbid other tenants. Now, tenants have so many options, they can afford to be more deliberate in their choices.
However, before installing a rooftop pool on your rental property, consider some of the positive aspects of the current market: High-rise apartment living is not for everyone; job growth is still strong and the likelihood of rising interest rates, plus the lease versus buy conundrum keeps the rental market continually robust.
Here are the things you should know if you are a landlord or considering becoming a landlord to attract the best possible tenants.
Plan for more days on the market. In general, it can take six to eight weeks to secure a tenant.
Price it right the first time. Many landlords want to initially list a property at an unrealistically high number. Starting high and then lowering the rental price sends out the perception that there is something “wrong” with the property.
Create a space that is both inviting and generic. New carpet and new paint can go a long way, but if a house is too personal it will have a negative effect. The purple princess bedroom that enthralled a little girl ten years ago will not have same appeal to a potential family with all boys.
Consider curb appeal. The first impression is a lasting impression. Whether a tenant sees the property on the internet or as a drive-by, a yard that is overgrown and not cared for will be an immediate turn-off. The reality is that potential tenants may refuse to come in if they see a poorly cared-for yard, even if the inside is very nice. A landscape overhaul does the trick and is worth investing in. A lovely outdoor space entices the desired tenant and helps keeps the property continually leased.
Comprehensive tenant screening is important. Keep in mind that the “luxury rentals” have a very tight screening process and not everyone can qualify. That means that tenants with questionable credit or background are looking elsewhere. A good property management company knows and understands the importance of tenant screening.
Consider offering perks. Many tenants are willing to pay extra for amenities like lawn care and snow removal. Landlords should also weigh the benefits of paying for water, sewer and trash. A property management firm can advise you on the risks and rewards of these services.
Location, location, location. You should know the neighborhood and its rental rates. Visit Zillow, a multiple listing service (MLS) or any other internet rental site and conduct a loose calculation of rental-dollar-per-square-foot. If the two-bedroom condo down the block rents for $1,835 a month, it may not be wise to list yours for $2,700.
It is not impossible to secure top rent with a top tenant in today's rental market, but it pays off to pay attention to the details, do a bit of research, be patient and be more selective. The goal is to get a great tenant that is dependable and who ultimately appreciates and wants to stay in the property.
Everyone wins in this scenario ̶ even in today's world of amenity-filled apartment buildings.
Holly Toenjes is the president of InTransit Properties and recognized as a seasoned leader in the Denver-area real estate scene. 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