Is a Rental Renaissance Coming?
Here's a post by Dee Allomong of Let's Talk Property Management about the onset of a possible "rental renaissance" tied to the impending reset of option-ARM mortgages in the U.S. (Full disclosure: I am a member of Let's Talk Property Management but have no ownership interest in it and absolutely no involvement in running it. I find it to be a useful site.)
If Dee is right, and I think she is, the renaissance will be led by those suddenly finding themselves in the "sell to rent" group. Check out the graph in Rental Housing and Real Estate Market Trends for 2010 from PropertyManager.com, to which Dee also links. There is a mountain of option-ARM mortgages still to reset and we might not get to the other side until 2013.
So, we should expect a significant increase in the tenant pool, but is that a good thing for managers of multi-family properties? I'm not so sure. On the one hand, more tenants should eventually equal more demand, which is a good thing. On the other hand, won't many of the "sell to rent" group look for residential to rent first? Furthermore, won't there by credit issues?
The key to creating value from the "sell to rent" group will be found in screening and marketing. If you are a multi-family property manager, when is the last time your screening procedures were reviewed and updated? Are you able to identify the credit risks and proceed accordingly? Similarly, are you able to identify the cream of the crop from the "sell to rent" group? If so, what are the demographics and how can you reach them?
If anybody out there has reliable demographics on the "sell to rent" group and any experience in trying to reach it, please drop me a line.
