A Renters Market

As of late, the spotlight has been on the sluggish sales market! But, the slowing sales market has not only affected sale prices. The lack of closed sales has directly put downward pressure on rental rates, in large part due to the fact that a growing number of homeowners who have been trying to sell, with no success, have now been forced to rent their homes. This occurrence has forced many home owners to put their properties on the rental market to help assist with mortgage payments. Consequently, the increase in supply of available rentals has not been met with an equal increase in demand caused from population growth. Therefore, rental rates have continued to steadily decline.

Renters are presently securing lease rates not had in years. For example, one can presently lease a newer 3 bedroom, 2 bath, 2 car garage villa for $1,100 - $1,200 per month; the same villa leased for $1,450 just two years ago, representing a 17% - 24% decline in rental rates. Furthermore, concessions are also present. In some communities, owners competing over qualified tenants have sparked additional concessions. It is also not uncommon for renters to receive incentives including 2-4 weeks free rent, window treatment upgrades, and free social/fitness memberships all paid for by the home-owner.

Many owners have not fully realized the trend and or accepted the new market rental rates. Consequently, this has caused many units to remain vacant on the market for longer periods of time. It is not uncommon for homes to remain on the rental market for 4-6 months. Conversely, in the past, with the booming economy and appreciating real estate values, demand for available rentals was increasing faster then supply and rental rates were typically steady to rising. In addition, concessions were not as prevalent and properties were renting much quicker.

To maximize income and minimize losses owners should consider the advice of local real estate leasing professionals and be aware that rental rates are not a function of the owner’s mortgage payments, but one of supply and demand. This realization should ensure a better outcome in this very different market. Louis Pfaff is a licensed real estate broker, the President of Synergy Real Estate, a local property management company, and has a Masters Degree in Real Estate.

Should you have any questions, please do not hesitate to contact Synergy at 239-403-0030.

For more info about Fort Myers Property Management please visit the link http://www.naplespropertymanagement.net/

A Look Behind the Credit Score

One of Synergy’s main tenets for granting approval to prospective tenants is the widely discussed credit score. This is done to protect the owner from the chance of a premature vacancy and to ensure a responsible tenant inhabits the unit. Using the objective FICO credit score as part of the screening process also shows an attempt to follow Fair Housing guidelines and could prevent a discrimination charge. Now you may be asking yourself, “Just what composes a credit score?” The three digit score contains many variables that must be examined closer to be able to form an educated opinion of the prospective tenant.

The first and largest component of the credit score is the payment history (35%). This is not surprising as paying your bills on time should be rated highly. This is a critical component for owners of residential property because a person who has consistently paid his bills will likely continue to do in the future, barring an unforeseen crisis.

The second largest component is the ratio of credit available to credit used (30%). This component is important to property owners because a tenant who has maxed out his available credit may be teetering on the edge of bankruptcy. This shows an inability to prudently handle credit and could be a warning sign of future problems.

It must be noted that these first two components make up a disproportionate 65% of the credit score. The last three components make up the remaining 35% and are weighted as follows: Length of credit history (15%), Variety of Credit (10%), and number of inquires into the credit score (10%). A long credit history will show that a tenant has been responsible for an extended period of time, withstanding possible downturns in the economy while maintaining his/her credit. Likewise, having a variety of credit will show experience handling various types of loans and bills. Finally, one must be wary of a tenant who has too many recent inquiries into obtaining new credit. This person may be seeking a life preserver to pay off other high debts.

Now that you have a good understanding of the composition of a credit score let’s go into how to analyze the score and the caveats involved. First, it must be noted that one must look at the whole credit report rather than just relying on the number. A person’s score can get downgraded for many things, including for circumstances which may have been beyond their control at the time and do not accurately portray that person’s current financial situation. These include medical bills, divorces, and student loans. One thing to watch out for while reading the score is a bankruptcy. If one is found it is imperative that it has been discharged. If it has been discharged check to make sure the tenant is not repeating the same habits that got him into bankruptcy. Finally, when running a married couple’s credit score make sure to run both the husband and the wife’s score. The total household debt per month is the important figure.

The credit score must be thought of as the title to a novel. It gives you an idea of what is inside but you must read through it to form an accurate picture of the applicant. When used correctly the credit score can be an indispensable part of the tenant screening process and will help ensure a responsible tenant.

For more info about Fort Myers Property Management please visit the link http://www.naplespropertymanagement.net/