Darcy Alkus

Bay Area NBC just ran an article titled Homeowners Turn to renting Waiting for Market to Recover.

(See original article at: http://www.nbcbayarea.com/news/business/Homeowners_Turn_to_Renting__Waiting_for_Market_to_Recover.html by Mark Koba.)

By now everyone knows the story: Home goes on market, home doesn't sell on market, home sits vacant, homeowners decide to rent. This is where we come in as Marin Rental agents. We often get the call from the Realtor, referring the owner and the property to us to handle. If a homeowner has owned the home for many years, they may be in a great position to rent. If we can cover their smaller mortgage with the rent, they can coast for a couple years until the sales market has re-balanced and try again.

However, the homeowners with equity are usually the ones who can adjust their asking price low enough to sell the home if they really need to sell. These homeowners usually own the long term rentals and are landlords by choice. The other type of landlord is the one who owes more than his/her home will currently sell for, therefore turns to rentals simply because the home cannot sell. It's important for both landlord and tenant to recognize the difference.

As a tenant, you will generally see two types of rental homes available in Marin: the long term rental and the I'm-renting-because-I'm-in-transition type rental. The long term rental is generally in ok condition, usually somewhat updated, but not fuly, and usually with a level of finish you would expect from a rental. Maybe you see tile from the 70's or 80's, of if you're lucky granite tile from the 90's, vs today's sleek slab stones, or an electric stove vs a gas stove. You're more likely to find wall-to-wall carpet in long term Marin rentals, which is easier for landlords to replace between tenants. You might find a slightly unkempt yard where tenants are in charge of landscaping. The long term rental is great if you already know you are a long term tenant: you know you're staying so it's probably worth it for you to put a little elbow grease into fixing up the yard a bit, or maybe buying a new gas range. This type of rental property in Marin is the more affordable option for most renters.

The Transitional Rental, as we like to call it, is likely the homeowner's personal residence, likely done with a greater level of finish than the long term rental, and has likely come to the rental market because the homeowner is in some type of transition. This is a rental best suited for a tenant also in transition. You're more likely to find that gorgeous Wolfe Range, the custom cherry closet systems, the well-manicured lawn with the fragrant roses in this type of rental. You're also likely to pay more for it, and likely are going to have to leave at the end of your lease, or deal with the home going back on the market for sale.

If you're the owner of a long term rental in Marin, you know the drill: clean the carpets, re-paint the walls, get it leased to a nice quality tenant for a price that hopefully covers what you owe (maybe even a little more?) and hope nothing major breaks. If you're a transitional landlord turning to lease a home in Marin for the first time, you will have to accept that the rent your home will bring will not cover your mortgage. You will have added costs: up keep, gardening, insurance, leasing agents fees, and most unpredictable: downtime between tenants. You need to understand all the costs associated with renting before making the decision. If you can't afford to come up a bit in the red each month, it may be a better choice to take the loss now on selling your home. However, if you've calculated the costs, leasing to a great tenant for a year or two may be a great way to help offset your monthly costs while waiting for the market to recover and saving you money in the long run.

Understanding the Marin rental market is the first step to determine, as landlord or tenant, if leasing is right for you in this economy. As leasing agents here in Marin, my partners and I are happy to help. Contact me anytime with your Marin rental questions! da@jwavro.com www.MarinLeasingTeam.com

This Sunday's IJ ran an article on the front page of the real estate section by MELISSA KOSSLER DUTTON titled Homeowners Turn Into Landlords. (Original article can be seen at http://www.vindy.com/news/2009/jan/25/tough-times/) My fiance' and I opened the paper this morning and, over Peet's coffee and marble rye bread, shook our heads.

We've been trying to explain this to Marin for months.

The piece reads as follows:

When Dave and Gina Schudi of Phoenix went house hunting last year, they knew the time was right to buy — not sell — a home.

So when they did buy a new one, they rented out their old home.

“It all depends on the market,” said Dave Schudi, who plans to sell the old house eventually. “We’ve got good renters in there.”

Falling house prices and a slow market are forcing more homeowners to consider renting their properties.

It’s something Tampa, Fla., Realtor Julia Vakulenko suggests to potential clients. “Basically, we ask all the people who contact us, ‘Must you sell it right now?’” she said. “Most likely, it will just sit there or maybe sell below the market value.”

For many, the role of landlord is something they’d never considered. If done right, however, renting out a home can help the owner ride out the housing slump, said Vakulenko, of Tampa4U.com.

But the process does require doing some research, said Vakulenko, who owns five rental properties. She often refers clients to property management companies who can determine what their home would rent for and whether there’s a market for it.

Homeowners are often disappointed to learn that their home would rent for less than their mortgage payment, added John Nuzzolese, president of the Landlord Protection Agency in East Meadow, N.Y. “Whether it’s for sale or for rent, it’s only worth what people are willing to pay for it,” he said. “People have to be realistic and put themselves in the tenants’ shoes.”

Real estate analyst Danielle Babb often sends people to www.rentometer.com to see what the going rent is in their area. The Web site allows users to see what comparable properties in the area charge.

Once you’ve set a rent range, determine your demographic — students, families, young professionals — and market the house to them, said Babb, author of “The Accidental Landlord” (Penguin Group, 2008). Babb, who has 27 rental properties, wrote the book after watching friends and colleagues trying to rent out houses they couldn’t sell.

“You’ve got to think like a renter. There’s lots of availability,” she said. “They’re going to choose the most exciting option.”

The truth is, we are running a very high inventory of rental properties in Marin. There are vacant homes for lease and no hordes of tenants pounding on the door to rent them. (There are always a few exceptions...I mean, we are still Marin!) Anyone who was a landlord after the dotcom bust remembers what this feels like--but anyone who has only become a landlord in Marin within the last five or six years is going to have a hard time understanding why his or her home that rented for $6,500 last year is only worth $5,000 or less now.

The formula is simple supply and demand; we have high supply of rental inventory due to the languishing home sales market turning homeowners into landlords and--due to an economy that's pinching everyone's belt--much reduced demand for said homes.

It's time for everyone in Marin to be a little more reasonable.

Homeowners, now is the time to take advantage of the downtime and update your rental property. Tenants have a lot of choices right now and they do not have to settle for outdated 70's or 80's style homes. The updates will give you a better chance of leasing your home now, and will certainly help keep it rented next time you have a vacancy. (Or, if your goal is to sell eventually, will make your home that much more competitive.)

If your home is already in great condition and is still not renting, it's time to lower your price. Unless you have owned your home for many years or put down more than half of the purchase price, you are unfortunately not going to be able to cover your mortgage cost. If you want to find a great tenant, price your home for this market.

Tenants, you can find some great bargains in Marin right now, but don't overplay your hand. Rentals, unlike a purchase, involve an ongoing relationship. Our experience has shown that tenants who submit extreme "lowball" offers come off as pushy and/or unreasonable...not exactly someone you want a relationship with. Also, it's important to note that if you have three dogs and two cats, or poor credit, or unverifiable income, you still may not be approved to rent a home--even if the property has been sitting vacant. So take factors about your profile into consideration when negotiating. If it's a house you really want, make a fair offer, explain your reasoning, be realistic, and don't lose it over principle!

My partners and I specialize in leasing Marin homes: tenants and landlords call us anytime with questions.

Aticle quoted originally published: Sunday, January 25, 2009 By MELISSA KOSSLER DUTTON (http://www.vindy.com/news/2009/jan/25/tough-times/)

Freddie Mac announced today it will allow some homeowners to rent out their homes after losing them to foreclosure. (http://news.yahoo.com/s/ap/mortgage_giants_renters)

Marin rentals and the effects of foreclosure is a hot topics with some of our tenants. Today's well-qualified tenants have valid concerns:

-- What happens to me and my family if I rent a home that suffers foreclosure?

-- What happens to my security deposit?

-- Will I be evicted even if I keep paying rent?

These are all valid concerns, however, due to ever changing legislation, tough to answer.

My understanding (and, of course, I am not a lawyer and my advice is not to be considered legal advice) is that once a home is foreclosed on, the bank is now the tenant's landlord. Rent should always be paid every month, otherwise the tenant risks defaulting on their rental contract and puts himself in a position to be evicted.

The Fredie Mac announcement today provides good news for tenants looking to stay in bank-owned Marin homes, but still probably doesn't answer the question about what to do next if your home falls into foreclosure.

The bottom line is that while the bank doesn't want to be a landlord, the bank also doesn't want to lose more money than necessary. If you are a tenant and you receive a notice of foreclosure consult a local tenant's attorney asap. You probably have more options than you think! (And hey, if you love the house you might even be able to purchase the property at a rock bottom price!)

My partners and I specialize in Marin Rentals and are happy to answer questions from landlords or tenants anytime.

It's a blustery 71 degrees here in Marin County today--though my parents in New Hampshire don't seem to want to hear about it--and what a joy it is to experience this surprise spring-like weather in mid-January. My leasing team and I are all out enjoying the weather, showing our properties, and surprise! renting them.

Statistically speaking January in Marin Rentals can be hit or miss. It's (usually!) cold and rainy which makes for poor showing conditions the first two months of the year...people tend to want to stay inside and recover from the holidays, rather than spend their weekends viewing rental homes. But some years January can be a great month for rentals. Some years we see large numbers of relocating executives moving here for the first quarter which results in a high number of higher end homes rented.

On the other hand, some years (especially when companies slow their hiring...like, hello, now?) it's very quiet.

But so far, 2009 has been surprisingly busy for us leasing agents, at least in the middle range of about $5000 and under. My partner Joscelyne closed on three of my properties this week alone, and my other partner Christopher closed on two. Our phones are ringing and appointment books filling up.

So what does this mean for Marin's property owners and tenants?

Owners, after a very slow fall and holiday season, the tenants are finally out here looking. So drop your prices to realistic levels and let's fill these vacancies!!

Tenants, there's finally some competition out there, so when you find a home you like don't let that great property pass you by because you think things will get worse....that's not always the case, especially in Marin with our limited inventories and generally well-qualified applicant pool. Snap it up before someone else does.

After watching yet another erratic week of plunging stocks, all my partners and I can surmise about this surprise boost in business is it must be the weather!

The winter months in Marin rentals can be tricky.

I've noticed a couple a pronounced patterns in my years working in the Marin leasing industry. Speaking broadly, Marin is largely a family-based demographic, thus, most local tenants plan their moves around the best timing for their family. Summer, for most, is that time.

The rental tenant pool* here tends to include the following: SF hipster young families looking to sample life in the wild, wild North in the form of rental housing before commiting to buying their first $2 million McMansion; established locals selling their homes who are looking for a one or two year breather from home ownership before leaping into a new, bigger McMansion; locals remodeling their current McMansion; and locals divorcing (usually the half getting kicked out of the already mortgaged and remodeled McMansion).

With the exception of the divorcing group, most of these parties are making planned moves. They prefer to make their transition when the weather is nice and the school year is complete. So largely, these groups are not calling us looking to rent homes during the winter months.

However, the rental market here in Marin is not fueled simply by the school year. Relocating executives or other out-of-area employees (single, married or otherwise) are a large part of our rental base. When companies relocate their executives they tend to do so based on the financial quarter system, and more so the first quarter of the year. So the biggest month for relocating executive tenants?

You guessed it: January.

This year, however, one has to ask just how many companies are shelling out extensive relocation packages for their new executives? Or their transferring employees? (Or even their CEOs for that matter?) When the stock market suffers, the mid- to high- end rental market suffers. Throw in a high inventory of homes that couldn't sell which are now available as rentals and you see that a landlord with a vacancy this winter might be in a tight spot.

So what does this winter hold for Marin rentals?

The answer is I don't know. I know my phones are busier than usual for this time of year, I know we rented three or four properties right before Christmas (including presenting an offer Christmas Eve), and I know that my partners and I are keeping a positive outlook.

But I also know there are a LOT of great homes available to rent right now.

So here's my advice. If you're a landlord with a vacancy this winter, perhaps it's time to take advantage of the down time. Contractors are available: maybe it's time to update your kitchen counter tops? Trade out your bathroom vanities? Tear up that old carpet and refinish the hardwood below?

I've said it before and I'll say it again: quality properties attract quality tenants. You may not directly bring in more money per month by making a few simple upgrades to your property, but by doing so you may very well reduce your down time next time you have a vacancy. Which, last time I checked, does translate to more money to your pocket.

My fiance', sister and I make up the Marin Rental Team at J.Wavro Associates and are happy to answer any rental questions you may have. Call or email anytime!

*When talking about the cycles of Marin rentals, tenants pools, etc I'm referring to the $3k to $10k+ a month Marin rental. The more affordable properties priced under $3k and apartments tend to rent quickly anytime of year regardless of season due simply to the fact that this is the Bay Area and nice, cheap housing is hard to come by!