Tag Archives: rent

Best Time to Sign a Lease

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photo by Beth Kanter

The Allstate Blog quoted me in What’s the Best Time of Year to Sign a Lease? It opens,

There is no way around it — apartment hunting can be stressful. And the cost of rent can be quite expensive — even outpacing average U.S. salary increases. According to the National Association of Realtors, the cost of rent rose an average of 15 percent while renters’ income only rose 11 percent from 2009 to 2014. However with some planning and negotiating, you may be able to have some more money in your pocket at the end of each month.

Similar to how you can pay more for a winter jacket in October than May, rental rates often vary throughout the year. By planning your move and signing lease terms to help position your next move during the lower rental rate season, you may end up saving some money. 

Research the Demand in Your Area

Just like most things, supply and demand determines prices in the rental market. Not surprisingly, you may get a better deal on renting when demand for condos or apartments are at their lowest. However, if you live in a tight rental market, your choices could be very limited. “In most areas the slow rental season is typically late fall through winter since less people move during this time,” says Scot J. Haislip, vice president, national lease program at the National Apartment Association (NAA).

It is important to understand the rental market you’re looking to move into since rental patterns can vary based on where you live. David Reiss, director of Community Development Clinic in New York City and professor at Brooklyn Law School, specializing in real estate and community development recommends contacting several local brokers to get their perspective on the slower rental periods in your area of interest. He also cautions that some high demand areas, such as New York City or Chicago, currently do not have a slower period for rentals.

Smart Negotiation

Even during the winter months, most landlords are not going to simply hand over a discount — you have to work for it by negotiating with your prospective landlord. Before you broach the subject of price, do your homework by picking up the phone or researching online to compare similar units at the current time. Reiss suggests that you consider asking for a decrease in your monthly rent or a period of free rent.

Ending Homelessness

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"Homeless Man" by Matthew Woitunski

The Christian Science Monitor quoted me in Los Angeles to Serve as Crucible for Reform in Ending Chronic Homelessness. It reads, in part:

As the heavy winter rains sweep across southern California, Los Angeles’s homeless residents hunker down. Many – like former farmworker Andreas, who huddled in the doorway of a parking structure – are unable or unwilling to find shelter off the street.

These are the chronically homeless, a large portion of the 44,000 people in L.A. that make this city the West Coast’s homelessness capital.

Nationwide, the chronically homeless represent roughly 20 percent of the nation’s homeless population at any given moment. And, both in California and across the country, they form the core target of an intensified effort by activists and politicians determined to get at the roots of intransigent homelessness.

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The US is not going to conquer chronic homelessness until it addresses the structural issues that hand homelessness down from one generation to another, says Brooklyn law professor David Reiss, who specializes in housing issues.

The absence of a safety net for those who fall out of employment is the beginning of the cycle, particularly for at-risk populations such as foster-care children who age out of the system and single mothers with young children. Job scarcity is also a factor. Big cities with the highest cost of living, like Los Angeles and New York, usually present the most possibilities for those in search of work.

“Very low-income people often prefer to stay in such cities, even if they are at risk of homelessness, because it is the best of a set of bad options,” he points out.

The basic costs of maintaining a home are driving more people onto the street, says Professor Reiss – a growing problem tied to the issue of income inequality.

A recent study by the Harvard Joint Center for Housing Studies finds that this trend is increasing and, says Reiss, “we should expect more and more households to have trouble paying rent in the coming years.”

Jumping the Affordable Housing Shark

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"Henry Winkler Happy Days 1976" by ABC Television

The Fonz

Realtor.com quoted me in Could Fonzie Solve America’s Housing Shortage? It opens,

Call me old-fashioned, but in my heart of hearts, Fonzie from the 1970s TV show “Happy Days” is still the epitome of cool. That leather jacket. The shades. Those thumbs!

He may also be the solution to America’s housing shortage.

As you may recall, Fonzie lived above the Cunninghams’ garage—offbeat living quarters that are making a big comeback today thanks to BIMBY, short for “builder in my back yard.” BIMBYs carve out small, bootleg homes on their property by renovating work sheds, upgrading floors over garages, or raising new structures from scratch.

BIMBYs typically create these dwellings for aging parents (thus their not-so-sexy nickname “granny flats”), or to rent out to college students who can’t afford traditional apartments. Their renaissance is due to plain old necessity: Housing is just too damn expensive. A BIMBY home, though modest, is a deal for both tenants and cash-strapped homeowners. It’s a win-win scenario for Cunninghams and Fonzies alike!

That’s why Logan Jenkins, a journalist for the San Diego Tribune, recently suggested the BIMBY resurgence could fill a desperate need for affordable housing in areas where the cost of living on new homes and rentals has spiraled way out of control.

“If 10% of the homeowners in San Diego County added 450 square feet of separate living space to their properties, the affordable housing crisis would be largely over,” Jenkins argued.

And far from dragging down the neighborhood with riffraff, such housing “enables a neighborhood to maintain diversity that otherwise would be lost in a hot housing market,” according to Larry Ford, a geographer and author of “The Spaces Between Buildings.” After all, wasn’t Fonzie the life of the party?

This may explain why certain cities are embracing BIMBYs with open arms. Portland has changed its local laws to forgive their developer fees. Santa Cruz offers pre-approved architectural plans, loans, and fee waivers to what it calls “accessory dwelling units,” or ADUs, spurring a fourfold increase in applications. And other local governments are following suit.

“ADUs could make a big impact in curing housing issues in many locations,” says John Lavey with Community Builders, a nonprofit that has studied the trend, “especially in desirable locations such as Bozeman, Montana, where I’m located, where housing and rent costs exceed national averages. And for millennials seeking walkability and neighborhood authenticity, these ADUs are in high demand.” 

But not all communities are automatically lining up to accept these BIMBY newcomers.

“Zoning limitations on accessory units were adopted by lots of local planning boards that were consciously rejecting them for their communities,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. To change the regulations, BIMBY advocates would need to go head to head against the NIMBY (“not in my back yard”) crowd, who argue that an influx of Fonzies could drive down property values.

Housing Affordability in NYC

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Jacob Riis, Lodgers in a Crowded Bayard Street Tenement

The Citizens Budget Commission has released Whose Burden Is It Anyway? Housing Affordability in New York City by Household Characteristics. The CBC produced some interesting and counterintuitive policy briefs last year, in which it

examined housing affordability across large U.S. cities to assess New York’s situation in a broader context. Using federal data sources, CBC found that while many New Yorkers face high rents, and the share of households who are “rent burdened” (paying more than 30 percent of income toward rent) grew between 2000 and 2012, the city ranks near the middle among 22 large cities in the share of rent-burdened households. A second analysis revealed New York has the lowest transportation costs among the 22 cities studied due to the large proportion of residents who commute via mass transit. When housing and transportation costs are combined, the city rises from 13th to 3rd place in affordability. The average New York household pays 32 percent of its income towards housing and transportation costs, well within the U.S. Department of Housing and Urban Development’s (HUD’s) affordability guideline of 45 percent. CBC also examined how some “typical” households (as defined by HUD) fared in terms of housing and transportation costs in the same group of cities. In this analysis, low income households in New York also ranked relatively well despite facing serious rent burdens. (1)

The current CBC report looks at NYC rent burdens in greater detail. Key findings include,

  • Forty-two percent of New York City’s renter households are “rent burdened;” that is, adjusting for actual rent paid by each household (“out-of-pocket contract rent” plus utility costs) and food stamp benefits, they pay more than 30 percent of income in rent. „
  • Half of rent burdened households are severely rent burdened, paying more than 50 percent of income in rent. Ninety-four percent of these severely rent-burdened households are low income. „
  • Low-income severely burdened households are disproportionately comprised of singles and seniors. They are also disproportionately households with children and located in the outer boroughs. (2)

CBC adjusts rent to take into account subsidies and familial support. Some will disagree with adjustments of this type, but I think it is a pretty reasonable approach. When combined with the adjustments it made for transportation costs, CBC has produced a textured portrait of the state of housing affordability in NYC.

The New Mortgage Disclosure Rules

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President Barack Obama meets with Rep. Barney Frank, (D-Mass), Sen. Dick Durbin, (D-Ill), and Sen. Chris Dodd, (D-Conn) by White House (Pete Souza)

TheStreet.com quoted me in New Mortgage Rule Requires Disclosure Documents to Help Consumers Compare Costs. It reads, in part,

A new set of shorter and simpler mortgage documents will be disclosed to consumers before they close on a loan, making the costs more transparent and helping home buyers compare offers from multiple lenders easier.

Mortgage lenders are required to start giving loan applicants the new disclosure documents starting on October 3, a new government requirement imposed by the Dodd-Frank Act.

“The disclosures will be easier and shorter so that consumers understand the mortgage they are getting because it will be simpler to compare offers,” said Holden Lewis, a mortgage analyst for Bankrate.com, the Palm Beach Gardens, Fla.-based financial content company.

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Drawbacks of New Documents

Of course, it’s not all positive. You can now expect your closing to take longer than before while lenders and title companies adjust to the new procedures. Consumers should definitely lock in their interest rates “a little longer to be safe in case there are delays,” he said. The process might stretch to three days, so lock in your mortgage rates for 45 days instead of the traditional 30 days and “err on side of caution,” Lewis said.

 Major changes to the terms in a mortgage can push back the closing and this can present a serious problem if the current interest rate lock is “on the verge of expiring and interest rates are rising,” said David Reiss, a law professor at Brooklyn Law School. In a worst case scenario, a lender could withdraw an offer because the consumer cannot afford higher monthly payments due to an increase in interest rates.

Homebuyers can mitigate this issue by negotiating the terms of their interest rates cautiously and discussing them with their lender or real estate broker who can help determine “whether there is enough of a cushion to take into account all of the things that can delay a closing,” he said. “Borrowers should know that a rate lock without a sufficient cushion of time offers a false sense of security.”

Closing on a house might take longer, so consumers should make sure their timing meshes with the apartment or house they are renting or if they are selling their current home. This is more critical right now because of the transition to the new documents.

“Through the end of the year, homebuyers may want to build in a cushion as to when they have to close on the purchase,” Reiss said. “This could offer some protection if the mortgage application process takes longer than expected because of TRID-related issues.”

If tax reasons are prompting homeowners to close on a sale by a certain date, then it is even more vital to focus on documents a buyer, lender or tittle company might require during the process.

“As with many things, staying on top of everyone at each stage such as the contract negotiation, mortgage application and closing is the best bet for avoiding surprises and bad results,” he said.

Thursday’s Advocacy & Think Tank Round-Up

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Rapid Growth for Property Managers

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hot air balloons

Buildium.com quoted me in Can Rapid Growth Endanger Your Business? It reads, in part,

For property managers, the prospect of rapid growth can be thrilling. You lease the units in your first building, fill vacancies quickly, add services that let you charge higher rent, the building owner compliments your work, and before you know it, you’re thinking: “Why not more?” After all, why waste a great opportunity to make more money by simply repeating what you’ve done so well at your first property? All the stars seem aligned…

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7 Steps to Find Out If You’re Ready to Expand Your Property Management Portfolio

Here are seven steps to take before fast-tracking you company’s expansion:

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#6: Know the local rules & the laws

If the buildings you manage are different entities — one rent-controlled and the other a cooperative in an historic neighborhood, for example — you must understand their different requirements. The same can hold true for buildings in different communities where regulations covering trash pick-up and snow removal may vary.

And differences can be even greater for buildings in different states. In New York City, multifamily buildings with more than four units [may be] rent-regulated and involve a complex set of regulations between landlord and tenant, says attorney David Reiss, a professor of law and the Research Director at Brooklyn Law School’s Center for Urban Business Entrepreneurship. “If you don’t know what they are, it can be a recipe for disaster,” he says.

Also important to know, he says, is that some buildings are located in historic districts, which the Landmarks Preservation Commission can authorize, and that affects how owners and managers can renovate, rehab, and maintain exteriors, Reiss says. “You might have to place an air conditioning unit a certain way.”

#7: Consult with other property managers

Besides doing your homework, talk to owners and managers of similar properties who’ve expanded beyond a single listing. Reiss says many communities have property management organizations that share information, or your city or town may have an association of like-minded businesses. If not, maybe, you can become a local hero by starting one.