Tag Archives: Zillow

Are Month-to-Month Rentals Good Deals?

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photo by umjanedoan

Zillow.com quoted me in Are Month-to-Month Rentals Good for Landlords? It opens,

Your tenant’s lease is up, and they ask about switching to a month-to-month arrangement. Assuming they’re a good tenant — they pay rent on time, keep the place clean, don’t host loud parties — you might be tempted to accommodate the request. But before you do, be sure to understand the relevant landlord-tenant laws.

The Appeal Of Month-To-Month Renting

From the tenant’’ perspective, the benefit of month-to-month renting — also known as tenancy at will — is its flexibility compared to a standard long-term lease. Whether they’re pursuing out-of-town job opportunities, considering relocation to a different neighborhood or just thinking about moving up to a more spacious abode, the elasticity of month-to-month renting is appealing to a potentially footloose tenant.

From your point of view as a landlord, the appeal centers on cash flow and convenience — of not having the property stand vacant while you hassle with finding a new renter. In addition, a month-to-month rental can give you some added flexibility, too.

The Terms Of The Original Lease Generally Remain In Effect

There is no overarching federal law regarding tenancy at will; the rules are typically state-specific. Or, as Matthew Kreitzer an attorney with Booth and McCarthy in Winchester, Virginia, notes, “Tenancy-at-will is largely a creature of local law.” If and when there is no formal written agreement in place, local case law usually comes into play to fill the gap, he explains.

Michael Vraa, managing attorney at HOME Line, a tenant hotline based in Minnesota, says that in his state, as well as many others, the terms of the initial rental agreement carry forward into the month-to-month rental period.

Assuming rent is paid on a monthly basis, “unless the lease has some provision that describes what would happen if a new lease is not agreed to, the law would default to the notion that the agreement becomes month to month,” says Vraa. “If the lease ends July 31 and the tenant pays the next month’s rent (August), and the landlord accepts it, the agreement probably shifts to a month-to-month agreement.”

Tom Simeone, attorney at Simeone and Miller in Washington, D.C., adds that even a verbal contract or agreement to carry forth on a month-to-month basis is legally enforceable in most states. “If the parties previously had a written lease that expired, those terms will remain in effect in the tenancy at will. If not, the court will enforce what it finds to be the parties’ intentions and fill in any contract terms with what it deems to be reasonable,” Simeone says.

As Vraa noted, landlords sometimes include provisions in the original lease describing what can or will happen if a new lease is not agreed to at the end of the set term. Some management companies, for example, include a statement in the original lease saying the landlord or management company can or will raise the rent if a new lease is not signed. This may be by a certain dollar amount, such as “increased by $50 per month,” or by a specified percentage rate, as in “up to 5 percent per month.”

Rules About Tenant Privacy And Intent To Vacate Still Apply

Vraa and Simeone say that, generally, the rules regarding a tenant’s right to privacy are the same under tenancy at will as under a lease. Thus the amount of notice you have to give a tenant before entering their premises remains the same — typically 24 hours, as dictated by law in many states.

In regard to the notice required for intent to vacate, Simeone says this, too, is determined by the original lease. “If not,” he adds, “a court will likely require the lease to be month to month, especially if rent is paid on a monthly basis, which is typical. If so, thirty days’ notice is required to terminate — by either [the] landlord or tenant.”

However, Vraa says, in a month-to-month rental term, neither the landlord nor tenant are required to provide a specific reason for discontinuing the contract. That means you can give the tenant a notice to vacate the property, regardless of whether you plan to sell the property, rent to someone else, or simply do not wish to continue leasing to that specific tenant. But David Reiss, professor at Brooklyn Law School, notes, “The big risk, for both parties, is that the other party wants to terminate [the tenancy] at a time that is inconvenient for the other party. In that case, the parties can agree to a longer term (a year-to-year lease or one for a specific term of years).”

Reiss also stresses that although most state laws regarding tenancy at will derive from common law, “each jurisdiction may have variations from these common law principles that result from court decisions or statute. For instance, the meaning of one month’s notice to terminate a month-to-month lease can have small, but legally significant variations among jurisdictions.”

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Movin’ on up with TJ’s and Whole Foods?

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ChadPerez49

TheStreet.com quoted me in Houses Near Trader Joe’s or Whole Foods Reap Better Property Value Returns. It opens,

The internal debate for people who are shopping for a home is never an easy one, as the location and potential for the property value to rise might outrank the appearance of the brick and mortar edifice. But new research from Zillow has reiterated beliefs that resale value should remain the higher priority.

Even first-time home buyers are aware of the importance and value of determining the resale value of a condo or house.

After examining 17 years of housing data from 1997 to 2014, Zillow, the Seattle-based real estate website, determined that homeowners realized greater gains when they were in close proximity to Trader Joe’s and Whole Foods, the national grocery store chains. The analysis included examining the values of condos, co-ops and houses within a mile of 451 Trader Joe and 375 Whole Foods locations, totaling nearly 3 million homes. The median value of these homes was compared to the median values of all homes during the same time period.

“These grocery stores are doing a great job of identifying places ready for quick home value appreciation,” said Svenja Gudell, chief economist of Zillow. “A Whole Foods or Trader Joe’s opening is a signal for home shoppers or homeowners that this is likely to be an up-and-coming location.”

One emerging trend is the desire of homebuyers to live in neighborhoods where walking to local stores and restaurants remain a feasible option.

“As more people are priced out of city centers and head to the suburbs, homebuyers still want amenity-rich neighborhoods and a more urban feel,” she said. “These stores are definitely among those amenities that are attractive to buyers.”

Other Amenities Sought

These two grocery stores resonate highly with consumers, and their preference has increased to the point where they have asked specifically if either one is within walking distance at showings of homes, said Samantha DeBianchi, CEO of DeBianchi Real Estate, a Fort Lauderdale, Fla. real estate firm.

“The old adage ‘location, location, location’ is really true,” she said.

The research conducted by Zillow revealed that through 2014, the homes located a mile of either Whole Foods or Trader Joe’s were valued at more than twice as much as the median home throughout the U.S.

Since these two grocery stores are always constructed in neighborhoods where the gross income is higher than the average salary, whether this phenomenon is simply a self-fulling prophecy is anybody’s guess.

Zillow contends that the stores provide the inertia to push up home prices, even in neighborhoods where the prices were falling behind those in the city itself. They also examined the effect of the construction of the stores on the property value three years before and after the opening of 40 Trader Joe’s locations and 40 Whole Foods stores. After a store opens, the prices of homes start to exceed those in the city overall.

“I am still skeptical of the claim when it comes to those two stores, but I would say that when you buy near a major amenity when it is under construction, you often see a bump when it is complete,” said David Reiss, a law professor at Brooklyn Law School.

Down Payment Help

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Shimer College

The Dallas Morning News quoted me in Asking for Help with Down Payment Can Often Be Difficult. It reads, in part,

How do you ask a question when no one wants to talk about the subject?

Often, it’s quite clumsily, without much effort at sparking an honest exchange.

*     *     *

Before asking, hopeful buyers should investigate options, said David Reiss, a real estate professor at The Brooklyn Law School.

“You would want to press your lenders to identify all first-time homebuyer programs you might be eligible for,” Reiss suggested.

The Federal Housing Administration offers loans with low down payments, and many state housing finance agencies offer low or no-down loans to eligible buyers, he noted.

In any case, said Reiss, “It would be helpful to know your options when speaking with family members about a gift.

“They might be willing to give a smaller gift for an FHA mortgage, or they might be willing to make a larger gift if they see that it would result in lower monthly payments for your,” Reiss said.

“And the mere fact you did this type of research is evidence that you are a financially responsible adult,” he concluded.

Thursday’s Advocacy & Think Tank Round-up

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  • A joint study by Enterprise Community Partners and the Harvard Joint Center for Housing Studies, Projecting Trends in Severely Cost Burdened Renters: 2015 – 2025 predicted that, in the coming decade, little would change with respect to 1 in 4 renters being severely rent burdened. The researchers examined a number of factors, including: a predicted 10% population increase, declining homeownership rates, and a predicted rise in demand for rental housing.  They also looked at a number of possible scenarios to determine how salary gain and population growth would affect the percentage of severely rent burdened households.  Even the most optimistic of scenarios would only result in a 1.4% decrease.
  • According to analysis by the National Association of Realtors (NAR) Existing Home sales fell by 4.8% from July to August despite slowing price growth and a slightly lower interest rate.  On the other hand NAR points out that Existing Home sales are 11% higher than August of last year.
  • The Turner Center for Housing innovation at U.C. Berkley has released analysis entitled Housing Highlights from the 2014 American Community Survey (ACS) which culls the housing related data from the ACS which is released by the Census Bureau and provides statistical trend charts relating to homeownership, cost and vacancy rates.  The Turner Center’s analysis finds, among other things  homeownership continuing to slide it is now at 63.1% following its peak in 2006 when it was at 67.3%. But it also finds that the overall housing cost burden is at its lowest point following the bubble.
  • According to a recent study by Zillow student debt only reduces chances of homeownership for non-graduates.

Thursday’s Advocacy & Think Tank Round-Up

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  • Community Builders, an initiative of the Sonoran Institute has released Place Value: How Communities Attract, Grow and Keep Jobs and Talent in the Rocky Mountain West recommends walkability and quality of life conscious development of communities .
  • According to the National Association of Realtor’s analysis of the New Housing Starts data homebuilders are increasingly developing high density housing with “walkability” suburban and single family housing has been deemphasized.
  • The Urban Institute released its Housing Finance at a Glance monthly chartbook, which Prof. Reiss finds to be a very helpful holistic view of the mortgage industry.
  • The U.S. Department of Housing and Urban Development (HUD)’s Office of Policy Development and Research has developed the Creating Connected Communities: A Guidebook for Improving Transportation Connections for Low and Moderate Income Households in Small and Midsize Cities – the guidebook contains recommendations geared toward cities with 250,000 or fewer residents which among other things suggest a refocus of financial resources on critical needs and improvement of the alignment between housing and transportation investments.
  • Zillow has announced that home prices are rising faster than incomes for most Millenials (no surprise there).  This report also finds that first time home buyers rent for longer before buying typically more expensive homes which are paid for with a larger share of income.

Thursday’s Advocacy & Think Tank Round-Up

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  • National Association of Realtors reports April Pending home sales, up 1.3% – the strongest in 9 years.
  • A joint study by the NYU Furman Center and Capital One  Renting in America’s Largest Cities: National Affordable Rental Housing Landscape reveals a trend in all 11 of the largest metro areas in the U.S., which the study focused on, of rent increases outpacing inflation, tending to not keep up with the increase in number of renters and an increase in severely rent burdened low income renters.
  • Zillow’s recent research concludes that the rent affordability crisis leads to lower homeownership rates because renters cannot afford to save for a downpayment in high rent metros like Los Angeles.