As home ownership in the U.S. sinks to a 19 year low of 64.4% more attention is being focused on the rental housing stock. Vacancy has dipped to 4.7% tipping the scales in the landlords favor. An evenly balanced market is considered to have a vacancy rate of 5%. The lower supply increased rental rates. Nationally the $420 billion dollars paid in rent in 2013 increased to $441 Billion in 2014 a 4.9% increase. Rent growth for 2015 is expected to increase again with strong job growth, inflation, and the entrance of the millennial generation into the work force seeking independent housing.
Denver is ranked 5th on the National Apartment Index (NAI) which measures metropolitan areas with the lowest vacancy, strong job growth, strong rent and demographic trends. New York and San Francisco hold the top two places on the NAI. Nearly every industry in Denver is expecting strong job growth, which will continue to strengthen our economy and maintain developers’ optimism.
Average rents in the Denver area increased by 12%. The total rents increased from $4.5 billion paid in 2013 to $4.9 Billion in 2014. This 12% increase means tenants shelled out $474 million more dollars in 2014. How do these numbers impact the single tenant? The average tenant is paying $86 more per month equating to $1,032 more per year in rent. Experts are forecasting rents to increase again in 2015 by as much as 8% which is expected to bring the average rent up from $1,168 in 2014 to approximately $1,260 for 2015.
Vacancy in Denver dropped from 5.2% in 2013 below that balanced market number of 5% to 4.7% in 2014. The delivery of several new apartment complexes in the Denver area for 2015 is expected to raise vacancy rates slightly as the market absorbs the new inventory. The quality of the new inventory will continue to raise the average rent despite the anticipated increase in vacancy.
Developers, attracted by the employment forecast in Denver, have delivered 7,588 units in 2014 and expect to deliver even more units in 2015. The large institutional purchasers have many investment opportunities for downtown Class A properties.
What does this mean for the average investor? If you have failed to raise your rents in the last two years you are at least 20% behind market rents. This is where hiring an expert in the industry like 8z Rentals can keep your investment performing at its peak. Many times we are able to increase rents enough to cover the costs of management. That frees you up for more valuable things in life like time with the family or finding more deals!
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Fall and winter may be a slower rental market, but we’re keeping busy at 8z Rentals. We recently gathered our entire team, to discuss and update our entire lease agreement for our 2015 lease documents. Here are the improvements that we added, that we think owners, such as yourself will appreciate.
- Updated the formatting of the entire lease to make it much easier to access critical information on the top page.
- Separated utilities into their own paragraph with easy to understand check boxes so it is clear about who is responsible, including who is responsible for connecting the utilities and when they need to be connected by.
- Defined “possession” to protect owners if tenants delay taking possession and are not aware of damages that can be incurred from failure to occupy the property.
- Addressed the issues of growing and smoking of marijuana in more detail.
- Integrated the pet addendum into the lease to make it more clear for tenants and owners.
In addition, we believe that a big challenge in the residential leasing market in 2015 is “service animals.” Everyone at our office has attended Advanced Fair Housing classes to be prepared for this new complicated facet to fair housing. It is extremely important to know the correct way to deny or approve applications concerning service animals, since it is protected by a federal law, which can be extremely expensive to defend against even if you are right, as the prevailing party is not allowed to collect attorneys fees.
The residential leasing market is quickly evolving. Standard cookie cutter leases do not address all the concerns that owners need to consider in Colorado’s current leasing and rental landscape. As full time leasing agents we get to see the changing rental market and adjust accordingly to protect our owner’s properties and investments.
Fall is upon us and we frequently get calls this time of year from owners in a panic asking us if they are “too late” to rent their property.
My answer to owners is of course “No!” Rentals happen all year long, but yes you will need to be more flexible and consider dropping your rental rate from the peak season rates. You will also need to consider being more negotiable with terms other than price, such as pets, utilities, occupancy limits, and lease duration. The summer months are naturally on the top of the bell curve for prices since that is when the maximum activity occurs. Econ 101 kicks in when the demand drops. Owners need to adjust their prices down to account for the reduced demand. In general, owners can expect about 10% -15% less in the slower months versus the peak months.
On the surface the answer to the owner’s question may seem pretty obvious, but as I dig deeper into the psychology of their question it occurs why they are in a panic. Most owners are caught up in the sales concept, which has big consequences for minor fluctuations in price. Unlike selling your property which is usually a life changing event, and worth some forward planning to maximize the sale price. Rentals have far smaller consequences. Selling a property with a 10% price fluctuation translates into tens if not hundreds of thousands of dollars. Most sellers who wait until the fall really have their work cut out to obtain top dollar. Luckily with rentals the total stakes are far lower, a 10% fluctuation in rent is a much smaller loss. The good news is that the reduced number of residents is also offset by the reduced amount of inventory. This helps level the playing field once again for owners. Properties in nice condition that outshine their competition are many times able to rent for close to peak rates. The bad news is that if your property needs work and doesn’t show well, you will most likely have to get it fixed up to compete with the limited prospects or reduce your rents far enough to lure someone to your property.
All of this is good news to savvy residents who are lucky enough to have the flexibility to lease during the slower season. Avoiding the peak rental season is a fantastic way to secure great housing at reduced prices. Residents can avoid the frantic rush of having to sign a lease quickly if they like the property, and they are more likely to find a negotiable landlord. Retirees and single professionals fit perfectly into this category. Most retirees and single professionals are not concerned with school districts and have more flexibility with unique living situations. In addition, most retirees are not concerned with proximity to commuting arteries. As a matter of fact they probably want to avoid these areas since they are more expensive and more crowded. Renting is a growing trend among retirees who are seeking to live near friends and family for a portion of the year, to avoiding the headaches of maintenance and yard work, and following the nice weather. If you are going to be renting for a few years and have the flexibility it makes perfect sense to avoid the rush and wait for the slower season to find a gem.
Summer is finally coming to an end in Colorado. It has been a wonderful and busy season for 8z Rentals, as we leased a plethora of properties, renewed multiple leases, and moved out all of our tenants with leases ending during this period. The busiest rental period of the year is coming to a close, but as always, we continue to lease and manage rental properties.
Are you a Colorado property owner who still needs to lease your property for 2014? While the rush for rental housing may slow as summer ends, working with a property management company like 8z Rentals can significantly increase the demand for your rental property. 8z Rentals lists, markets, and shows your property for you. We respectfully follow property owners’ orders and use our professional experience to successfully lease properties to the best of our ability. Let us give your property the extra boost it needs; call 8z Rentals today to learn more!
8z Rentals’ Boulder leasing agent Jason DeLorenzo will soon be making the move to Denver to continue his successful career as a leasing agent. After over two years of working as a leasing agent in Boulder, Jason is ready to move on to leasing properties in an even more challenging rental market. Jason will be working alongside Anita Guide to provide leasing and management services to Denver and the extended surrounding area. Interested in learning more about Jason DeLorenzo? Check out our Boulder Rental Pulse blog to view Jason’s past leasing accomplishments as well as his background in leasing and management services.
8z Rentals usually leaves a week between tenant move-out dates and new tenant move-in dates for our managed properties. This is done to ensure that our managed properties get the necessary amount of cleaning and maintenance before our new tenants move into them. While some maintenance issues may be unknown to our company prior to tenant move-in dates, we always do our best to clean and fix up our managed properties to the best of our knowledge. We understand that it can be frustrating to move in to a dirty property, or even a property that needs multiple fixes. That’s why we give our best effort to have your property fully prepared before your move-in date.
Many of our new tenants have plenty of questions regarding their newly leased rental properties. 8z Rentals would like to remind our tenants that the welcome packets left in their new properties contain an abundance of information about each of their properties. We strongly recommend that all of our tenants read over everything included in their welcome packets to get completely informed. 8z Rentals uses welcome packets to make sure that our tenants have all the necessary information for their personal properties; feel free to give us a call if our packets leave any of your property questions unanswered!
Greetings new and returning 8z tenants! As you are getting situated in your new rental property, you may notice areas of your property that need to be fixed or repaired. If you are a new 8z Rentals tenant, you’re probably wondering how to submit a maintenance request to us.
In just a few steps you can easily submit your request to us online through your tenant portal. Simply create or login to your portal account on 8zRentals.com, and you will see a section labeled “maintenance requests”. All you need to do is click on this section and give us a brief description of the issue that you are requesting a repair for. Click submit to officially send us your request. It’s as simple as that!
We receive notification of your maintenance request as soon as it is submitted to us online. Following this notification, we set up one of our trusted vendors to contact you or your roommates regarding scheduling the repair. After directly scheduling with you or your roommates, our vendor will come by to repair your property.
How Long Does the Process Take?
You can usually expect the whole maintenance process to take 1-4 days to be completed. This is mostly dependent on how busy our vendors are at the time of your request. For instance, during tenant move-in and move-out weeks, our vendors tend to be very busy, which means it will take a little longer for them to get to every maintenance request. In contrast, during less busy seasons such as the fall, our vendors tend to be able to answer maintenance requests much more rapidly. All in all, our vendors and our own business give our full effort to make sure your repairs get taken care of as soon as they possibly can be.
Does it ever feel like your property management company is blowing off your calls? Here at 8z Rentals we understand the importance of our tenants and owners, so we always do our best to answer our clients’ calls and emails. Even if we miss a call during the day, we strive to get back to our tenants and owners by the end of the same business day. We are here to keep our tenants and owners satisfied, and we know that you want to stay in touch with us. Give us a call today to let us serve you in rental property management.
8z Rentals does rental maintenance right. While other property management companies attempt to make profits by marking up maintenance costs, we stay 100% transparent with maintenance costs and do not mark up, so there is no profit motive for us to schedule unnecessary maintenance. In addition to our transparency in maintenance costs, we strive to find insured, high quality maintenance companies with reasonable pricing for all of our rental properties in Colorado. With 8z Rentals, you don’t have to worry about dealing with low quality maintenance workers or paying too much for an easy fix. As a business, we have done our research, received bids and references, and partnered with some of the most trustworthy maintenance companies in all of Colorado. If you are an owner or tenant and feel that you have been ripped off by your property management’s maintenance endeavors, try 8z Rentals next time for a more quality and trustworthy rental maintenance approach.