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Minneapolis Duplex Owners See Changing Signs

May 3rd, 2010 categories: Tenants

If you could swear you’re seeing fewer “For Rent” signs in area lawns and windows, you’re right.

A report by GVA Marquette Advisors released on Friday announced that Twin Cities vacancy rates dropped to 6.1 percent for the first three months of 2010.

This figure, while still historically high, represents a significant drop from last fall’s 7.3 percent vacancy rate.

While GVA Marquette Advisors tracks this data for communities with at least 10 units, trends in this sector also influence smaller multi-family properties.

Marquette’s report estimates that job growth and an improving economy lead to 1800 vacancies being filled in the metro area, with affordable urban and close-in units going first.

Of course, the increased numbers of vacancies the last few years has lead to more rent concessions and incentives. Collectively, this has lead to an average effective rental rate which is 2 percent lower than it was one year ago.

Continued vacancy rate reduction should, over the long term, force a shift in this trend as well.

Spoken by Kari Lundin | Discussion: No Comments »

Is It A Good Time To Rent A Minneapolis Duplex? Or Buy?

January 7th, 2010 categories: Multi-Family Property Investing

Today’s Wall Street Journal real estate blog post debated whether or not it’s a good time to sign a lease.

With higher vacancy rates due to unemployment, the article suggested rents will continue falling for the next few months. 

After all, landlords are offering incentives and slashed rents just to fill vacant units. Therefore, the article stated, it might be a good time to negotiate a better deal on a lease.

Of course, if you’re a prospective landlord, those words cause a sick feeling to start brewing in the pit of your stomach. Who would want to invest at a time when it will be so hard to fill vacant units?

As the article continued, however, there was a single line that nearly screamed out the fact that it is, in fact, a great time to buy.

It read, “Demographics favor landlords as the echo-boomers (the children of the baby boomers) will swell the ranks of apartment renters at a time when new supply is limited.”

Echo-boomers?

At a population of nearly 80 million, they are the largest generation since the 1960’s. In fact,  they represent nearly one-third of the entire U.S. population.

So?

Read the rest of this entry »

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Keep Tenants On Your Holiday Shopping List

December 21st, 2009 categories: Tenants

With just three shopping days left until Christmas, it’s a good time to remember that small gestures, like including your tenants in your gift giving, can go a long way toward keeping your rental units occupied.

Times are tough for everyone, and our natural instincts are to cut back. However, as we discussed last year, small gestures like a gift card to a grocery store, iTunes or Targetcan be a way to differentiate yourself from other landlords.

And while $10 of downloadable music may not ultimately prevent anyone from moving out, it nonetheless fosters good will for the duration of a tenant’s stay, which may help keep rent payments on time.

Spoken by Kari Lundin | Discussion: No Comments »

Kindness Counts In Minneapolis Duplex Vacancy Rates

November 12th, 2009 categories: Tenants

With national vacancy rates at their highest levels in 23 years, Minneapolis duplex owners are having to resort to innovative strategies to attract and keep tenants.

While a fresh coat of paint, new carpet and a move-in incentive like one month free can help attract new tenants, what about keeping the ones you already have?

According to a recent article in the Wall Street Journal, more landlords are finding themselves in a position of having to negotiate. The Journal reports that in a recent survey conducted by the National Association of Independent Landlords, more than two thirds of  independent landlords will reduce rent in order to keep a tenant, while almost one-third of them already have in the last 18 months.

At first glance, this study is frightening. If all tenants want to renegotiate the terms of their lease, won’t we be unable to pay our bills?

Consider this. A vacancy caused by an unwillingness to either establish a payment plan for a delinquent tenant or offer, say, a five percent discount to one who is struggling economically can cost you far more than the initial concession.

Turning a unit for a new tenant not only often costs you paint, cleaning, and  repairs caused by normal wear and tear on a unit, but the lost revenue during the vacancy as well. In other words, potentially thousands of dollars vs. say, a discount of 5 percent as an incentive for a tenant to say.

Of course, you can’t be a doormat either. Some people in life will mistake your kindness for weakness, and exploit it accordingly.

But offering understanding to the tenants who’ve proven themselves, can be a a great way for you both to survive.

Spoken by Kari Lundin | Discussion: 1 Comment »

Let Your Minneapolis Duplex Go To The Dogs

October 16th, 2009 categories: Tenants

You would think with all the foreclosures on the market and in the works, it would be tough to find a vacant duplex anywhere.

And yet, recent media reports cite the highest national vacancy rates in over 20 years. Where did all those people tenants go? Some foreclosure victims are renting. Others have moved in with friends or family to weather the storm. And many prospective tenants, like recent college graduates, simply haven’t left home.

So in the midst of this economic downturn, how can you make sure you don’t go months without rent?

Well, in addition to cosmetic improvements, one of the most effective ways is to allow pets. 

Finding a place to live if you’re a dog owner can be nearly impossible. And duplexes with yards are especially appealing to someone with pets.

In my experience, it’s as important to “interview” the dog as it is the prospective tenant. Well trained and behaved dogs, for example, tend to make better tenants than those who jump all over you, as it speaks to the owner’s commitment to the dog.

By en large, pet owners are appreciative of finding a place that welcomes them and go to great lengths to insure they don’t endanger their living situation.

However, there are exceptions to every rule, and to protect yourself from the additional damage pets can inflict on a property, you should ask for a pet deposit in addition to the regular security deposit you take when you have them sign the lease.

A word of caution, however. It’s important to check with your insurance company before you decide you’re willing to rent to pet owners. Many have clauses in their policies limiting their responsibility if specific breeds of dogs are on the premises.

Spoken by Kari Lundin | Discussion: 1 Comment »

Minneapolis Duplex Owners Should Head For The Basement

July 23rd, 2009 categories: Tenants

The Minnesota Multi-Housing Association should hire Belinda Jensen.

I don’t think she knows a thing about renting or owning duplexes. But I think a storm’s a comin’, and somebody needs to forecast it.

So I will.

There’s a tornado on the horizon for Minneapolis/St Paul duplex owners and landlords.

It’s a great big, dark, ominous-looking vacancy rate resulting from the $8000 first time home buyer tax credit.

I can’t even tell you how many people I’ve spoken with in open houses and general conversations who a) are planning on taking advantage of the tax credit and b) are on month-to-month leases.

As the tax credit expires November 30, 2009, how many move-out notices do you think landlords will receive on October 30?

I’m guessing about 17 inches worth.

While it’s always wise to keep your tenant’s leases current, it is especially important to make sure you have them under contract now.

If you don’t, I’m predicting a long, cold winter.

Spoken by Kari Lundin | Discussion: No Comments »

The Ups And Downs Of Minneapolis Duplex Vacancy Rates

July 9th, 2009 categories: Multi-Family Property Investing

If you worked your way through all the Michael Jackson media this week, you might have heard about the report released by Reis, Inc., announcing the national apartment vacancy rate hit a 22-year high in the second quarter.

Reis, a New York based real estate research firm, also found vacancy rates rose nationally to 7.5 percent; an increase of 1.4 percent from the year before. Of the 79 markets they track, 45 showed increased vacancies.

Of course, Reis charges a small fortune for their reports. None of the information leaked to the media  so far included the Twin Cities in either the list of ten worst or best markets. We’ll have to wait for Saturday’s version of their report in the Star Tribune to know where we stand.

How does this impact a Minneapolis duplex owner?

Vacancy rates and rental income are like a teeter totter. When one goes up, the other goes down.  So it comes as no surprise that Reis says the amount of rental revenue dropped as well.

Why the increase in vacancies at a time when so many people are losing their homes?

Read the rest of this entry »

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Ask Santa to Help Eliminate Vacancies in Your Minneapolis Duplex

November 26th, 2008 categories: Tenants

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How to Determine Rent and Vacancy Rates for Your Twin Cities Duplex

July 23rd, 2008 categories: Buying A Duplex

I get asked a lot of questions in my job; questions like, “How much rent could I get for a three bedroom unit? Are studio units more popular by the University of Minnesota, or do students prefer one bedrooms plus dens?”

I’m glad my clients ask these questions. It tells me they’re remembering what I told them: two of the most important factors to consider when calculating whether or not to purchase a Minneapolis or St Paul duplex are rents and vacancy rates.

Of course, the next question I get asked is how to locate that information. My answer is always the same: the Star Tribune and Craig’s List.

Every Saturday the Star Tribune includes their “Homes” section. It’s often filled with useful information, not only for single family home owners, but also investors and multi-family home owners. Throughout the month, they periodically publish a rental section inside of “Homes”. Right next to or below the “Renting and the Law” column, the Trib publishes a rent sampler. The rent sampler is a chart of the average rents and vacancy rates for types of apartments in various Twin Cities locations.

The newspaper gets this data from a publication called Apartment Trends, which is published by GVA Marquette Advisors. 

While this information is useful in quickly getting a bird’s eye view of a neighborhood, it is dated. Last weekend’s chart, for example, was gleaned from information through March. That’s where Craig’s List comes in. Read the rest of this entry »

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The Up Side Of A Down Market

May 19th, 2008 categories: Buying A Duplex, Multi-Family Property Investing, Tenants

 

At the start of the decade, vacancy rates for rental units in the Twin Cities hovered near an almost incomprehensible two percent. Demand for places to rent came probably about as close at it could statistically to 100 percent.

As a result, landlords didn’t have to offer very much in the way of perks, upgrades or property improvements. Rent went up every year. And owners could almost do as little as stick a sign in the front yard and have the new tenant move in the front door while the old loaded things out the back.

Times changed. Low interest rates and the boom in housing wreaked havoc on vacancy rates. Qualifying for home loans was comparatively easy. It made more sense for a tenant with a good credit score to buy a property rather than rent. After all, that way he or she could realize the tax benefits and appreciation that come with property ownership.

Needless to say, vacancy rates skyrocketed. While low compared to U.S. markets, the cities of Minneapolis and St Paul spiked to seven and eight percent, while the outer ring suburbs saw double digit numbers in several types of units.

To attract tenants, landlords started offering incentives. If a renter signed a one-year lease, he might get the first month free. Some landlords gave away televisions, free cable, and when all else failed, decreased the amount of rent until someone decided to move in. Rent increases became almost unheard of.

Here’s the good news about today’s down real estate market. Fewer people are buying houses. Some are even losing their houses to foreclosure. Those folks still need places to live. So they rent. Demand goes up, and inevitably, so does rent.

In the tight credit market, it’s also more difficult for people to get loans. Which means there are fewer buyers for rental properties, which means purchase prices are going down.

Translation? In the short term, I’m seeing small multi-family properties on the market with very good cash flows. In the longer term, those properties will appreciate rapidly when the market rebounds. (And c’mon — in all the negative press, name one single pundit who’s said it’s never coming back!)

Seems like the best of all worlds if you’re an investor.

 

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