Navigating the Rental Market as a Real Estate Investor

By: Jeff Ball, CEO, Visio

Rents are rising and vacancies are dropping. What could be better for real estate investors? Not too much. It is a great time to be a landlord and the music likely will continue for awhile. Yet, there are  less obvious pitfalls for landlords in this environment. In many markets, the cost of renting is outstripping the cost to own and growth in real wages. Owning is becoming more attractive and builders are rushing to meet that need. Just this past Tuesday, the U.S. Commerce Department announced an eight-year high in U.S. Housing starts and housing starts have been above a one-million pace for four straight months.

This is a good sign for our economy, but a trend landlords should watch closely. As the disparity between the cost of renting and owning grows, many of the best tenants will buy. Because the new households entering the bottom of the funnel are likely to be lower quality (simply because they are younger and less established), the overall quality of the available tenant pool declines.

Landlords can combat this trend by upping their game when it comes to attracting, qualifying and retaining high quality tenants. High quality tenants stay longer, care for the property and pay on time. While money is flowing into buying rental properties, Silicon Valley has taken notice and funded a number of new, compelling web-based services designed to help landlords attract, evaluate and retain high quality tenants. Some of these companies limit their services to taking online applications and providing an integrated credit, background and eviction check (www.renterresume.co,www.rentprep.com). 

Others layer in more complicated services such as offering the landlord a customized landing page linked to various marketing channels, online rental payment, maintenance requests and document execution and retention (www.tenantcloud.com and  www.rentcafe.com). Technological evolution, albeit sometimes slow, happens in all large markets.  Savvy landlords will explore and take advantage of these new web-based services to maintain or improve their tenant quality and protect their long-term return on investment.