The Rent Index and What it Suggests for Property Managers

The Rent Index and What it Suggests for Property Managers

Posted on 10. Dec, 2012 by in Real Estate

On almost a daily basis I hear anecdotal reports of syndicated investors as well as rogue opportunists seeking to find bargain houses that they can buy, fix up and rent out. At the same time the number of Americans who can’t qualify for a mortgage or don’t have enough money for a down payment is on the rise.

This trend is why vacancy rates in most regions of the country are in decline and why the rent index is looking healthier than it has in years. Zillow.com happens to be a good source of information on the rent index, and reported about it as recently as Oct.22, 2012.

“The Zillow Rent Index (ZRI) covers 310 metropolitan areas and 67% of those metros reported annual increases in rents in September. As a point of comparison, 50% of the metro areas covered by the ZHVI experienced annual home value increases. Nationally, rents increased 6% in September from year-ago levels and rent growth continues to be robust, fueled by the entry of foreclosed households into the rental market and increasing household formation itself (newly formed households often choosing to rent before buying). Markets that saw extremely strong year-over-year rent increases include Baltimore (10.7%), Chicago (10.7%), Philadelphia (8.2%), and San Francisco (8.0%).”

Figure 3: U.S. Zillow Home Value Index and U.S. Zillow Rent Index

This information lights the way for Property Managers to seek and find new owner-landlord clients. Begin by asking your happiest current clients if they’d be willing to give you a one or two paragraph endorsement. Don’t be shy about asking for referrals and recommendations as well. Prepare a brief report that colorfully demonstrates that both the Home Value Index and the Rent Index are moving higher. That the ideal formula for investors who want to buy houses close to the bottom of the market and rent them out for net positive cash flow.

This is a good time of the year to do an “open house” or a “client appreciation social” at either your office or at a community facility that is centrally located. You might create a brief power-point presentation for attendees that include your best ideas for making 2013 an especially profitable year for the residential rental housing market.

Think of one or two new concepts that you’re offering to help your clients succeed. You don’t have to be a shameless self-promoter, but it won’t hurt to tactfully remind your clients why they are well-served to keep their property management business with you and your company.

In 2013 property managers should see a marked increase in the number of rental property investors and a growing increase in inventory that needs managing. Discover the most effective and efficient ways to attract potential residents and a steady stream of rental applicants.

Then tell the world about your property management style and expertise. Then remind your existing clients why you’re on top of the latest trends that will add to their bottom line returns. Let everyone know the advantages of doing business with you!

Remember, the 3 most important rules concerning real estate are “location, location, location.” When it comes to property management, perhaps the 3 most important rules are “relationships, relationships and relationships.” Anything you can do to improve on that rule, the better off you and your clients will be.

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