Rent Sense: Another Economic Perspective
By Neil Fjellestad and Chris De Marco
FBS Property Management
We have built a healthy San Diego business out of advising independent real estate investors, acquiring and managing rental properties for clients while providing superior housing alternatives for qualified renters. More than four decades with properties in 69 zip codes throughout the region provides us a realistic view of the local economy in real time.
Here are some highlights –
- Most renters pay their rent on time every month. Especially during uncertain times this becomes a financial priority.
- Rent is clearly their largest household expense and growing as a percentage of household income. In this region a significant number pay more than half of their income as rent.
- Renters want the privacy, security and convenience of paying their rent online. Those using this alternative pay sooner and avoid additional late charges.
- Rental owners faced with vacancies that improve their properties even if forced to borrow funds to do so and/or must perform capital improvements gradually are rewarded with more qualified applicants to lease.
- Existing residents will more likely renew and/or pay a higher rent to live longer at a property that is well managed and maintained.
- Most rental owners are concerned about leaving a property vacant and will adjust rent realizing that number of days rented is more important than holding out for the highest rent rate.
- Real estate investors that are buying are satisfied. Those that are selling or re-financing in the current market environment remain frustrated with the lack of expected results and/or inadequate estimate of time to accomplish.
- Many of the jobs lost over the last 3-5 years are gone. Though other jobs are being created with different requirements and rewards the transition is longer than hoped.
- Existing small businesses will create jobs when and if they can control risks (the cost of doing business) while believing that the benefits of growth outweigh the alternatives. Much of this risk will be driven by new businesses.