For years it was hard to keep tenants because the mortgage companies were giving loans to anyone with a pulse! All you had to do was show your income and lenders would lower interest rates to make the home affordable. Hence, the creation of the adjusting rate loans! Eventually, all those people found out what adjustable rate mortgage (ARM) means and many lost or are losing those homes. What that means is, once again, they’re tenants.
With job losses and inflation, rental property vacancies are coming from non-payment of rents and evictions, not from lack of tenants. There are so many evictions now that, in some cities, the sheriffs’ departments are not even serving evictions – they’re just too backed up.
Landlords nationwide are struggling with vacancies. Creativity is the new game – how to get people into vacant homes and apartments. Incentives are being offered. Some are, like the auto industry, offering rent reductions for up to 90 days if the tenant loses a job. Pets are being accepted where before “No Pets Allowed” was the norm.
And landlords are scrutinizing the prospects credit report less and less. Unfortunately, we are a country with bad credit histories – bad and getting worse. In most places, if a prospective tenant can verify income, they can find a place to live. It used to be that if you had a foreclosure on your credit report or low credit score, no one would rent to you. That is no longer the case. In 2009, some landlords are even counting unemployment benefits as income.
Landlording may sound like a good idea right now with so many discounted properties on the market, but there is much to consider.
Landlording is like any other aspect of real estate investing, it ebbs and flows, changes with the economy and even the seasons! The important thing is to pay attention and be ready for the changes.
What do you do to stay prepared? How do you screen for tenants? What is your landlording experience.