53.6% of the homes in Reno are not owner-occupied. Which means that over half of single-family residential properties in our area are most likely rentals. That remarkable statistic comes from the most recent Washoe County census data (2012-2016). The data does not include apartment complexes or privately-owned multiunit dwellings of more than four units.
Although some of these homes were rentals, it seems likely that many became rentals during the recession. As the bottom fell out of the housing market, investors with cash swooped in and bought everything they could get their hands on; from short sales to foreclosures. In addition, not all homeowners qualified for a short sale. Some didn’t want to attempt one, and others didn’t want to take the financial hit of selling at a big loss. Most owners chose to turn their former homes into rentals out of necessity.
With the housing market heating up again, prices at the lower end have largely recovered. Many rental owners once again have equity in their properties and if they purchased at the lows, are now showing a nice profit. The number of rental properties on the market have increased accordingly.
One thing we’ve noticed is a significant increase in the number of properties listed for sale with renters in place. While this isn’t a problem necessarily, it does introduce some complexity to the showing process. State law requires that renters be given a 24-hour notice for all showings. This eliminates the possibility of a spur-of-the-moment showing appointment. Many renters are less than pleased at the prospect of having to move and can make the process difficult to prospective buyers by rejecting showing appointments, keeping the house in less than “show-ready” condition, or hanging around while the property is being shown, thus making buyers uncomfortable and hastening their departure.
What to do? Here are a few suggestions if you are on the hunt for a home or putting your rental on the market. As always, don’t hesitate to call; we’d love to help you reach your goals
· Give some consideration to waiting until your renters move out to list your property for sale. We understand that the expenses of holding an empty property add up, but homes priced below $400,000 are selling fairly quickly. You want to make it as easy as possible for buyers to visit. Every buyer turned away is one less opportunity for multiple offers, and buyers whose showing requests have been rejected often won’t make a second attempt to view the property.
· If waiting is not an option, consider incentivizing your tenants to ensure their cooperation. A partial reduction in rent in exchange for accommodation with showings and keeping the property clean is worth the investment.
· Be sure that your tenants are clear on the process and the need to quickly responding to showing requests.
· If the tenants would like to transfer their lease to the new owner, be sure to have your agent include that information in the listing along with the current rent to pique the interest of potential investors. A good tenant in the hand is worth two in the bush.
· Freshening up a worn property in inexpensive ways is well known to property flippers. New paint and carpet, a thorough interior cleaning, power washing the exterior, and tidying up the landscaping are inexpensive ways to turn a tired and bedraggled rental house into a sparkling “like-new” home for a lucky buyer.
· Train yourself to see beyond the clutter to the house beneath and try to envision the home with your own furniture and décor. Wild paint colors, stained carpet are easily fixable; you may even be able to negotiate an allowance from the seller to cover some expenses (check with your lender first!). Bad floor plans, low ceilings (if that bothers you as much as it does my husband), no yard, or insufficient storage are not readily correctable.
· It is not uncommon to find rental properties being offered “as-is”. Be especially careful and investigate the Big Four: Roof, Foundation, Plumbing, and Electrical. These four can represent significant problems which can turn into a significant expense after close of escrow.
· Work the owner’s disinterest in having the property show well into an advantage for you. Not everyone has the ability to see the “rose” and not fixate on its thorns. Less competition in the form of multiple offers means a possible opportunity for you to buy at a better price. Being willing to take on some repairs yourself can also lead to instant equity for you.
Courtesy of Linda Humphrey