MHN Blog

New York City's Rent Rise Pits Owners Against Renters

New York City's rental market is legendary: Because buying a home within city limits is so expensive, the city has long been a renter's market.

But now--thanks to new rent increases, which the board in charge of New York City's rent-stabilized apartments passed yesterday--renters may find their cost of living is about to rise.

New York's high housing demand has pushed apartment costs up to unbelievable levels in recent years--which renters are happy to pay.

With rents averaging $2,922, Forbes selected New York as the most expensive city in the country, noting that its 2.8 percent vacancy rate should keep the market moving.

There's no question about it: New York is expensive. Its average rent is $1,000 more than America's second most expensive city--San Francisco--where typical renters pay $1,904 a month.

Because the city's rental market is so costly, the state of New York has taken steps over the years to ensure some affordable living is available.

• Some of New York's buildings are rent controlled, mostly residential ones built before 1947. Renters must have been living there since before 1971 to take advantage of the cheaper rents, which are determined by the Maximum Base Rent system.

A maximum base is set for each unit and is altered every two years to make up for operating costs. Rents can only be raised 7.5 percent each year until the set limit is reached, according to the New York City Rent Guidelines Board.

• Other units in the city are rent-stabilized. Stabilized buildings typically include at least six units and were built before 1974.

The system may be helpful to some renters, but it certainly isn't simple--even the board's Web site describing the characteristics of a rent-stabilized apartment doesn't fully say what the classification entails.

Because some buildings can have a few--but not all--rent-stabilized apartments, the board says to be rent-stabilized, an apartment must have had a rent of less than $2,000 for someone who moved in during 1993 or later.

However, it cautions, "there are many exceptions to these rules." To make things more convoluted, new buildings can be rent-stabilized because of a 421-a or J-51 tax exemption--even if the rent is more than $2,000.

Sound confusing? Things just got a whole lot more complex.

On Thursday night, the Rent Guidelines Board approved a maximum increase of 4.5 percent for one-year leases and 8.5 percent for two-year leases.

In addition, the board also voted to allow a rent increase option for any buildings that have had the same renters for six years or more--they can be charged either the new increases or a $45 or $85 monthly increase, depending on whether they have a one- or two-year lease.

The increases were the board's biggest since 1989--and didn't sit well with renters at the meeting, who the New York Times said shouted and booed.

Understandably, no one wants higher rents. The economy is tough right now: Unemployment is down, food costs have grown and many people have less to spend or save.

And the New York housing programs were established to help keep poor and working-class Americans in the city by giving them more affordable rent--keep raising that monthly amount, and they'll be priced out, fast.

But some consideration needs to be given to the property owners, too, who--as energy and other costs rise--are also struggling.

The higher oil prices are making heating large buildings astronomically expensive. (Which is probably why, as Newsday reports, renters who pay for heat could see their rent increase less--4 percent for one-year leases and 8 percent for two-year ones).

Which is why some said that the increases weren't enough, according to the Times; others said it would at least help some of the small-property owners who have had renters paying as little as $500 a month for years.

But who should get the bigger break? Renters who are trying to find a way to live in the country's most expensive city? Or property owners who are getting squeezed by rising energy and maintenance costs?

Is there a compromise that might make both groups happier? What do you think? Tell us by posting below.

 

As Gas Costs Rise, Buyers Look At Downtown Living

Urban multifamily developers, start your engines: Demand is about to increase, and we have the astronomically high gas prices to thank.

Americans are looking at homebuying in a new light, according to an Associated Press article reprinted in the San Jose Mercury News today. They don't want to commute--partially because of the time it takes, but more often, because it's just getting too expensive to drive far.

Gas has risen by more than a dollar this year; this week, it hit a new high of $4.08 per gallon on Monday.

As a result, Americans are driving less. Compared to April 2007, we drove 1.4 billion fewer highway miles this April, and 400 million fewer miles than we drove a year ago in March, according to the Transportation Department.

Prospective buyers are well aware of how expensive gas is. A recent survey of 900 Coldwell Banker agents found that 96 percent cited rising gas prices as a big client concern.  

And that's giving urban living a big boost.

Eighty-one percent of the agents in the Coldwell Banker survey said clients mentioned minimizing their work commute as a reason for being interested in urban living.

That's giving a boost to homes near "urban centers and subway, train and bus stops," AP says, which "are often selling faster and at better prices than those in the distant suburbs."

That's not necessarily true for all downtown areas. Smaller cities and burbs that are too far to offer a decent commute are suffering. An article in today's Boston Globe touches on the struggle cities like Franklin, Mass.--which is located more than 40 miles from Boston--are having to revitalize their downtown areas.

Mixed-use developments may offer Franklin residents the same quality of life and convenience a mixed-use development would offer a resident in a larger city like Boston--but it's also going to offer them a hefty drive of an hour or more to commute if they're working there.

This week, the Commerce Department said that multifamily starts fell 8 percent in May. However, multifamily permits increased 3.9 percent. Could urban demand be responsible for the rise?

It's possible. In large U.S. cities, the urban housing market has traditonaly been dominated by multifamily structures because of space constraints and design. It just makes sense: With a higher population, you need a bigger amount of smaller homes.

We know overall housing demand has been rocky for some time. But if we know that demand for one sector--urban multifamily properties--is beginning to vastly increase, how should the industry prepare?

Should we be planning more rental properties? Increasing the offerings in mixed-use condo projects--adding restaurants, coffee shops, gyms and other neighborhood-enhancing items that will let residents walk where they need to--to increase their draw?

Should the design of new downtown multifamily structures reflect some of the convenience suburbanites are used to--such as ample parking and open space?

Or will the location alone--and shorter or nonexistent commute--be enough to lure residents from the suburbs?

The Condo Market's Challenge: Buy or Borrow?

As financing becomes harder to get, potential buyers may instead choose to rent--which, according to some reports, is killing the condo market in some large cities.

An article in Tuesday's Atlanta Journal-Constitution about the trend declared the city's condo market all but dead.

Given that last month, multifamily housing was cited as the reason residential building rose in May, the rapid decline of condo sales and construction--in a city as large as Atlanta--is somewhat of a shock.

But it turns out Atlanta's entire multifamily market isn't declining. Only its for-sale sector is.

Renting Rises

The problem? Financial backing for condos has become nearly impossible to get, according to local developers.

Luxury rental apartment financing, however, is a different story.

• In Atlanta's metro area, hundreds of units are in the works to fulfill the city's growing rental need.

• "The new darling child of multifamily residential is rental," local developer Franco DeFoor told the Journal-Constitution.

• Developers can't get funding to build condos; buyers also can't get funding to buy them. But apartment project funding is widely available.

Still, it's an interesting shift for a city that had a condo boom at the beginning of the decade. As urban living became more popular, young professionals and retirees flocked downtown to condos to be able to walk to entertainment and work.

Could Condos Collapse In Your City?

Atlanta may have had a unique period of condo market growth, but the current condo decline isn't specific to Atlanta.

The rental market is taking over in cities like Orlando, too. Just this week a developer in the city got approved to change the condo portion of its mixed-use project into rental units.

Jon Wood, vice president of the Houston-based The Morgan Group, told the Orlando Business Journal that its 200 planned condo units are transforming into 202 apartments because financing was impossible to get for condos.

Condos comprised 25 percent of multifamily housing starts in the first quarter of 2008; in 2006, they were more than 50 percent, according to the National Multi-Housing Council.

A Need--But Not A Necessity

We've discussed how the declining housing market and rising foreclosure rate are likely to give the rental market a boost. And a recent National Apartment Association survey found 69 percent of renters have no plans to buy a home in the next year.

We'll need apartments--that's clear. But it's surprising that financing appears to be completely drying up for condo projects.

After all, some buyers will still want condo units: Young professionals, urban dwellers, empty-nesters looking to downsize.

And granted, some markets--like Atlanta--are probably suffering from an oversupply built by zealous developers during the housing boom, but does that really mean lenders should label condos as high-risk investments?

Some of the high-end apartments mentioned in the Journal-Constitution come with rents of $1,500 to $2,000. That's mortgage money in most cities!

True, financing isn't easy to get these days, which may block many buyers from buying--scraping together a down payment in today's economy isn't easy, either.

But if they can afford $2,000 in rent, they can afford monthly mortgage payments. And before long, won't they start to think that might be a more economical, long-term financial choice?

Then what will we do with all these luxury apartments that are being built--turn them into condos?

Have you found condo projects are being scrapped or converted in your area? Do you have a project that's switched over from for-sale to rental?

We want to hear about it. Post about your experience below.

A Tough Week for New York's Rental, Construction Market

Two news stories this week showcased the New York apartment market's current troubles--both with building, and with renting.

Last week, we covered the sad news of yet another fatal crane collapse at a residential building site in New York--the city's second in recent weeks.

Not surprisingly, the city has reacted strongly: They've stopped use of the Kodiak cranes, and developers at five sites are losing thousands per day as a result, according to Crain's New York Business.

Temporary buildings commissioner Robert LiMandri issued stop-work orders for all seven of the Kodiak cranes operating in New York so that the city could inspect them.

The cranes were being used at five sites--most of them with a  multifamily component: the accident site, First Avenue at East 91st Street; a mixed-use development at 808 Columbus Ave.; a new W Hotel in the financial district; a luxury residential building located at 245 10th Ave.; The Laurel Condominiums at 400 E. 67th St.

Obviously, safety is a priority--but since city officials haven't given the developers a timeline for the inspections, they're forced to wait, and that's an expensive pause.

The delays could take weeks, Crain's said; although the crews have been mostly reconfigured to do work that doesn't involve the crane, that could make it very difficult for those projects to stay on budget.

And it's becoming a growing problem in the city: The amount of construction projects that the New York City Department of Buildings has stopped due to safety violations has increased 79 percent since January.

The most recent crane accident may also result in a new training requirement for entire crane crews--a 30-hour initial training and additional eight-hour course every three years, according to Crain's.

Construction delays can be costly for developers and cause big problems for the renters waiting to move into the new or rehabbed buildings--although, according to one recent news story, New York may have less renters to worry about.

Fox quoted the New York Post as saying rents are starting to decline in the Big Apple. A studio in York Avenue and the East 70s is running about $1,500 a month; a two bedroom in the West 170s is renting for the same amount, according to Manhattan Apartments, Inc.

The Financial District and Upper East Side are also offering deals, the Post said.

Move further away from the subway, and things get even cheaper.

The decline is an interesting turn of events for New York, which has largely avoided the giant real estate price declines that the national housing slump has caused in other cities.

However, last month, numbers indicated that the slump may finally have reached New York--as we recently reported, residential building permits have sunk 50 percent in the past year in New York City, which clearly indicates there's less of a demand for housing.

And now, according to Fox, desperate landlords are willing to pay a month's rent for new renters or foot the broker's fee.

You could argue that less demand for rental properties means more New Yorkers are buying apartments--but those lower building permit numbers indicate that may not be the case for long.

Could New York--which long withstood the housing slump--finally be feeling the effects? And is this an indication the national housing decline is nowhere near over--and in fact, spreading to claim new victims? What do you think?

Apartments Are A Hot Housing Choice, According to Survey

The multifamily market should have a strong year in 2009, according to a new National Apartment Association survey.

The survey--conducted by market researcher Harris Interactive--found:

• 69 percent of renters plan to stay renters for up to five more years.

• 50 percent of the renters surveyed plan to continue living in their current residence for the next year.

• An additional 46 percent of renters have no plans to buy a residence within the next year.

Why?

The survey also found that consumer confidence in the U.S. housing market is low; 80 percent of U.S. adults think the market won't improve in the next six months.

The result: Apartment occupancy is currently at a record high, according to the NAA.

"The results of this survey reflect what our membership is experiencing across the country," National Apartment Association (NAA) President Douglas Culkin said in a statement. "Renters are not eager to take a chance on homeownership this year. If the economy improves, that trend may abate, but, for now, people are generally staying put."

Because occupancy rates are so high, we're at an all-time record for the number of rental units in the U.S. About 34.7 million units--enough for 83 million people--now exist, the NAA says.

But we're clearly going to need more.

Even if those renters who said they were going to stay put do stay in their units, we're adding a large number of new renters to the market via foreclosures.

As rates on adjustable mortgages reset, foreclosure filings swelled by 65 percent in April and bank confiscations more than doubled compared to 2007, Radar Logic Inc. said Monday, according to Bloomberg.

And they're going to need to rent because with today's tight credit conditions, it's unlikely those former homeowners--with a giant foreclosure now part of their financial history--will be able to get financing to buy a new home.

So start building--because 2009 looks like it's going to be a big year for rental units ...

New England Multifamily Market Is In For A Rocky Ride

Small multifamily building owners in New England--and their renters--are having a harder time staying afloat during the housing crisis than local single-family homeowners.

New England has almost 320,000 two- and three-family homes; it's one of the region's charming characteristics.

But lending standards are tougher for multifamily properties--which, along with rising adjustable-rate mortgages (according to Connecticut affiliate NBC 30), means the multifamily sector has been hit hard, according to a recent Associated Press article printed in the Boston Herald.

New England hasn't had it easy through the housing slump.

• Its economy has struggled, and housing experienced severe declines in states like New Hampshire, where--according to a forecast released Friday by the New England Economic Partnership--housing prices fell 7.8 percent in the first three months of this year, compared to 2007, the Nashua Telegraph reports.

• In addition, 25 percent fewer homes sold in the state.
  

To make matters worse, it felt in many ways like New England had really just recovered from its prolonged 1990s housing slump and slow economy.

But now, as we've previously said, areas like Massachusetts--where more homes went into foreclosure last year than were sold--the housing slump is becoming a bigger problem: especially for the multifamily market.

• Single-family home sales dropped 10 percent last year.

• Two-family home sales fell 35 percent. Three-family home sales plummeted 43 percent, AP said. (The Globe has a breakdown of southern New England housing numbers here.)

Considering the fact that the state has 220,000 two- and three-unit "triple-deckers," that's cause for concern for local economies, owners--and renters.

The National Low Income Housing Coalition estimates that at least 45 percent of the housing units entering the last foreclosure stage in Connecticut, Massachusetts, Rhode Island and New Hampshire contain renters, according to NBC 30.

Where will those people go when their building officially changes hands?

New England is in trouble--and it doesn't look like the region will be out of trouble anytime soon. Just Friday, Boston Federal Reserve Bank president Eric S. Rosengren said that the area should anticipate high foreclosure levels for years, even if the economy does improve somewhat, the Boston Globe said.

That's unfortunately based on a study Boston Fed researchers did to compare the current market to the real estate crash of the 1990s. After foreclosures hit a high in 1992, they stayed at high levels for the rest of the decade, the Fed found.

Which could mean that the current rocky housing conditions in New England will be here to stay for four, five, six years--possibly even a decade.

That kind of prolonged trouble could cripple--if not completely destroy--the region's smaller multifamily property market. Which would really be a shame.

But what can we do? Because losing a resident or hosting a vacant unit for several months can cause serious financial issues for small multifamily building owners, banks view that type of property as a greater risk--and that's somewhat fair.

But until lenders relax their rules or someone steps in to help those owners refi out of their rising ARMs, the foreclosures are likely to continue.

What would you suggest the region do to curb its multifamily foreclosures?

Is Affordable Housing in Danger?

Foreclosures have been hurting the single-family home market for months--and making headlines as families lost their homes due to loan resets and sinking equity.

The historically high foreclosure rate has caused growth in the rental market as former homeowners look for a new place to live; but the effect on the apartment market hasn't all been positive.

Because apartment buildings have owners, too--and those owners sometimes default and enter into foreclosure--renters can get kicked out with little notice.

And as some recent reports indicate, the small multifamily building market--which offers affordable housing options for families in many cities--may be in serious danger as a result.

According to an article in today's Chicago Sun-Times, 35 percent of the almost 14,000 foreclosures filed in Chicago in 2007 involved two- to six-unit apartment buildings. Buildings of that size in the city are, the Sun-Times says, frequently owner-occupied--and widely considered to be affordable housing.

In some neighborhoods, most of the foreclosures were of small apartment buildings, the Woodstock Institute (which measures foreclosures) said.

Two- to six-unit buildings comprised nearly 87 percent of the foreclosures in West Garfield Park last year; the same kind of buildings made up 70 percent of the foreclosures in neighborhoods like North Lawndale, the Lower West Side, East Garfield Park and New City.

Which poses a big problem for the city's housing market: If economically challenged areas are losing a large number of affordable apartments, where are the residents going to live?

Are developers working overtime to add to the city's affordable housing market in anticipation of the growing need? Is public housing ready to accept a significant amount of new applicants who are likely not going to be able to find alternate affordable housing options?

The Woodstock Institute says that the continued loss of affordable housing--which is probable, due to the continuing loan fallout--could "destabilize communities," the Sun-Times reports.

Chicago isn't alone in its struggle. In Boston, foreclosures--even in low-income have traditionally been just a small portion of the market. But times are changing: And in Lawrence, Mass., almost as many homes were foreclosed upon as were sold in the first four months of this year, according to real estate tracker the Warren Group.

Today, more than 45 percent of all area real estate transactions are bank foreclosures, the Boston Herald reports; given Boston was one of the areas hardest hit by the housing slump, that's not shocking--but it is bothersome because it's a big change--and almost twice the statewide foreclosure average.

“It is certainly disturbing,” Thomas Callahan, head of the Massachusetts Affordable Housing Alliance, told the Herald. “It has the effect of depressing the market.”

We're not hearing as much about multifamily foreclosures as we are about single-family ones. But they're out there--and the foreclosures in many ways are even more tragic than single-family home repossessions because they affect more residents.

Numerous programs exist to help troubled single-family owners; does our industry need more help, too? Could this growing concern spread to a housing market crisis--one that could threaten the very existence of small multifamily buildings?

What do you think?

A New Resident Who Could Cause Big Problems (Or Help Buildings Run Smoothly)

On Sunday, the New York Times ran an article about neighborhood-based social networking Web sites and their impact on the rental/multifamily community.

This isn't a new phenomenon--shortly after moving into my condo building nearly three years ago, I was told we had a message board-based Web site for unit owners, which I promptly joined--but the article got me wondering about the long-term success and potential impact of such sites.

One of the online communities listed in the article--LifeAt--currently only has five Chicago properties on its roster. I don't live in any of them.

So I checked out another one of the sites mentioned in the article, MeetTheNeighbors.org. My area has added a number of large rental and condo buildings to its roster in the past two years, but I was surprised to find my neighborhood was not only low on members--it didn't exist.

So I went through the site's brief registration process, created an entry for the area and waited. Surely, I thought, two days after a mention in a major newspaper, people would--as I had--be flocking to the site to check it out. Right?

Not really. As of today, the neighborhood has just one registered member--me.

In fact, the only residents I could find anywhere close didn't seem to be interacting as much for general neighborhood betterment but for other purposes. Two posted what looked like online dating ads. One woman's profile contained little information except for a plug for her sister's dogwalking service.

Where were the events I was told the site listed? Or the community action it was supposed to incite?

At the end of the day, these sites will live or die based on resident involvement--and it appears no one in my community is aware they even exist.

Which, for our building may be a relief. One thing that struck me as particularly odd about the Times article was how upbeat it was: Most of the sources cited social networking sites' ability to help managers address problems early and give residents a way to offer painter and insurance recommendations.

But surely (which the article does touch on briefly) many are using such sites as a way to semi-anonymously complain? Or could?

Remember that Web site that I accessed after moving in--the one where I posed questions about our satellite service and others questioned building rules? It disappeared suddenly and has yet to be replaced with anything similar.

Maybe the site was phased out--or maybe it just got too critical for comfort. Who knows? But it sure would be useful now, as the building gears up for a major hallway renovation. They've laid out samples in the lobby and on one floor of the building and distributed paper ballots. I can't help but think a Web site would make the process so much easier.

It would, of course, also give people a chance to complain about the fact the hallways have been so outdated for so long (the '80s were a great decade, but I really don't need them to start right outside my doorframe) and ponder what this is going to cost us. And that's a real risk property managers should consider.

Which brings me to my big question about building-based networking sites: It's clear from the Times article that if enough join one, residents love building- and community-based social networking sites.

But do property managers feel that they're a good idea, or a bad one? What do you think?

Does the Rise in Multifamily Starts Indicate the Slump is Over?

The Commerce Department announced Friday that multifamily housing had helped new home construction grow 8.2 percent in April, just one day after the National Association of Home Builders said homebuilder confidence currently is hovering only one point above its lowest-ever level.

Welcome to the mixed-signal housing market!

Multifamily housing starts rose an impressive 36 percent in April after falling 35 percent the month before.

That helped balance out the news that single-family home starts dropped to a 17-year low in April--and, despite the single-family decline, led some to call the Commerce Department data proof that the housing market might finally be on the mend.

Many were cautiously optimistic:

• Brian Bethune, an economist at Global Insight, told AP it was "definitely too early to uncork the champagne on the long and winding road to more-healthy housing-market conditions."

• The Wall Street Journal tallied a number of economists--most of which were hesitant to call the news a sure sign because, as David Greenlaw of Morgan Stanley said, "it may take up to a year to achieve equilibrium--but, at least things are moving in the right direction."

In truth, the rise in multifamily dwellings--which helped drive up overall starts--is likely a result of the country's high foreclosure rate and ever-tightening lending standards. As more homeowners lose their dwellings and buying becomes harder to do, less expensive homes and rental properties are sure to get a boost.

As Forbes.com says, the rise in multifamily unit starts points "to the elevated desirability of rental units in a frozen mortgage market."

And, as Jay Hancock of the Baltimore Sun said, "all the gain came from APARTMENT buildings, not single-family homes. Naturally the people getting kicked out of their homes need cheaper places to live. Now builders, responding to higher demand and rising rents, are providing. But this isn't exactly a sign of a hearty economy."

It's true the rise may not indicate the housing slump is over--but it does indicate something we've been saying for months: The multifamily market had better get ready for a boom.

The recovery--whenever it begins--is likely to be slow and specific to different regions.

There will be a strong need for rental housing as the housing market improves. And many economists are saying that could be six months to a year from now (or longer, if you believe Treasury Secretary Henry M. Paulson Jr., who said Friday that "we are still working through housing and capital markets issues, and expect to be doing so for some time”)--during which foreclosures will continue and banks are unlikely to loosen their rules much.

The multifamily market can reap big profits in the next year if it is prepared to provide space for the growing number of renters--U.S renter households increased by almost 1 million last year, four times as fast as from 2003 to 2006, according to a Harvard University's Joint Center for Housing study.

But what happens then?

During the single-family home boom, little consideration was given to what might happen if the market suddenly fell into decline. And, after rising astronomically due to financial and market conditions, that's exactly what it did.

What, then, makes the multifamily market any different? We may be in line for a good couple of years because the weakened economy isn't conducive to getting financing to buy a home--but it's time now to prepare for the period after.

We need to be getting ready for the era when the single-family home market has stabilized, credit isn't so hard to come by and home sales are increasing, along with values--a time when buying again looks more attractive then renting in many markets.

We know it's coming; but what can we do to prepare now? Alter demand projections for 2010 and beyond? Research ways to cut operating costs over the next 24 months? Fund extensive studies of markets most affected by the housing slump?

What do you think the multifamily market should be doing?

Switching Gears From a Residential For-Sale Property to a Rental: Part Two

On Friday, we touched on why some new condos are transforming into rental buildings. Can single-family homes make a similar switch?

Yes--and no. If a new single-family home doesn't sell, turning it into a rental can be difficult. They're just not quite as versatile, for a number of reasons:

• It could be costly, thanks to extra fees. Single-family homeowners don't want a large number of rental properties on their street because rentals often aren't maintained as well as owned homes--which can drive property values down for an entire area.

Yet the foreclosure rate has caused that to happen in a number of U.S. neighborhoods.

Some cities are responding to the change. In February, Minneapolis instituted a $1,000 fee when a home is changed into a rental property, the Minneapolis Star-Tribune reports.

• And renters may not want to live in a single-family home. Phoenix, for example, is suffering from an oversupply of single-family homes, according to MSNBC; the city received roughly twice the amount of new homes it could accommodate between 2005 and 2007, many of which were bought as investment properties.

But home values in the area are down--and those homes aren't selling.

To cover the monthly mortgage payment, many owners are renting their investment properties out, a practice that has created a "shadow market" that is competing with the city's apartment rentals, MSNBC said.

Yet the costs for renting a single-family home or an apartment just don't match up.

Given today's 5.72 percent average 30-year fixed mortgage rate, for a buyer taking out a $165,000 loan, the monthly payments would be $959.75, Bankrate says.

Or more--the National Association of Realtors' March median single-family home price was $200,700. Depending on how much of a down payment the buyer put down, the monthly payments easily could be higher than $959.

Rents have risen, too--but they're still at more affordable levels.

Because of bankruptcies and other issues, U.S renter households grew by almost 1 million last year--four times the pace of renter growth from 2003 to 2006, according to a recent Harvard University's Joint Center for Housing study.

The higher demand has driven average U.S. rents up to $775 a month, the Wall Street Journal recently reported.

• Yet condos are a slightly different story. The median existing condo price in March was $219,400, according to NAR, making condo prices more competitive with luxury apartment prices, which in most markets will rent for more than the $775 average.
  
  Thus renting a brand-new condo--comparable in many cases to a luxury rental unit in terms of amenities and appearance--for $100 or $150 more than the average apartment rent isn't so unlikely. It may, in fact, actually be the same cost as renting a luxury apartment, depending on the area.
  

In the end, though, price may not even be the deciding factor.

The cost of renting a house in many areas will be higher than renting a condo or apartment; but in some markets where single-family home prices have fallen considerably and/or the market is really overloaded with inventory, the cost of renting a single-family home could possibly be close to the cost of renting a condo.

But that doesn't mean people will want to. Renters have different needs--and ones looking to live in an apartment may not want the responsibility of renting a home, which involves upkeep. (Getting more space is one thing; having to mow a lawn that isn't really yours is another.)

A condo, however, is likely to include general maintenance. It is also more likely than a house to provide a location closer to public transportation or an urban setting--which, for work or social needs, renters may prefer.

More units, more versatility: That could be one big reason for the Commerce Department's March multifamily permit increase.

What do you think? Is the multifamily market be benefiting from its various moneymaking opportunities--ones that extend beyond basic unit sales?

Rental Conversions, Condos and the Future of the Housing Market

As overall residential building declines, the multifamily and single-family housing markets are having two very separate experiences: Although both were down in March, they were down in varying amounts, and for different reasons.

And that's painting an interesting picture of how each may start to recover as we tentatively try to claw out of the housing slump.

Thursday's news showed that building in general has slowed considerably: Total housing starts fell 34.5 percent to 1.035 million in the first quarter.

They'll probably remain under 1 million until the middle of 2009, according to The Wall Street Journal.

But single-family starts fell 5.7 percent in March. Multifamily unit starts declined much more--24.6 percent.

Permits for single-family homes dropped 6.2 percent in the month; but multifamily permits only fell 5 percent, according to government data released in mid-April.

Why the difference?

Consider the new $20 million, 75-unit condo building in Charlotte, N.C.

Condo sales began in November; since home sales have slowed nationally and lending standards have become stricter, risk has risen--which caused the project's developers to radically alter their plans.

They've stopped selling units--and are officially becoming a rental property, according to the Charlotte Observer.

"We are returning deposits and releasing buyers from their contracts," Terrence Llewellyn, whose company is developing the project with Dean Kiriluk of Kirco, told the paper.

In some places, like Miami, luxury real estate helped keep the condo market going during the housing slump--at least for awhile.

As condo prices in the rest of the state fell 25 percent or more, Miami prices grew by 6 percent in 2007, according to the Florida Association of Realtors--but in January, the median condo price dropped by $32,000. Sales fell 30 percent.

That shift is causing some developers, like Llewellyn, to switch gears--and change their for-sale projects into rental ones.

Which may explain why multifamily starts would be down in March, but multifamily permits--indicative of future construction activity--would show an increase that the single-family home market did not.

More profitability options; more faith in the industry--and more funding.

But why? Is changing a multifamily unit into a rental property really more profitable than converting a single-family home into one?

Join us Monday for the answer--and part two of our look at how condos may be able to recover sooner, even if foreclosures continue to rise  ...

Rent This Apartment: No Pets, No Cigarettes

Companies and entire cities--such as Chicago, which banned all indoor smoking, starting on January 1, 2008--are encouraging smokers to put out their cigarettes. Could apartment owners be next?

Maybe. Citywide smoking bans in places like New York and Chicago have been successful--just last week, Chicago Health Commissioner Dr. Terry Mason said the ban, which is not even six months old, had been accepted across the city.

Companies are also trying to get smokers to quit because it reduces their health insurance costs--although for some companies, it's a touchy subject.

Last week, the 16,000-strong Tribune Company recently rescinded on a plan to charge its 600 smokers an additional $100 a month for insurance, according to the Los Angeles Times.

The Tribune Company is now considering a program that would offer employees benefits for stopping smoking. And it's not alone.

More than half of 453 large employers surveyed in a report by the National Business Group on Health and consulting firm Watson Wyatt Worldwide are offering financial incentives to help employees be more healthy; that includes incentives to quit smoking, Newsweek says.

Twenty-four percent more employers say they'll offer health improvement bonuses in 2009.

And now, apartments may be getting in on the anti-smoking action. According to ABC News, California is considering making all its rental housing smoke-free.

• New legislation being considered by a state senate committee that would allow rental housing owners to ban smoking on all or part of their property.

• The bill--proposed by State Senator Alex Padilla--would let renters smoke within their units until the lease they signed prior to the bill's passing expired.

And then: No more puffing.

If renters do, it would be considered a breach of the agreement--and they could be evicted.

Regulating unit use if it affects the unit--i.e., no repainting walls, no knocking them downs--is one thing, but should property owners and managers have the right to regulate what residents do inside the unit with their body?

Perhaps. Smoking can discolor walls, leave an odor and require repainting, which adds an expense for the owner.

But a large part of the restaurant smoking ban opposition has revolved around personal rights--and when a renter is paying to reside in a unit for a given amount of time, do we have the right to limit what they do in that unit (within reason)?

What do you think--would a smoking ban for rental properties be fair, or wouldn't it?

New York: An Owner's Market, Not a Renter's One

It's spring, which according to the New York Times, means thousands of recent college grads will soon be hitting the rental market looking for an apartment ... and many will be in for a shock.

There is no rental market quite like New York City. As a result, there's no landlord like a New York City landlord.

In some markets, rental property owners may be having a hard time filling units as the economy slows. Vacant units have caused foreclosures in some markets, such as Boston, where multifamily foreclosures rose 27 percent from February 2007 to 2008, according to the Boston Herald.

But New York's rental market remains strong.

With $3,000 average monthly rents in some neighborhoods, its market is pricey--and also large. Because home selling prices are so high in New York, 75 percent of the city's housing stock are rental properties.

Perhaps that's why the rental market is so strong: Vacancy rates in New York City hovered around 1 percent for the third consecutive year in 2007, according to real estate broker Citi Habitats.

The tight apartment supply caused rents to rise 5.5 percent on the most expensive residential market in the U.S., Bloomberg said.

With that kind of demand, landlords can call all the shots--and do:

• Qualifying for an apartment can be tricky. New York landlords only want residents who make 40 times the monthly rent amount, according to the Times--which, for a $2,000 apartment, would be an $80,000 annual salary. The average 2006 recent grad salary? According to census data, $35,6000.

• Roommates may not even help. Many renters take on roommates to help buffer the high rent cost--but while some landlords will take the combined incomes of several roommates, some won't.

• Co-signer requirements are even stricter. If a renter doesn't make 40 times their rent, a guarantor--such as a parent--needs to step in. The guarantor must make 80 times the monthly rent amount.
  

Once you qualify, getting into the unit isn't cheap. First, there's a security deposit, which can be the first and last month's rent--which in New York, can be $6,000 for that $3,000-a-month place we mentioned earlier.

Many renters also must pay a broker’s fee; it can cost more than $10,000 just to get inside your new unit.

Some landlords and apartment brokers may find the market is changing due to sites like Craigslist, which offers no-fee and fee-based broker listings. But Alicia Schwartz, director of howtorentinnyc.com, doesn't think the broker system will become obsolete.

“At the height of the rental season, landlord listings change from hour to hour,” she told the Times. “And the only ones who talk to landlords hour to hour are brokers, not listing services.”

New York's housing market has fared better than much of the country; although some of the boroughs recently saw price declines, across the city, home prices rose 28 percent earlier this year, according to the Real Estate Board of New York.

But the city isn't immune to the national credit crisis. As mortgages become harder to get and less residents are able to buy, the city's rental market is likely to strengthen--and space will always be at a premium in Manhattan.

True, New York is a unique rental housing example; but are there things we all could learn from the way its property owners and managers do business?

Preparing Your Property--and Renters--for the Risk of Foreclosure

Some renters who thought they'd wait out the housing decline before buying may find the slump is landing at their doorstep anyway--and it could leave them homeless.

That's according to an article today in the New York Times that highlighted some of the problems renters are experiencing as landlords default on their loans.

From declining service to flat-out evictions, renters are feeling the subprime sting--and they often get little notice their living situation is about to change.

Rental properties are now involved in 38 percent of U.S. foreclosures--168,000 households, CBS estimates.

The hardest hit areas are ones that have experienced tough housing times since the decline began, according to CBS--Nevada, New York and the other usual suspects.

• New York has no shortage of rental units: In 2006, they were about 65.6 percent of all New York City; nationally, rental units comprise 32.7 percent of housing.
  

It makes sense that New York would be a concern. The more pricey the real estate market (click here for Forbes' recent list of the most expensive rental cities), the more danger renters are in: Refinancing expensive homes is tougher in today's market, and as money becomes tighter, in many cases, owners with find larger mortgage payments will have a harder time making their monthly obligation than ones who own less expensive properties.

• In Massachusetts, 23 percent of all foreclosure petitions in February involved two- and three-family homes: And those make up just 11 percent of the housing in the state, according to the Warren Group.

As a property owner, avoiding foreclosure is an obvious goal--but in today's tough market, it's important to recognize that things happen, and having a few plans in place can help ease a foreclosure or close-to-foreclosure situation:

• Be ready for vacancies. According to the Greater Lowell Landlords Association, a regional landlord advocacy group in Massachusetts, the main reason landlords in the state are defaulting is because of a lack of funds. "You have to be able to handle a vacancy," Dick Macdonald, president of the association, said. "This is a tough business, and right now there is a shortage of residents. A lot of good ones bought condos."

• Be vigilant about keeping current with utility and other bills. You do not want the country to put a lien on the property because of unpaid taxes, water or other bills. Warning should be given, but be aware that lenders and municipalities are nervous these days because of the hefty amount of defaults and foreclosures.

• Consider moving in. If you own a multifamily property as a business investment, unloading your primary residence (if you can, at a decent price) and filling a vacancy yourself could help your overall budget.

• Wait things out. With home values falling, selling your building now may not be wise--and although the home price market is trending downward, it's creating a number of new renters, which means more business in the future.

• Help out your renters if things sour. If your property does enter into foreclosure, you may have very little negotiating power with the lender, but suggesting they give renters some time to get out doesn't hurt.

In addition, some banks are offering displaced renters a "cash for keys" option, where renters receive a little financial assistance to move.

Stress that it could be worth their while: About half of all foreclosed properties are handed over to the bank with considerable damage, according to a national survey of 1,500 real estate agents by Washington, D.C.-based marketing and research firm Campbell Communications.

And--considering residential properties that aren't damaged are losing value left and right these days--that's a situation nobody wants to happen.

Multi-Housing Forum Gives Industry Members an In-Depth Look at Building Challenges, Financing Options

Multi-Housing News' parent company, Nielsen Business Media, sponsored an event in Chicago today called Multi-Housing Forum, featuring sessions on branding, debt and more.

I attended the forum's very compelling 2 p.m. session, "The 2008 Multifamily Debt Update," which was an interesting look at how GSEs are navigating the current market--a hot topic for the multifamily sector.

During the hour-long session, moderator Glenn Housman, Senior Vice President, Richard Ellis Inc., took questions and chatted about financing options and advice along with Freddie Mac Senior Producer Laura Cathlina and Jimmy Mayfield, managing director of Greystone Servicing Corp.

A few highlights:

• 125 on they way: Starting May 1, the new 125 percent regulation goes into effect at Fannie Mae--and Housman advised audience members looking at a refi to get their items in order "lickety-split." (Freddie Mac has yet to confirm its participation, Mayfield said.)

• Rate locks are working "very fast" these days, according to Cathlina. And with Freddie Mac, the deal is a deal when the lock is in place. "Once we rate lock, we're rate locked," she said. "If something comes up in the marketplace, we're not going to come back and change it."

• Price saver tip: Points are negotiable from lender to lender, as are processing fees and all other "nickle-and-dime issues," Housman said, pointing out that with a Freddie Mac loan, "Laura is controlling the deal--but not all costs."

• Shopping around: Housman advised participants to keep in mind that to an extent, you can get different quotes from different lenders. However, he reminded the crowd that there are limitations to that rule. "Once it's in Laura's system, you can't [cancel it] until you write a letter and say 'I want to switch,'" he said.
  

• Looking to get in and out of a deal in a few years? Consider Freddie Mac's ARM program, rolled out five years ago. "If you know you want to purchase a property and be out of it in five years, that's the best program for you," Housman said.

• Know your schedule. A 365 schedule compared to an actual 360 is not "apples to apples," Housman said. One is based on 365 days, the other--which is quoted more often--is based on 12 30-day months. A 360 will include more days, but usually offers a better interest rate, Housman said.

• Size limits? Call Fannie Mae, which is set up to handle them efficiently. "No deal is too big," Housman said. "A billion, $2 billion, they can do it." According to Mayfield, Fannie defines a small loans as "$3 million or less in most markets. In larger markets such as Chicago, $5 million or less."

Aside from helpful tips and GSE news, the session contained one other general theme: Fannie and Freddie are doing just what they're supposed to, according to Cathlina.

"Fannie Mae and Freddie Mac are both publicly held," she said. "Our first obligation is to our investors."

That said, they were formed to add liquidity to the market--and have. "In the past nine months, we have been doing just that," she said. "Exactly what we were created to do."

The agencies have both come under fire in recent month for various reasons--but they've also been given more lending power to help troubled homeowners. And their influence in the multifamily market can't be denied: Last year, both GSEs provided $60 billion collectively just to the apartment market, Housman said.

Their role will undoubtedly grow as the market increases--and lenders continue to tighten restrictions. Have you considered Fannie or Freddie financing options? It may be time to ...

What Cities Offer the Best--and Worst--Rental Markets?

Landlords, rejoice: Mortgage applications dropped to their lowest level in a year last month, and the sketchy real estate market is producing more renters as the housing slump continues.

Home ownership isn't for everybody; and with today's stricter lending standards--not to mention the cash-poor economy we're experiencing--it's really not for everybody.

Just ask New York City and San Francisco landlords. According to Forbes, residents pay the highest rents in the U.S. in those cities. (Not suprisingly, both areas front some of the top U.S. home purchase prices.)

In New York, a resident renting a median-level apartment in one of the five boroughs will pay $2,922 a month in 2008--a 6.6 percent increase from last year.

In San Francisco, it's possible to leave your heart, but not a good a idea to leave your wallet, because rent will cost you 7.8 percent more than it did last year--$1,904 a month, the biggest increase in the U.S., Forbes says.

The magazine recently ranked the top 10 Best and Worst Cities for renters; the deals--which the Midwest dominates--include:

• Columbus, Ohio. With an average rent of $626, fairly hefty vacancy rates and a 300 percent increase in residential rental unit construction should keep the market stable.

• Houston. The median monthly rent--$707--is close to what Houston residents pay for a monthly mortgage payment, but since the city has the highest vacancy rate in the country, renters can get great units--and rents are only forecast to increase 3 percent this year.

Cities with more pricey rental properties include:

• Boston. With an average rent of $1,658, the city will have a 41 percent reduction in construction in 2008, which should cut into its otherwise OK 5.9 percent vacancy rate.

• Chicago. The city of Chicago--where I live--has an average rent of $1,010, according to Forbes; that's due in part to the fact Chicago is second only to New York in financial service jobs and overall rising employment. Last year, the rental market saw almost no new construction, giving it a low vacancy rate--and a price increase prediction of 3.2 percent for the year.

Curious about the other high- and low-rent rollers? Check out Forbes list of the Most Expensive and Least Expensive Cities for Renters.

Multifamily Loan Delinquencies Rise in February

Multifamily property and hotel loans edged the overall commercial mortgage-backed securities delinquency rate up in February, according to Fitch Ratings--and the rise included a number of newly delinquent loans.

Commercial mortgage-backed securities may not have had as bad a year as anything connected to a residential mortgage had--but they've still had a hard time, according to Reuters.

And it's all connected to the housing market: The commercial-backed securities met with concern that less-than-secure underwriting practices in 2007 may have made sketchier loans that wouldn't be able to weather a U.S. recession. As the economy declined further, that fear increased.

And, as a result, $130 million in newly delinquent multifamily loans--which include apartment buildings--really influenced the increase in Fitch's delinquency index, according to Managing Director Susan Merrick.

"Multifamily delinquencies continue to be overrepresented in the index, now comprising 60 percent of all delinquent loans." (Despite the fact they only represent 14.6 percent of the Fitch-rated universe.)

A couple of things to compare that to:

• Office building-secured loans are 30.4 percent of all properties in the Fitch world and represented 11 percent of the overall delinquency index last month (even though office delinquencies were down by 1.1 percent last month).

• Retail loans made up 15.2 percent of the delinquency index.

Fitch's index measures loans that are at least 60 days delinquent in the $562 billion Fitch rated portfolio, a total of approximately 42,000 loans.

Delinquent multifamily loans reached $1 billion at the end of last month, a 14.5 percent increase from January 2008.

As this Las Vegas Review Journal article from two weeks ago illustrates, it's a situation renters are all too familiar with: Across the country, many are being kicked out of their homes with no notice because their landlords failed to keep up with their payments and went into foreclosure.

If that trend continues--more landlords and loans entering into delinquency--it could have a huge affect on the housing market. Could the need for rental multifamily units increase? And should the industry be preparing for that possibility now? Or could that spur home sales, which might offer suddenly displaced renters more security at what is becoming each month a more reasonable cost?

What do you think?

Good News, Bad Mood for Housing Industry

Homebuilders may not be feeling great about the residential industry, but the multifamily sector received some good news this week: Construction of housing with two ore more units rose 14.4 percent, and multifamily home groundbreakings increased 14.5 percent.

Yet overall builder sentiment is low, according to the National Association of Home Builders, who said  that its housing market index for March was the third lowest reading on record. Buyers are either waiting it out to see if prices fall more or just plain can't get financing to buy homes, USA Today says.

And homebuilders are feeling the effect: The index came in at 20 in March for the second month in a row. It's been at 20 or below since September. A reading of more than 50 indicates builder confidence is healthy.

That low confidence was reflected in the Commerce Department data reflected today--which showed future groundbreaking permits reached their lowest level in 16 years. Also:

• Overall construction declined, with starts dropping 0.6 percent after going up 7.1 percent in January.

• That January number was higher than originally thought--the Commerce Department had reported that housing starts were 0.8 percent higher in January. But the increase provided little comfort because of last month's drop in starts. January, it seems, may have just been a blip on the radar--and we didn't even realize it was a decent blip at the time.

• And the annual comparison isn't very hopeful, either: Housing starts last month were 28.4 percent lower than in February 2007.

Homebuilders don't feel the slump is near over. Buyers clearly don't either, if they're still waiting for prices to fall further before they buy.

The same can be said of lending institutions--if they're still being strict about loans, which is preventing home purchases for some buyers, it doesn't seem they're so sure the situation is close to being straightened out, either.

What needs to change first--buyer enthusiasm? Lender availability? Builder confidence? Homebuilder positivity will probably come last; but who most needs to light a fire under themselves to get the housing market moving: Banks or buyers? What do you think?

New Rules Limit Roommates, Push Rent Up For Some in Boston

In an unusual move, the Boston Zoning Commission set a limit this week on the amount of college students who can live together in off-campus apartments--and its effect on both the college and multifamily housing community is being questioned.

Just four students per apartment will be allowed. Clearly, the the college kids are upset; less students per apartment will translate into higher rents for them. But they aren't the only ones concerned about the ruling, according to the Boston Globe. Other worried parties include:

• Property owners. "If you reduce my five-bedroom to four, I'll just raise the rent to what I would have gotten," Greg Hummel, a Brighton property owner, told the Globe. "And if students can't afford it, do you think the Starbucks crowd will pay any less?" (Which is fair, because the ruling is going affect 5,000 units in Boston.)

• Area real estate lawyers (at least one). "This is a back-door form of rent control," said Stephen Greenbaum, a real estate and land use lawyer who spoke against the proposal at the hearing. "You can't simply single out a particular group and say they can't live together. This will not only not stand up to a legal test, but is also patently unfair."

Both are valid points. So who wants the change? Mostly residents and their representatives, who claim students packed into high-rent apartments have raised housing costs in the Boston area too high for many working- and middle-class families.

But that doesn't mean college students' housing needs aren't relevant. No one needs to go on record to point out how expensive higher education in general is. But living somewhere while getting it is expensive, too.

Take Northeastern University in Boston. The article says the residential area around the school has become flooded with students; according to the College Board, just under half of all undergraduates live in college housing--so that seems likely.

Why? Well, living on-campus at Northeastern isn't cheap. In Fall 2007, room and board cost $11,420 a year, the College Board said. That would be about $1,100 a month for food and lodging for the school year. Area rents in Boston for four-bedroom apartments can be found for less than $3,000 a month, according to the Globe--giving four roommates a monthly rent of $750.

Unless they eat $350 worth of food a month, that's a considerable savings--and would be more of a savings if the students added a roommate or two.

Are we right to deny students cost-of-living savings? Certainly not for one of the other reasons for the limit given in the article--that college students have loud parties and disrupt the neighborhood. That notion hopefully didn't in any way influence the decision, because it's a little silly: Four students living together in an apartment can throw just as loud a party as five students in the same apartment can.

Is it possible a more realistic limit would have been effective? Yes, 12 students are too many for a five-bedroom apartment; but six, with two or more students sharing a bedroom, isn't. (That's how dorms--their other housing option--are structured, after all.)

Or maybe the student housing quandary is really just part of a larger one: Boston rental housing is just too darn expensive. According to Rent.com, Boston's cost of living is 240 percent of the national average, and apartments are 48 percent more expensive than the national average.

That's tough for anyone--students or families--to be able to afford without downsizing space or increasing the amount of residents in a unit. And who's to say one group should have the right to make adjustments, and the other shouldn't?

Making the Repair Process a Breeze, Not a Bust

Condo and apartment property managers deal with many resident repairs--some of which are the building's responsibility, some of which aren't.

As I type this, a contractor is replacing my front door--in part because my circa-1985 door began splitting like a wishbone a week ago (the hallway got the larger half--so make a wish, elevators!), and in part (of course) because I believe in supporting the remodeling and repair industry.

Yet the experience has illustrated a few methods that can make the repair/remodel process smoother for property managers, contractors and residents--who are often all working independently for the same goal: A safe, reasonable repair that won't disturb the building's character or quality of living.

That said, because everyone is working independently, there can be a lot of back and forth, confusion and sometimes costly mistakes. So I've compiled the following suggestions for property managers, contractors and residents. Feel free to read them, develop them into a client handout, forward them, comment on them, add to them--I'd love to hear your input.

Ways Property Managers Can Make Their Lives (and Their Residents' Repairs) Easier

You're the source of knowledge for renters and for owners (maybe owners should know what repairs you cover and what ones you don't, but more often than not, they'll shoot you an e-mail or call to ask.)

As such, even if you're not responsible for a repair (like, say, a condo unit's front door), you can provide helpful guidance to residents to get the job done the way the building wants it done--and hopefully reduce future problems or eating up your time handling the issue. Some things to consider:

• Have standard (but customizable) responses to common questions. When my door first began having issues, my building manager told me it was common in our building, and that I could swap it out with any solid wood core door. I assumed I'd also need to find a doorknob that looked like my old one--but the building didn't have information on where to find it (or let me know most residents who replace doors swap it out from the current door, along with the peephole). As it turns out, the knob, peephole and deadbolt had to match the previous versions--which the contractor I hired told me. Had I done the repair myself, I wouldn't have done that--resulting in more work for my property manager to let me know it had to be replaced and possible fines for my unit.

• Provide a general timeline. The residents request may not be first priority on your list due to other pressing concerns--but you can bet it's first on theirs. For repairs the building is responsible for, even if there will be a wait for the unit repair to be made, giving owners or renters an accurate estimate of when the problem will be fixed goes a long way toward building trust and resident satisfaction.

• Keep a database of renter repairs. Have you had a lot of window frame issues in recent years? Are plumbing issues on the 4th floor becoming an increasing issue? Tracking unit issues can help you gauge overall building needs.
  

• Consider doing an annual resident repair survey. In addition to finding out how residents feel about your level of service, an annual survey can help property managers find out what problems unit owners or renters are having and also can allow managers to develop a list of frequently used (and liked) contractors.

• Go the extra mile on the first request. If a resident e-mails to ask about a repair that isn't the building's responsibility, providing a complimentary list of building-approved contractors and information on where to order any replacement parts the building requires isn't just being proactive--it's doing the job to the fullest and best extent possible.

Ways Contractors Can Make The Repair Process Easier

Always remember that residents have different levels of repair know-how--don't assume they have too little or too much. They're often desperate for a fix to be made or totally confused; other times, they're debating doing it themselves, and you're going to get hired based on your expertise. A few thoughts:

• Be in touch--as promptly as possible. It's hard to call potential clients back when you're out working on jobs, but being in contact is important. One contractor I talked to Friday promised to call back with a quote either Saturday or Monday; I never heard from him. I moved on to another contractor, but even if I hadn't, I took that as a sign of irresponsibility.

• Be realistic about deadlines. If you're not going to be able to get to the area for three days to do the repair, don't say you'll try to stop by that day.

• Consider giving a quick quote. Obviously, you'll need to come look at the unit for some repairs before giving a price estimate; but if it's a fairly fast, standard job you've done many times in the building, give the unit owner an approximation or range. I called several contractors about the door; only one wanted to make an appointment to come see it, even after I told them it needed to be replaced very soon and they told me they'd done dozens in my building. When I pushed for a price estimate, it was so much higher than the other contractors I'd talked to, that--coupled with the fact they wanted to come out later in the week before starting work and my door was barely functional now--I took them off my list.

• Make sure you include any extras. If your price includes a post-job cleaning service, special features or other services, tell the client on that first call. Always highlight your high level of service--almost all the contractors I spoke to made sure I knew they would also paint the door once it was installed.

• Develop relationships with large buildings. Rental buildings may outsource a number of their repairs; condo buildings often recommend contractors regularly who are known for doing good work--which can significantly cut the amount of time you spend on marketing yourself to new clients.

And Finally, Ways Residents Can Make Life in General Easier for Everyone

You may want the repair done yesterday--but you want it done right.

• Confirm all repairs with the building. It's better to check beforehand about approved materials and installation methods--before you do the work and risk a fine.

• Don't panic, and be polite. When you contact your property manager, realize the situation will be fixed, if it is by the building or you. Hysteria isn't going to help.

• Consider using a building-approved contractor. It's less paperwork and you may get them sooner if they're already there working on other projects. (Mine came the next day because they were working on someone's unit on the 6th floor.)

• Do your homework. Figure out what's wrong, look up any related terms and be able to describe the problem to any contractors or the property manager--it makes everyone's life easier.

• Confirm the services are what you want. Are you responsible for clean-up? Do you need to sand or paint anything, or will the contractor do that before leaving?

Have any other tips or suggestions for property managers, renters or contractors? Share your industry knowledge by posting below!

Are Future Sin City Housing Needs a Safe Bet?

Las Vegas may still be reeling from the housing slump, but its economy is growing--and so is its pool of renters, according to the Las Vegas Business Press.

The Business Press' recent article about the rental market indicates the tighter mortgage atmosphere, which has made buying less of an option for many residents, is giving multifamily rental properties a push.

The Bentley Group, a Vegas-based real estate advisory firm, says the city can thank its healthy tourism trade.

"Nearly 40,000 hotel rooms are coming on line over the next four years, creating more than 285,000 new jobs," Bentley Group President Christopher Bentley told the Business Press. "Demand for multifamily product will increase to meet the housing needs of new employees."

Fantastic. Or is it?

Multifamily builders are only scheduled to deliver 1,500 new units this year--roughly 1,000 fewer than in 2006, according to real estate brokerage Marcus & Millichap.

What's going on?

• Renters have other options.

As Vegas is finding, in today's housing market, an increase in renters doesn't necessarily translate to an increased need for apartment properties.

People may not be able to afford to buy a home--and rightfully so, the area's cost of living ranks among the highest in the Southwest, according to the Council for Community and Economic Research--but they're more than happy to rent one of the city's vacant houses.

Roughly 25 percent or more of the 23,494 homes listed for sale in December in Vegas are on the rental market.

Not enough to cancel out the multifamily market, but the city's vacant home options could be making a noticeable dent in it.

• Everyone's gun shy.

Multifamily property need is likely to increase once some of the area's new hotels are finished and start hiring. Website VegasTodayandTomorrow.com said today that more than 110 high-rise, condo, hotel, mixed-use and other projects are in stages of planning, development and construction in the Las Vegas area.

Those 1,500 units planned for 2008 had better be roomy.

Las Vegas was particularly hard hit by the housing decline. Property values were big during the boom and crashed hard when the slump started.

Are builders just hesitant to start multi-family projects until the residents have physically arrived because they've been burned before as residential building declined and projects got called off?

Or are they just having a hard time nailing down funding and support--despite a clear need for housing--because residential building is not considered a popular investment these days?

What do you think?

How Property Managers Can Maximize (and Work Magic On) Their Budget

As the year draws to a close, many members of the housing industry--developers, brokers, real estate agents--are crafting their budgets for 2008.

Property managers are no exception. And, according to U.S. Census Bureau information, keeping costs down might soon be even more of a pressing concern for residential property managers.

Rent appears to be contributing less to new apartment budgets: The median asking price for all new privately financed, nonsubsidized, unfurnished rental units in buildings with five units or more in the first quarter of the year was roughly $102 lower than the asking price in the previous quarter, the latest Census rental data showed.

There has been speculation that, as foreclosures rise and home mortgages become harder to get because of tighter lending restrictions, renting will be on the rise in the U.S.

However, if oil and energy prices keep increasing and rent falls in 2008, many property managers may find themselves looking to make the most out of every allotted budget dollar--and cut costs wherever possible.

A few suggestions:

• Get the Word Out Wisely. Promoting your property can be challenge when coupled with maintaining and managing it--which is why property managers often find purchasing combined print and Internet ads can save time and reach a solid amount of potential renters.

An August 2007 study by Watertown, Mass.-based marketing firm iProspect found 39 percent of Internet users make a purchase after being driven to Web sites from off-site marketing--print ads and word-of-mouth are the two largest influencers.

Although several national newspapers have recently reported their online and print real estate classifieds aren't selling well, managers may reap benefits from listing rental properties.

Or, at least, that's For Rent Media Solutions' take. For Rent runs the ForRent.com listings Web site and recently launched a print version of its rental guide.

The latest edition includes a region in North Central/Northwest Indiana and Southwest Michigan.

"ForRent.com-The Magazine merges print apartment listings with its Internet listing on ForRent.com," says Anita Williams, ForRent.com-The Magazine regional manager. "Since the magazine's introduction in eight other markets, property managers in these areas have seen phone leads increase by an average of 315 percent, according to our LEADS Management System."

• Cut Costs. Save the World. Many property managers are finding that reducing energy usage can be good for the environment--and for their building's budget.

Consider seeking out events like the roundtable that New York-based US Energy Group, which offers a number of products to control, manage and monitor building energy usage, held for property managers in late November.

Participants discussed ways to reduce energy use and--of course--save money. Covering topics like water usage, HVAC savings and government incentives, the two-hour event brought energy experts and property managers together in Great Neck, N.Y.

• Be Smart About Taxes. Global accounting, tax and business advisory organization Grant Thornton International's Construction, Real Estate and Hospitality Industry Group recently released some tax tips to help property managers prep for 2008.

Among the highlights: Grant Thornton suggests reviewing your deferred compensation plans in light of complex new rules that will affect plans resulting in a compensation deferral. The rules, which should take effect at the end of this year, can speed up taxation to recipients--along with interest and penalties--if violated.

The company also advises property managers to conduct a property tax review to see if any opportunities to lower property tax valuations on real property exist and to make sure all real property is separate from the personal property tax base.

It's worth the time: Potential tax--and other--savings could last for years.