Higher home prices impact everyone. Education can make an expensive market, a good market.
Tools and professionals help sellers and buyers navigate current markets
What can you do to be successful with higher home values and saturated markets? How can real estate agents and investors do more to help during these cycles?
The real estate rebound has been great for real estate investors, Realtors, and homeowners that were stuck underwater.
Job growth is a good sign, though wages haven’t “sharply” increased. Rocketing rents, low vacancy rates, and winded credit is making finding housing very difficult. Which lead us to the following question. “What can a real estate professional do to help in this market?”
First, we must consider what are some factors causing these challenges.
- Factors causing higher costs and less market entry for would-be investors
- Higher home prices
- Higher Rents
- Low rental vacancy rates
- Damaged credit ratings
- High property taxes
- Utility costs
- Lack of savings
- Toughening rental application processes and landlord demands
- Exclusion
Existing homeowners face rising costs that have led to a new round of mortgage delinquencies and defaults. Renting is now more expensive than owning in many parts of the country. When lease renewals come up, or owners are pushed out of homeownership, there are challenges finding new rentals. Even when they find available units, the institutionalization, and caution of new landlords can mean expensive application fees.
Options can be limited even further as communities try to exclude all but the most attractive residents. Many units remain empty. In recent cases in Virginia, California and New York, some receiving credits for affordable housing are being sued for discrimination against families and the lower income earners they are supposed to be helping.
What if You Can’t Rent a Home Anymore?
Mortgages can be cheaper than rent, but many just can’t get the credit from banks to buy. Even those with great incomes may be prevented from renting due to old incidents which landed them with misdemeanors, in bankruptcy, or low credit scores, which are sometimes hampered due to student loans. What options are available to these individuals and parents with kids?
- Subleasing
- Owner financed homes (with no down payment)
- Building their own tiny houses
- Occupying distressed homes as short-term rentals
These can still be expensive. The only hope for a brighter future and getting ahead is building their way back, step by step. However, this does take determination, sacrifice, financial discipline, and a plan. Four ways to get back on track:
- Documenting a paper trail of timely housing payments (canceled checks, or online payments)
- Fixing credit with the assistance of an attorney, and paying down debt
- Forced savings solutions
- Finding additional income in freelancing or real estate investment
- Taking advantage of down payment assistance programs
Of course, it is still hard to do it alone, especially with rents, home prices, interest rates and inflation all heading up, faster than wages.
How Can Real Estate Professionals Help (Investors and Agents)?
Real estate is a highly lucrative career. Investors and workers shouldn’t feel guilty about being well compensated for an incredibly needed and valuable service.
For those that care, there are many ways to help those in need of housing. In addition to distressed homeowners, there are many great buyers and prospective renters out there. Even among those shot down due to poor application processes, which use simple metrics to evaluate applicants, there are many great would be tenants.
For many, this is simply a case of being willing to give people a chance, and looking at the whole picture, not just the digits. If someone has a criminal history that is simply a one-off misdemeanor which doesn’t suggest they will damage your property, this is far different than serial felons, or others. Some cities now even make it illegal to conduct criminal background checks. The same goes for credit. A 700-credit score may not be warranted when looking at the whole credit report. It could be the result of a bankruptcy which was just cleared. In contrast, someone with a 480-credit score may have little liabilities, and could just be suffering from having been using cash instead of borrowing. Look at their recent history too. Perhaps they took a hit in the larger crash, but have shown responsibility otherwise.
For those still uncomfortable with these tenants, what about asking for first, last and security, rather than just one month to move in? Or how about a month-to-month lease arrangement which can make it easier to evict if they fall behind? Or if move-in money is the challenge for an otherwise good tenant, how about breaking last and security money into payments? This may net real estate investors and landlords higher returns and more net cash flow.
If you are willing to give people a chance then advertise when you are willing to be flexible, or prospective renters will assume you are not, and may just breeze right through your ads. Then there is always investing in affordable housing, building it, or focusing on creating jobs.
The rewards in referrals, loyalty, and property condition, as well as net rents, can be sizable.
What are some the readers’ concerns with the high markets?
Have you raised or had your rent raised within the last 2 years?