Currently, there are
111,532,119 renters in the U.S., with 2,654 new renters every day. But there are also
22,910,370 landlords or rental property owners in the U.S., which means 1 in
every 14 or so people are landlords in America.
While some may think that being
a landlord is all sitting back and collecting profit, the reality couldn’t be
further from that perception. In fact, landlords exercise a tremendous amount
of time, risk, work, their own money, and even legal exposure.
But when done correctly,
they ensure the win-win scenario of making a good investment AND providing a
safe, comfortable, and nice home for deserving renters.
You’ll find hundreds of
blogs about renters and the rental market, so today, we wanted to bring you a
profile of landlords, including their attitudes, fears, and challenges with
being property owners. I break these down into the categories of Tenant
screening, Repairs & maintenance, Landlord
stressors, problems, & fears, Profit!, The dreaded “E” word (eviction), and
the Damage Deposit.
Landlord stressors, problems, & fears:
The #1 concern for landlords
is non-payment of rent.
Only 51% of landlords say
that being a landlord is more attractive or lucrative than it was a year ago, a
shockingly pessimistic stat.
Even worse, 33% say that
it’s less attractive or lucrative to be a landlord now compared to a year ago.
According to surveys, this
is what stresses out landlords the most:
22% Loss of income
22% Troublesome tenants
16% Maintenance
13% Tenant evictions
12% Tenant turnover
10% General stress of the
role
5% Staying on the right side
of the law
A second survey yields
similar landlord stressors:
18% High turnover of tenants
12% Tenants not paying rent
10% Keeping up to date with
safety checks and
8% Keeping up to date with
changes in legislation
5% Finding good tenants
5% Property maintenance
3% Time consuming
But when asked if they’ve
ever had to deal with a problem tenant, 51% of landlords surveyed said “yes,”
while only 49% had not.
Profit!
88% of property managers
were able to increase rental prices in the last year.
In fact, rental properties now
generate 31% of the average landlord’s annual income!
Homeownership rates are at a
50-year low, but at the same time, rental inventory is at a 20-year low,
causing the average renter to spend 10.4 weeks looking for a new home or
apartment!
California is ranked #4
(behind D.C., New York, and Hawaii) for states with the highest percentage of
renters. In fact, 43% of California residents now rent.
88% of the property managers
they surveyed increased their rental rates over the past year.
Tenant screening:
36% of landlords just “trust
their gut” when screening renters, and not all run eviction reports or criminal
background checks.
38% didn’t screen a
particular potential tenant because they “didn’t raise any red flags.”
13% didn’t want to spend the
money to screen tenants properly, and an astounding 21% of landlords just
weren’t aware that they could screen tenants online.
But more than 95% of
landlords say that tenant screening is beneficial – they just aren’t doing it
or doing it right.
When screening prospective
tenants, 59% of landlords felt that a steady income was more important than a
solid credit history.
Another shocking revelation
is that 66% of landlords would overlook a relevant criminal history when
accepting a renter.
But only 56% of landlords
would take a tenant if their credit was bad!
These days only 38.6% of
renters have a credit score of 660 or above.
Unfortunately, many
landlords set up their tenants to fail because they accept applications they
shouldn’t (costing themselves a lot of money and aggravation in the process.)
For instance, 40% of
potential tenants are cost burdened, which means they would be paying more than
50% of their income in rent, which magnifies the risk of late and missed
payments.
Repairs & maintenance:
According to data, the most
common (and costly!) maintenance problems for landlords include:
·
Smoke detectors
·
Water heaters
·
Getting keys
organized
·
Pests like
termites, ants, roaches, etc.
·
Furnaces and
flues
·
Clogged sink
drains and toilets
·
Electrical
systems
When it comes to their
opinion or renting a tenant with pets, landlords are just about split down the
middle, as a pet can cause a lot of damage.
In fact, 53% of landlords said that they would
rent to a tenant with pets compared to 47% would not.
The dreaded “E” word (eviction):
The average eviction now
costs landlords $3,500 and takes at least 3-4 weeks (past the month(s) of
non-payment. However, if not handled correctly the first time or in extenuating
circumstances, there have been cases where evictions cost the landlord up to
$10,000!
Interestingly, new eviction
filings spike in the summer months, specifically July, August and September
every year.
The damage deposit:
54% of rentals have tenant
turnover every year.
Landlords commonly have to
withhold a tenant’s deposit because of maintenance issues, damage to the
property, or other conditions. The common reasons include:
49% State of the
garden/lawn/landscaping
15% Damage to fixtures and
fittings
13% Cleaning
12% Rent in arrears
1% Damage to furniture
9% Other damage
If you have any questions about purchasing a rental property, being a landlord, or even how a property management firm can help you, feel free to contact us.
