09.14.09

To Woo a Renter

Homeowners Who Punt on Selling Face Challenge as Tenants Get Choosier

When Ria Jackson, 40, and her husband, Scott Jackson, 41, spent $2,000 to boost the curb appeal of their four-bedroom colonial in Bowie, it wasn't to attract a buyer. They needed to make their home more attractive to choosy tenants.

Prospective tenants had already turned down their rental, complaining that their furniture wouldn't look good with the colorful paint Ria had chosen over the years. Some simply disliked her original choices of mauve, burgundy, olive and gold. So the couple hired a painter to redo their kitchen, family room, master bedroom and bathroom, and office in market-friendly shades of beige.

They had to lower their asking rent, as well. The Jacksons were originally asking $2,900 a month for their home, but after a month with no takers they dropped the price to $2,750.

"We're entertaining all offers," Jackson said. They're currently waiting to receive two rental applications and credit histories from potential tenants.

They moved into the newly built house in 1997, Jackson said. "We were thinking, we'll be here just a few years. Well, 12 years later and four kids later, we're still there."

Their house has been listed with a real estate brokerage as a rental since mid-June, when they decided to take advantage of the buyer's market and bought a new house in Bowie with a bigger yard for their kids and newer details, like granite countertops and double wall ovens. "We found something we really liked, and went ahead and jumped on it," Jackson said. They plan to rent out their current home until they can sell it in a better market.

It's an unusually good time to be in search of a house rental in the Washington area. The supply of houses and townhomes available for rent is increasing as homeowners, not wishing to sell their homes in a down economy, are offering them for lease. And monthly rents are being held down by stiff competition from apartment complexes trying to lure tenants.

The area has always had a robust rental market, given the transience of the population. The current vacancy rate, including apartments, townhouses and detached houses, mirrors the nation's average, at about 10 percent. But renters are enjoying an abundance of choices that is unusual for the region.

"It means [renters] can shop around more," said Eddie Edwards, a McLean real estate agent who specializes in rental properties in Northern Virginia. "You'll find more renters now are negotiating or trying to get lower prices."

Tenants in the current market have higher expectations, Edwards said. They're looking for houses to be painted, have new carpeting and have kitchens with updated appliances.

"The market just has too much inventory for a landlord not to warrant at least painting the house," Edwards said.

Michelle Jonasson-Jones, an agent with Royal Dominion Realty in Silver Spring, said about two-thirds of her current rental listings are clients who would prefer to sell their homes, but instead are renting them out until the market turns around.

August is a peak time for home rentals, with families trying to move into a home before the new school year starts, Edwards said.

"The houses that will go vacant or stay on the market are homes that are either overpriced or simply just don't show well," Edwards said. "It's just literally that simple."

To compete against a surplus of inventory and the signing incentives being offered at apartment complexes, homeowners trying to rent their houses have to be willing to go the extra mile. Simply offering more living space than an apartment is no longer enough to move a rental, the agents said. The houses need to look nicer and newer, and the landlords need to appear more approachable and flexible.

Data from Metropolitan Regional Information Systems, the local multiple listing service, show a two- to four-month supply of detached single-family homes available for rent, based on the number of current listings for the District and Montgomery, Fairfax and Prince George's counties compared with the number leased. But those numbers do not include the large share of rentals that are leased directly by owners without the help of an agent. Early last week there were 380 newly posted rental properties with more than three bedrooms for the Washington metro area on the free online listing service Craigslist.

In the District and Fairfax County, most landlords looking to rent houses and townhouses were asking for $2,000 to $3,000 per month, according to MRIS. Rents were slightly lower in Montgomery and Prince George's counties, where most of the rentals available recently were going for between $1,000 and $2,000 per month.

One indicator of an influx of rental homes on the market: The insurance company Allstate reported large increases in homeowners who switched their coverage to landlord policies.

Nationally, the Northbrook, Ill.-based company saw a 26.7 percent increase in homeowners becoming landlords during the first quarter of 2009 compared with last year. Maryland had an 18.6 percent jump, Virginia 25.3 percent, and the District 7.8 percent.

But Jonasson-Jones said she has also seen an increase in the number of people looking to rent because they've experienced financial hardship or they have been foreclosed upon.

In the past, many landlords hesitated to offer their rentals to people who've had their credit rating damaged by a foreclosure. But in this market, renters are finding more opportunity.

"I'm seeing owners that are willing to work with candidates like this because, hey, they know the state of the market," Jonasson-Jones said. The Jacksons, for instance, said they would not deny a tenant based solely on a low credit score.

But even a new coat of paint and a couple of hundred dollars off the rent can't compete with the incentives and amenities being offered now by many of the apartment complexes in the District and nearby suburbs.

Sheryl Marshall, a 32-year-old paralegal in Washington, said she and her boyfriend initially wanted to find a house to rent somewhere between Washington and Baltimore to accommodate their commutes in either direction.

The pair was hoping to find a house in Laurel or Odenton, Md., for about $2,000 per month. For that, they wanted a full-size kitchen that had been renovated in the last two to five years, two full bathrooms, a full-size or larger bathtub and hardwood floors.

Marshall said they looked for about three weeks before shifting their focus to the new apartment complexes because of their amenities and value. She said little things, like not having to maintain the lawn, added to the appeal of renting an apartment instead of a house.

Financial incentives added to the new apartments' appeal. One community Marshall is considering is asking for only $250 upfront, compared with the first month's rent asked for by homeowners.

"I think that for people who are looking to rent, it's very hard for them to come up with the cash upfront to do a rental home," Marshall said. Marshall is a landlord as well as a tenant. She rents out the home she owns in Baltimore while living in a rented English basement apartment in Mount Pleasant. She hires a handyman to take care of maintenance around the Baltimore house and yard. To encourage her tenants to renew their lease, she offered to keep the rent at the same price.

"I try to be the landlord that I would want as a landlord," she said.

By Emma L. Carew, originally published in the Washington Post