October 24th, 2008 by AllStudentRentals.com

In most cities, landlords are a little hesitant to raise rent prices by a substantial amount each year. For the most part, they realize that renters have a number of options to choose from, and as a result they want to avoid alienating people by jacking rents whenever they please. Generally, the rental market is controlled by the renters, they have the majority of the power. However, if you live in a college town, this is simply not the case. Property managers in college towns realize that there is a limited supply of quality off-campus housing, and that the supply of college students needing housing is going nowhere but up.

As dorms become crowded and university housing systems are overwhelmed by enormous freshmen classes, the push to find off-campus housing for hundreds of thousands of kids across the country is growing rapidly. Finding an apartment is no longer a matter of searching for what suits you best, it has become, in some cases, a desperate search for anything that you can afford. Property managers in college towns know that decent (and I use that term loosely) apartments and houses are in incredibly high demand and that kids, flush with their parents money, are more than willing to pay for it. I’m not about to say that all property managers are exploitative, however, they certainly know what they have and what it is worth. I have seen average rent prices in my town go up by more than 50% in some cases, to the point where some average 1-bedroom apartments rent for more than $800. I know this doesn’t seem like much for those of you who live in more metropolitan areas, but considering that not long ago in my town you could get a 1-bedroom spot for less than $400, $800 seems like straight extortion. I understand that as things like inflation, gas/commodity prices, insurance premiums, and other expenses all go up that property owners must raise their rents, but I see it happening every semester.

The one factor that doesn’t help this situation at all is the fact that the economy has no real negative effect on the rental housing market. When the economy is great, lots of people need places to rent because they have jobs or they are in school or whatever. When the economy sucks, even more people need places to rent as thousands of former homeowners experience foreclosures and mortgage defaults. No matter what, the property owners collect money, and they are collecting more and more of it each year. It may seem incredibly unfair that rent prices are rising with seemingly no end to how high they will go, and the truth is, that it IS incredibly unfair. However, it is the nature of supply and demand. There is a limited supply of decent housing, especially in college towns, and those who are willing to pay a lot for it will inevitably drive the price up. What can you do? Nothing. Paying rent is one of those things that cannot be avoided. There are ways to get the best for your money however. AllStudentRentals.com was designed to provide renters the opportunity to view hundred of potential properties and find exactly what they are looking for without having to call dozens of property owners, drive around town, and essentially waste time. You can search by price, style, lease term, and dozens of other criteria, so at least you will be comfortable while you are getting raped by high rent prices.

One last thing, to illustrate the idea of raising rents and offering nothing, consider the situation at the house I recently moved out of:

Myself and three others were living in a relatively new 4-bedroom house that was close to campus and in a pretty nice neighborhood. We were paying $1700 a month and the house had all of the things you might desire including central air, washer and dryer, dishwasher, a big backyard, etc. When we moved out of the house, we found out that not only was our landlady raising the rent to $1850, she was also taking out the washer and dryer. It’s as plain as day, more money for less shit. Ridiculous.

October 15th, 2008 by AllStudentRentals.com

With three teenagers in the house heading to college in a few years, and several of my friends facing the same demographic, the discussion turns to whether or not it’s a good idea to purchase a house for your student instead of paying for rooming costs.

The College Board reports the average cost increase over the last five years has been about five percent per year. The 2004-05 national average cost for a four year public college or university is $14,640 per year; for a four year private college or university, it is $30,295 per year.

In the last 25 years, college costs have risen at twice and sometimes three times the Consumer Price Index. Over the last decade, after adjusting for inflation, the average four-year public tuition, fees and expenses rose 75 percent for both public and private colleges, according to the College Board, the organization that administers the SAT exams and other entrance programs for its 4,700 member schools.

Where the tuition used to be the primary expense, room and board are playing a significant role in higher education expenses — many times exceeding the cost of tuition. The College Board reports that the average monthly room and board cost is $6,222. Over a nine month school year, it would be roughly $690 per month. Can you do better than that if you own a condo, townhouse, or home in the college town?

Plenty of parents are opting for the home purchase instead of the dorm rental — but that’s not always the best way to go. Before you plop down money to purchase your kid’s “dorm” unit, be sure to run the pros and cons, which are generally dictated by finances and time.

Financial
Here are some questions to answer before moving forward:
• Does the transaction make sense financially at this time in your life?
• Will the purchase create a positive or negative cash flow?
• With that said, would the negative cash flow be less or more than the monthly expense of paying for a dorm room?
• Where is the cost of housing going in the college town?
• What’s your rate of return on your down payment and closing costs over the next four years?
• Will you be able to rent out other rooms besides your student/child to reduce your monthly cost?
• How will this work out for you as far as taxes are concerned?
• Do you have enough reserves to cover the breakdown of the air conditioner, furnace, hot water heater,
appliances, winterizing, cleaning and maintaining of the property (In a dorm or campus housing, these
expenses are covered by the college/university)?

Time
If you decide the investment would be worth the financial expense, then you also need to take a look at time:
• Do you have time, or resources to take care of the property management?
• Who will you call cross-state or inter-state for repairs to the property?
• Who will handle eviction of other students in the house if they fail to pay rent?
• Will your child/student be responsible enough to report, and repair, any breakdowns in the house/investment you’ve made to save money so that the property is maintained and doesn’t become a money pit?

Source: M. Anthony Carr

Remarks: Housing costs are quickly becoming the most expensive aspect of getting a college education, far exceeding the costs of tuition, books, etc. For years, parents of students have been contending with increasing rents, less availability, and the devaluing of their own home investment. Renting has become an effective way to waste money while their children are in college, which is driving this migration towards home and condo ownership among parents of college-bound kids. Renting an apartment for your child for 4 or 5 years will amount to nearly $60,000 by the time they finish college, and investment that will effectively have no visible return other than the degree your kid receives, which may or may not be lucrative for you. Owning, on the other hand, is not all that much more expensive when all is said and done, is a way for your child to improve their credit if you use a Kiddie Condo loan from the FHA, and is an investment that could to continue to provide returns long after your child graduates from college.

October 15th, 2008 by AllStudentRentals.com

A glance at college enrollment figures over the last few decades shows some dramatic trends. Shortly before World War II, only approximately 160,000 Americans were in college. But thanks to 1944’s Servicemen’s Readjustment Act, better known as the G.I. Bill of Rights, in the years immediately after the war, approximately 2.2 million military veterans went to college. A few decades later, a swell of
“Baby Boomers” born between 1946 and 1964 crowded college campuses; enrollment rose to nearly eight million in 1970.

Now, get ready for the Millenials, because colleges across the country certainly are. Many of this group of 75 million children of Baby Boomers, also known as the “Echo Boomers”, will be attending college this decade, and this surge of incoming college students is capturing the interest of real estate professionals because providing private off-campus rental housing to these college students can be a great investment opportunity. But even if your firm does not focus on providing student housing, trends in this market will likely affect you in the years to come.

Why Student Housing is a growing market

There are several reasons why many real estate professionals are becoming interested in
investing in student housing:

• That wave of Echo Boomers will be filling college classrooms for years to come. The National Center for Education Statistics projects that college enrollment will grow by 11% between 2003 and 2013.
• College enrollment trends are even better than generational demographic trends–for most of the years between 1995 and 2014, the growth rate in college enrollees is expected to exceed the growth rate of 18 to 24 year olds.
• Today’s college students are taking longer to graduate, so they need student housing for a longer time. According to the report Trends in College Pricing 2005 from the nonprofit organization the College Board, almost 40% of today’s undergraduates are older than 24.
• Higher education tends to be less affected by economic trends. The reason for this is simple: when the economy is slow, people seek a college degree to improve their marketability in the job market; when times are good, a college degree is an important credential.
• The median rent increase among student housing apartments has been higher than the rent component of the Consumer Price Index over the last two years, according to National Multi Housing Council (NMHC) calculations.

Our findings Two years ago, NMHC took our first look at the student housing market niche by examining 64 “college towns” across the country to see what the demand for student housing was at that time–and what price the market was allowing. To build on that research, we returned to those same 64 college towns this year to look at rent growth between 2004 and 2006.

To get a helicopter-level view, we calculated a median rate of 7% overall across all 64 markets and across all the different types of units (studio, one-bedroom apartments, two-bedroom apartments, etc.). This 7% growth rate slightly exceeds the 6.5% growth in the Consume Price Index’s broader rental measure during the same period, indicating healthy rent growth in student housing.

Of course, such a broad median figure is only a starting point. Before investing in a particular college town, it pays to do your homework. Not surprisingly, of the 64 college towns we examined, many of those that recorded the biggest rent growth between 2004 and 2006 were in areas with already high housing costs. With some of the highest housing costs in the country for both rental and owned housing, California’s
student housing picture mirrors those high housing costs.

For example, Stanford University has the highest rents for units with two bedrooms and two bathrooms as well as those with three bedrooms and two baths; $2,069 and $2,534, respectively. And the University of California at Irvine has the highest monthly rents for studio ($1,394), one-bedroom ($1,481), and two-bedroom, one-bathroom ($1,637) apartments.

Important Implications for the Future No longer content with one shared bathroom per hallway and a single TV lounge, the Millenials starting college in 2006 expect the full range of amenities in their accommodations; cable television, high-speed Internet and fitness centers are some of the luxuries they demand. So, studying student housing can provide an important lesson for developers and operators of all
multifamily housing. When today’s students graduate, they are going to demand the same amenities in their post-college housing–in other words, since today’s students are tomorrow’s apartment renters, the entire industry is wise to pay close attention to what today’s students are seeking in their housing.

Source: GlobeSt.com

Remarks: This article highlights an ongoing trend in American education culture. More and more kids are entering higher education environments every year, and the simple fact is that there is not enough room for all of them. This excess of young people puts a strain on overburdened college housing departments who expect the private market to make up the difference in available beds. This can be seen as a blessing and a curse for the surrounding community, but it offer amazing investment potential for those who are willing to take a chance. Student housing has a reputation as high risk based solely on the perceived attitudes of young people. While it may be true that investing in student housing carries some risk that is unheard of in other situations, the payoff can more than compensate for this fact.

October 15th, 2008 by AllStudentRentals.com

According to Michael Zaransky, co-CEO of Prime Property Investors based in Northbrook, Ill., and author of Profit by Investing in Student Housing: Cash In On the Campus Housing Shortage, the opportunity has staying power. “About 80 million ‘echo boomers’ will turn eighteen over the next ten years,” he says. As they do, they will head to college in record numbers, further straining their chosen school’s already stretched budgets, especially if it is a public university.

“After funding enrollment, research, and hiring more professors, there is not enough money left for building dorms,” explains Donna Preiss, founder and CEO of The Preiss Company, which rents, manages and develops investor-funded student housing. This is why many schools are relying on the private market to supply off-campus housing instead.

That is a good thing for Howard and her husband who own a rental building close to campus. “So far, our building has been a very good investment,’ adds Howard, whose business —managing student housing investments for other owners — is also thriving as students scramble to find a place to live.
Not only is full occupancy typical for student housing, says Zaransky, so is the ability to increase rents. The students show up regardless of local unemployment or interest rate levels, and they pay the going rate since they have to live somewhere — besides adding roommates can keep even increased rents affordable.
That this niche operates primarily on supply and demand is its key attraction to investors. Also key is its positive cash flow despite hefty expenses — real estate taxes, high insurance premiums (reflective of the reputation of student renters), utilities, repair, maintenance, advertising and fees for management services.
But not all college towns or investment opportunities are created equal. Like any investment, selecting a property requires some homework.

Location, Location, Location
The best properties are within walking distance of a campus, says Zaransky. They are also located where the kids are increasingly choosing to go to school.
“The southeastern and southwestern states especially draw the most kids,” says Preiss, who notes the northeastern schools are more likely to institute enrollment caps which limits their attractiveness to investors. Zaransky also warns against going where rental properties are already abundant, as in large urban areas like Chicago and New York, especially after the recent run up in property prices there. “The odds tip in an investor’s favor with moves to pure college towns,” he adds, noting that Boston is the exception to this.
To help identify prime campuses, Zaransky uses a ratio to relate the number of university-owned beds to enrollment, using data mined from registrars’ offices. “Nationally, this ratio averages about 30 percent,” he reports. But it varies widely. At Arizona State University, for instance, he estimates the ratio to be 11 percent meaning 89 percent of ASU students are renting off-campus.
That imbalance is precisely what Rick Steele, a Denver businessman is looking for. His son will be attending ASU this fall and Steele intends to invest in a condo for him. This is not Steele’s first attempt at making a student housing investment. He wanted to buy property when his older son was in school in Providence, R.I. But that market seemed to offer minimal price appreciation and most of the available property involved older boarding houses. “It did not make financial sense since they were in need of so
much maintenance and repair,” says Steele, who opted to pay rent instead. He finds the Phoenix/Tempe market much more hospitable. “It is so vibrant and the housing stock is newer,” he says.

Newer is better for today’s students, who prefer buildings with pools and saunas and view wireless Internet
connections as an essential. Preiss, for example, builds her units with bedroom-to-bathroom parity so roommates do not have to share facilities.
“I figure with what I would pay for a dorm or fraternity, at worse I may breakeven when I sell. If the property
appreciates, then it will help offset the education cost,” says Steele, adding “Either way, at least my son will have a nice place to live while he is there.” Steele’s attitude is a good one and realistic for parents who only expect to hold their ‘kiddie condos’ for three-to-five years.
“It is really too short a period of time to realize enough of a return after the expense of holding and then selling to make it worthwhile,” says Stuart Tsujimoto, a certified financial planner with the Financial Network in Torrance, CA. He speaks from experience, having bought a condo for his daughter while she attended San Diego State University. Tsujimoto, who bought the condo outright rather than mortgaging it, feels that after factoring in his expenses plus the realtor’s commission when he sold, he would have made roughly the same return on his money by investing in a mutual fund and making withdrawals to pay for rent.
But for those who intend to buy and hold after graduation, the experience seems to be more positive. Tim Hinz, a realtor with Keller Williams in San Diego has had a number of clients buy condos for their college-bound kids.

“So far everyone who did, held onto it or gave it to the child who assumed the mortgage payments after graduation.” Many, given the particulars of the area, may also be holding for a retirement use later on in life.
Preiss also says most of her clients view their student condos as long-term investments. Even her parent-buyers tend to hold after realizing how attractive the cash flow is. They simply have her, as the property manger, rent out the freedup ‘bed’ once their child moves on. In Preiss’s developments as in others, leases are written by the bed or directly with each roommate, removing the legal onus of having to enforce a lease from parents, investors or owner-students.
While buying a ‘kiddie condo’ can be advantageous versus paying rent or the dorm expense, especially if a parent can access a Federal Housing Administration program to help finance it. Dubbed the “Kiddie Condo Loan,” the program allows students — and non-students — to purchase a home with an assist from a blood-relative’s good credit standing and cash. The home must be considered the primary residence of at least one of the borrowers, but renting out space to roommates is allowed. If the child moves out after graduation, the borrowers would have to refinance or sell the property to pay off the FHA mortgage.
These loans only require 3 percent down and since they are considered owner-occupied, they qualify for all the tax advantages of a primary residence; whereas a condo purchased as a second home or investment property may limit the tax breaks and raise the interest rate offered.
In addition to not having to deal with dorm-life, the owner-child benefits from building a credit history, having a place to live, and potentially assuming the responsibility of being a landlord to their roommates.
Despite those financial incentives, Zaransky advises parents not to feel obligated to invest where a child is attending school. Actually, he sees no reason to link the investment to a child at all.
“It just needs to be a good investment — rents need to be rising in the area you choose, and there should be an opportunity for appreciation over time. If those factors are not present at a child’s university, then parents should invest in another town and pay rent for their child’s housing instead,” he says.
For those who cannot swing the purchase of a condo or multi-unit building as an investment, there is another option for cashing in on the student housing shortage. There are actually two publicly traded Real Estate Investment Trusts that focus on student housing. Each offers a generous dividend yield and allows shareholders to participate without having to deal with the responsibilities of ownership. They are:
• American Campus Communities (Symbol: ACC)
• Education Realty Trust (EDR)
Regardless of how one chooses to invest, with growing demand for housing outstripping its supply, the investment returns are expected to continue far longer than the four-to-five years a child spends in college.

Source: MSNBC

Remarks: College is an expenisive option for the majority of parents across the country. The combined costs of tuition, rent, books, utilities, insurance, and daily necessities can be overwhelming and quickly add up to tens of thousands of dollars a year. That being said, there is growing trend of investors that are realizing the potential of lucrative student markets, and realizing that while having your child in college might present a financial burden, there is no reason you can’t be smart about it and even have the opportunity to earn a little return on your investment. College enrollments are increasing at a rapid rate, and there is no slowing down in sight. The high school graduating class of 2009 is estimated to be nearly 3 million kids nationwide, a great number of which will be heading off to college in the fall. Universities are overwhelmed by new students, providing an excellent opportunity for the savvy investor. I have been in college for 5 years, and in that time the average price of rent for an off-campus place has gone up by nearly 20%, a figure that will only continue to rise. Rental markets are strong when the economy is strong and when the economy is in the toilet like it is now. Property ownership in a college town is rapidly becoming a much safer bet than more conventional real estate practices.

October 1st, 2008 by AllStudentRentals.com

For years, San Jose’s vision for downtown was based on the dream of young professionals living in high-rise condos and shopping and doing business in a hip, fast-paced 24-hour city.

But the collapse of the housing market is forcing developers and the city to put their dreams on hold. Upscale condo sales have slowed to a crawl, and developers in desperation are turning their for-sale homes in the downtown into rentals, in hopes of seeing some return on their multimillion-dollar investments.

For city officials who spent millions in public subsidies trying to create a downtown full of committed homeowners, the trend stings. But they say there is no choice.

“The problem we have now is that a lot of for-sale units are coming online at the same time, and they are obviously struggling,” said San Jose Housing Director Leslye Krutko. “Right now our concern is to try to stabilize the market.”

The latest project to convert to rentals is Barry Swenson’s Skyline, an 11-story, high-rise tower near Highway 87. The San Jose City Council approved the conversion Tuesday after Swenson closed his sales office and ceased marketing the 242-unit project because he couldn’t attract buyers.

The project follows two others: The downtown Globe development in June received approval from the city council to rent out 76 units it once considered selling. Swenson’s other project, The Lofts, on The Alameda, also recently received council approval to rent the last 11 of 42 units because the developers could not sell them.

In each case, the developers are being allowed to rent the units for up to five years. They are banking on the housing market coming back to life, allowing them to sell the units down the road.

But it could take a while. Still, they overwhelmingly prefer renters to empty, vacant buildings. City officials say they want to encourage people to live in the heart of the city.

“We want people downtown whether they rent or own, and we welcome thousands of new residents in the next few years,” said Councilman Sam Liccardo, who represents downtown. “San Jose continues to have a healthy rental environment despite the economic troubles in recent months.”

How many condos are being converted to rentals is hard to calculate. That’s because only projects that receive a public subsidy or are in the redevelopment area are required to return to the council for approval to change their use.

With the economy gasping for breath, the housing market spiraling downward and unemployment rates soaring, officials expect more and more valley residents will be living in rentals over the next few years.

In Santa Clara County, condo sales dropped 25 percent from August 2007 to August of this year. The median price of those homes during that period was also way down, from $525,000 to $385,000. As for single-family homes, 5 percent fewer were sold during that period, and the median cost fell from $805,000 to $592,750.

“We have to be realistic that this is the most difficult financial market we have ever seen,” said John Weis, deputy director of the redevelopment agency.

Krutko added that “we are seeing our projects in the planning stages converting to rentals instead of sales.”

Some of San Jose’s downtown towers — such as Swenson’s City Heights, which has sold about 50 percent of its units — are doing OK. But they are clearly the exception to the rule.

Swenson began marketing the Skyline project at Lick and Alma avenues in March. By June, the interest was so faint that he decided to convert the first phase of the project — 121 units — to rentals.

Those who bought into the condo projects before the housing market turned sour have mixed feelings about the trend.

Veronica Galvan bought a unit at The Lofts a little more than a year ago. And she doesn’t mind that her new neighbors will be renters.

Still, Galvan worries that some of them won’t take care of their units as well as the homeowners do. “I think there’s going to be a difference,” she said. But “let’s see in a few years.”

Hector Salitrero, a member of The Lofts’ Homeowners Association board of directors, said he would rather see Swenson rent the properties than sell them off in a depressed market.

“I don’t see it as a bad thing,” he said. “I see it as natural reaction to the housing market.”

Source: San Jose Mercury News

Remarks: While it might be true that high-rise San Jose condos are not the prime market for student rentals, the trend that is outlined in this article has been proven to be true time and time again, in nearly every market across the nation. When the economy is in a tailspin and one of the hardest hit sectors is real estate, the focus will shift to the rental market, which will continue to be profitable no matter how bad the housing market is. If you own rental properties, your potential client base has been skyrocketing for the last year. Even with this advantage, you need a comprehensive marketing plan to get exposure for your properties, and AllStudentRentals.com can provide all the necessary tools, with no initial costs, and a knowledgeable staff to assist you.

August 27th, 2008 by AllStudentRentals.com

With University of California (UC) tuition and fees running around $8000-$9000/year, and nationwide tuition also increasing, all college students have to find ways to save money.   Sure there are many ways students can go about finding financial aid, applying for scholarships, and taking out various loans to fund their education and save money, but I prefer to focus on the housing aspect of college.

From the chart below, you can see I tracked my apartment living expenses (for 5 years) that encompassed rent, electricity, water, and cable internet/TV.   My 60 month average of living off campus in the UC San Diego area averaged $294.62.  If I remove the one month that I subleased my room for a month during the summer, then my average increased to $299.62.  Either way, it’s very difficult to really beat under $300/month rent in a very nice area near UCSD and La Jolla.   During this time span, I live at Costa Verde Village and La Jolla Crossroads, both luxury garden apartments with swimming pools, jacuzzis, communal gym, and many other apartment amenities.

Cost/month for a 60 month time frame

Keep in mind that I never felt I sacrificed the quality of living during the 60 months of living off campus.  I didn’t live in an area that was visually undesirable or live with an area that contains a high rate of crime and violence.  I lived within a couple of miles of UC San Diego and within close proximity to University Town Centre mall, Whole Foods (WFMI), Vons (SWY), Starbucks (SBUX), Ralphs (KR), and many restaurants.   During this time frame, I did relocate three times (twice within Costa Verde Village) and lived with four to six people in every situation.  How did I do it?

Look For Move in Specials

Most times, move in specials would be offered to attract new renters and these apartment complexes like Costa Verde or La Jolla Crossroads would offer a partial month free or a 10-20% price reduction compared to the “retail price.”  You can get an even better deal if you intend to move in a month right before the major influx of college students are looking for housing (late May/early June or late August/early September).

Find Apartmentmates, Especially Someone to Share a Room

Finding people to live with is extremely important if you want to save money.  Living with 4 or 5 people will allow the utilities to be split multiples ways and toward the termination of the lease, everyone will be responsible for any necessary cleaning fees.  Just finding a roommate to share a room should save you $3500-$4500 over the course of a year.   If you’re someone who can’t stand sharing a room, just consider the $4000 savings you could allocate toward investing, food, or other college expenses.

Try to Live in the Same Apartment For More Than a Year

The more people have to move, the more costs are involved like paying for overlap to ensure that you have enough time to move from one location to another.  For some people, they may be paying for two places for up to a month while trying to make the transition.  Also the time it takes to move is very bothersome and time equals money.  For those that are light travelers and don’t own much, this might not be as big of a factor, but those who own furniture and bigger items will have to consider the cost of renting a U-Haul or a truck.  At the apartment I lived at, living for at least two years ensured that painting cost at the termination of the lease would be free.  Make sure to find out these long term bonuses before you commit to a lease.

Sacrifice Common Area Space

While this might not be a practical situation for all people, I rented out our living room for the first half of the time I lived off campus, which equated to an approximate $3000 savings over the course of those 2.5 years.  This does cut into the communal area for social gatherings but to me, the savings outweighed the cost of losing that common space.  For the more ambitious savers, renting out the dining room will also generate some additional savings.  I rented out a space (enough to fit a mattress and desk) near our dining table for about four months which yielded another $250 in savings.

Look For Subleasers While Leaving the Apartment for Extended Amounts of Time

There are kids looking for sublease situations while they are in between leases or just looking to rent for a summer session.  They can easily be found through Facebook marketplace or the housing section of Craigslist.  A lot of times, you can sublease your part of the apartment out for more than what you pay because people will pay a premium for a short term rental situation.  I would only consider subleasing if you intend to be away for at least one month.  Any less seems like too much of a hassle for the savings.

Sure, there are many other factors you have to consider when looking for an apartment or townhouse while in college but costs definitely should be within the top of your priorities.   Apartment chemistry, roommate habits, and proximity to campus should also be factored but are more case dependent on the individual.   Happy renting.

Source: Investing Happily

Remarks: Good article about how renting can save you money. Renting isn’t the only option for housing but definately can be the cheapest. Don’t believe me me? Check out some of our listings to see how low rent can be.

August 25th, 2008 by AllStudentRentals.com

Michael Rodriguez planted a “For Rent” sign one Sunday morning in the yard of a three-bedroom, two-bath house he owns in Salinas, Calif., a farming community 10 miles inland from the Monterey Bay beaches and about an hour from Silicon Valley.

That day, Rodriguez received 34 calls from prospective tenants. “The next day, I was talking to somebody, and I looked over and the sign was gone,” said Rodriguez, the broker/owner of Platinum Capital Mortgage & Estate in Salinas. “Somebody was trying to eliminate the competition.”

Salinas, like much of California, is facing a housing slump and a surge in foreclosures. But the rental market is humming along thanks to its relatively affordable housing costs and proximity to Silicon Valley, where high-paying tech jobs are plentiful. Salinas metro area apartment rents increased 5.6% in the third quarter, compared with the same period last year, and the vacancy rate has fallen to 2.4%, one of the nation’s lowest.

BusinessWeek.com asked Dallas apartment information company AXIOMetrics to rank the metropolitan areas with the best and worst effective rent (the asking rent minus any landlord lease concessions) and found that, of the 88 U.S. metro areas tracked by the company, Salinas was the sixth-strongest. In Tacoma, Wash., where there is an overflow of military personnel from nearby bases looking for apartments, rents increased 7.8%—the biggest increase in the nation. Salt Lake City, Tulsa, Oklahoma City, and Long Island, N.Y.—areas with robust job markets—also made the top 10.

“The top rental markets were less impacted by the housing bubble bursting,” said Ronald G. Johnsey, president of AXIOMetrics. “The job growth in these markets is probably still good, though the rate of job growth is declining.”

Florida and Arizona dominated the list of metro areas with the biggest rent drops. Housing prices in those states are crashing, and so many people who could not sell their homes have instead put them on the market as rentals. Those single-family home rentals are competing for tenants with apartment complexes. Effective rents have fallen as much as 9% in the worst Florida markets—Naples and Cape Coral—where vacancies have jumped to about 17%. Apartment landlords are offering two or more months of free rent in some cases to fill vacancies.

The single-family home rentals are “affecting the apartment rental market,” said Jack McCabe of McCabe Research & Consulting in Deerfield Beach, Fla. “That’s going to continue to happen until you see a decline in the for-sale inventory. Once that happens, people renting out these units will end up putting them up for sale and that will lessen the rental inventory.”

Keith Oden, president and trust manager of Houston’s Camden Property Trust (CPT), one of the nation’s largest real estate investment trusts concentrating on multifamily housing, says the weakness is concentrated in places such as Arizona, Florida, and Nevada, where the job market is weak.

But in much of the country, rents are strong. People are happy to sit on the sidelines and rent until the for-sale market returns, he said.

“Fewer people are moving out of our apartments to buy homes,” Oden said. “Last year in our portfolio, about 20% of tenants moved out to purchase a home. In the first six months of this year, it was 14%.”

In Tacoma, which continues to experience job growth, many people are renting because—with increasingly restricting lending standards—it’s tough to qualify to buy, said Dick Beeson, broker/owner of Windermere/Commencement Associates. Tacoma is attractive to renters because it is an affordable alternative for people who work in Seattle, just over 30 miles away. Beeson said he expects rents to begin stabilizing next year as more investors lease out homes they couldn’t sell.

In uncertain times, people rent, said Walter David Smith, manager of Belhaven Residential, which owns 315 apartments near downtown Jackson, Miss., the third-best apartment market on our list. The demand for apartments was boosted in Jackson after Hurricane Katrina flooded the coastal areas and forced refugees inland.

The weak housing market is keeping people in leases, Smith said.

“This time last year, we probably had 10% vacancy,” Smith said. “Right now, we’re at full occupancy.”

Eric Thomsen, a 32-year-old computer network analyst who rents a one-bedroom apartment in Jackson for $509 a month, is not eager to commit to anything more than a one-year lease.

“When the economy is unsure, you’re unsure,” Thomsen said. “It’s easier to work your way out of a lease than a mortgage.”

Source: BusinessWeek

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