Shadow Market Is Hot This Fall

I spent the last three days taking a look at the private rental market. It’s been a while since I’ve done this and I was pleasantly surprised by the quality of what your dollar will get you in the private sector, as compared to the large apartment communities managed by property management companies.

For this adventure, I worked with private landlords who owned their own 4-8 unit buildings and real estate firms that are managing houses that have not sold or are now bank-owned assets. The biggest difference I found was the skimming of basic Fair Housing practices.

At least four building owners asked questions such as, “Got any kids?” or “Married?” Twice, I was offered the unit even though the Owner supposedly had already accepted someone else’s Security Deposit. When I questioned this, saying, incredulously, “Oh, I don’t think I can move next weekend. I need to at least give my current landlord a 30-day notice,” I was told, “Are you sure? The guy that wants this hasn’t called me today and he’s at least 89 years old! You would make a better tenant!”

As tempting as this may be, I declined saying, “Well, if he backs out, please call me.”

It was amazing to me that the private landlords of the small buildings were very accommodating as to allowing modifications to their units. I could paint, install me own appliances if I didn’t like the ones provided, and hang window treatments. One very nice man said he would change out the vinyl and install ceramic tile in the kitchen and bathrooms.

The real estate professionals were not so lenient. They were all about getting a lease signed TODAY. And by the way, you are responsible for all the lawn care and the snow removal. If you have problems, you can call the office but it might take a while before we can get the maintenance crew over there.

“So what happens if the water heater goes out?” I asked.

“Oh, we don’t handle replacement of the water heater. That’s on the tenant. You would have to contact the owner and make arrangements.”

“What? Why would I have to be responsible? It’s a health standard to have hot water,” I said.

“Yeah? Well, of course, you can always replace it and ask the Owner to reimburse you.” he said. (Okay, so maybe this guy is not the real estate professional I would ever choose to work with "in real life" if I was looking to hire someone.)

I will say that almost all provided great curb appeal! There were a couple of small houses in questionable neighborhoods that looked pretty run down. In fact, I didn’t even go inside those. After I completed my showing appointments, fourteen in all, I can tell you that no one can offer the amenities of the apartment communities unless it was a condo community. Nor, could they compete with maintenance issue resolution and the convenience of offering on line work order request submission. And of all these landlords and real estate agents, guess how many followed up with me? One out of three. That was it. The most significant difference I noticed was this: the private sector market is looking to close the deal quickly. Several times, as I was arriving or leaving a Showing appointment, someone else was also there to see the same available unit. This created such a sense of urgency! I admired that and have decided I think booking back-to-back appointments is defintiely a marketing strategy that I will employ going forward with our communities all year instead of only in the spring and summer months.

The best and the worst of the private sector market … One thing was clear, the shadow market is, as I suspected, definitely alive and well and thriving in this area. Obviously this was not a scientific analysis, though I think it is in line with my expectation.