As buying a home becomes increasingly out of reach for many in metropolitan areas, more and more people are choosing to rent. Rentberry has developed a website to ensure transparency among applicants, allow tenants the power to set bids on their rent, allows landlords to select higher quality tenants. Landlords post photos of their properties and select their desired rent. Applicants apply and bid on their preferred unit. Landlords are able to select the tenant with the highest qualifications with the highest bid.
While this startup company has only been around for a year, Rentberry's impact on the market may offer some significant housing changes. Critics believe this will take the Bay Area's sky high prices to a new level. Contrarily, CEO of Rentberry believes that through the power of knowing and controlling the rental process, tenants are actually saving money.
See full article and link below.
How much will you pay for your next apartment?
With Rentberry, that all depends — on how much you’re willing to bid. The new real estate website is shaking up the Bay Area’s housing market by encouraging potential renters to bid on homes the way they would on designer handbags or celebrity autographs on Ebay.
Some housing advocates worry that Rentberry — and similar Vancouver-based startup Biddwell, which is set to expand to California by the end of the year — could intensify the existing competition for Silicon Valley’s few available houses and apartments. Critics envision the websites spurring cutthroat bidding wars that will drive sky-high prices even higher, but the platform’s founders say their tenants are actually saving money.
“It’s not about increasing prices,” said Alex Lubinsky, co-founder and CEO of San Francisco-based Rentberry. “It’s all about knowing and controlling the situation.”
But Rentberry’s impact on the Bay Area market may be particularly significant, as buying a home becomes an increasingly unattainable goal for many, and more people choose to rent. The proportion of local renters is up about 5 percent compared to 10 years ago, according to a report by New York University’s Furman Center for Real Estate and Urban Policy.
On the Rentberry website, landlords post photos of their properties, along with the desired monthly rent, and potential tenants then compete openly with each other to float the best offer. The site tells prospective tenants how many other applicants are in the running for each home or apartment, lists the highest offer received so far, and suggests a higher bid. Tenants also bid on a security deposit.
The site launched last year in San Francisco, Los Angeles and New York, and expanded its reach nationwide in April. Tenants pay $9.99 each time they submit an application for housing, and landlords who have more than two properties on the site pay $24 per month. So far, landlords have listed nearly a quarter of a million properties on the platform.
For some housing advocates, who are watching with dismay as ever-rising rents squeeze tenants throughout the Bay Area, Rentberry raises alarm bells. The median rent for a two-bedroom apartment in San Jose was $2,566 in October — up almost 22 percent from January 2014, according to Apartment List. Rent in San Francisco rose by 21 percent during that time period, and in Oakland it climbed 16 percent.
“I think that it’s unfortunate,” Sophia DeWitt, program director for East Bay Housing Organizations, said of Rentberry’s business model, “because any site or option like this that is going to increase or strengthen the speculative market in housing is bad for rental prices. That will just increase the rental prices, and it’s bad for renters.”
On average, tenants using Rentberry pay between 4 and 6 percent below the landlord’s asking price, Lubinsky said — even in the Bay Area. When the site first launched last year, he told the San Francisco Chronicle that landlords could expect to see rental income increase an average of 5 percent. But that original estimate was based on an early beta test of just 10 landlords, he said, and did not end up becoming a larger trend.But Lubinsky swears his platform isn’t raising rents — in fact, it’s doing the opposite, because landlords are not automatically handing the lease to the highest bidder. It’s difficult and costly to evict a bad tenant, so most landlords would rather find a tenant who will stay for years and pay the rent on time, instead of a tenant who signs a lease for more money but stops paying after a few months, Lubinsky said. To do that, Rentberry landlords evaluate a potential tenant’s credit score, renter profile and other qualifications. And tenants can see each other’s information (anonymized to protect privacy), and get a clearer picture of where they stand in the competition.
Greg Rempe says using Rentberry saved him money. The 23-year-old moved from New Mexico to San Jose in June for a job at a startup, and stumbled upon Rentberry while searching for apartments on Google.
He bid on three apartments, but was determined not to enter a bidding war. For each apartment, he chose a maximum price that he wasn’t willing to exceed. One of the landlords ended up accepting his offer of $2,000 a month for a one-bedroom — below the $2,100 asking price, and below some of the other bids. It was more than he was used to paying in New Mexico, but Rempe walked away feeling like he got a good deal.
“I’m assuming it’s because I have a good credit score, but I don’t really know,” Rempe said. “Maybe I got lucky.”
Rempe appreciated the transparency of the bidding process. It was nice to know immediately where he stood in relation to a landlord’s other offers, he said. And after he moved into his new apartment Rempe used Rentberry to set up automatic payments for his rent, meaning he didn’t have to go through the hassle of sending his landlord a check every month.
Rentberry isn’t the only real estate platform that lets tenants bid on their rent. Biddwell operates with a similar model, but with one key distinction — bidding is done confidentially, so prospective tenants can’t see competing offers and try to one-up each other.
“We consciously make an effort to protect against bidding wars,” said co-founder and CEO Jordan Lewis, who helped launch the company in late 2016. “We want to use it more as a tool to facilitate negotiation.”
But that wasn’t always the case. When Biddwell launched the first test version of its platform, it looked more like Rentberry — it used an open system where potential tenants could see and respond to each other’s bids. That bidding process quickly began driving up rents, so Lewis’ team changed their game plan, and hid the bids. Potential tenants now see how many people have made an offer on a property, and if those offers are coming in at, above or below the asking price, but they can’t see individual bids.
As a result, 64 percent of offers accepted on the platform are below the landlord’s asking price, Lewis said.
Matt Regan, senior vice president of public policy for the Bay Area Council, said he isn’t worried about companies like Rentberry and Biddwell wreaking havoc on the local housing market. That’s mostly because the situation is already so bad that these platforms likely can’t do much to make it worse. In fact, he said, the Bay Area’s dire housing shortage means prospective tenants already engage in apartment bidding wars every day.
“This is probably a storm in a teacup,” Regan said, “compared with the tempest that’s swirling around us.”
Below is a blog post from Credit.com stating that single family rentals are developing faster than home purchases and apartment style living. From our point of view, we tend to agree with much of what is stated in this article. However, we do not believe that the Boise market fits the mold described in this article.
We agree that the rental market has surged after the housing crash. However we do not agree that this has been limited to only single family rentals. Boise and the surrounding areas have been building thousands of apartments each year and their finishes are far superior over your typical starter home. Perhaps it was the millennials that started this trend, but we've seen renters from all generations. As we have posted over the years within our own blogs we not only saw the loss of confidence in homeownership but also saw professionals desire to rent due for the flexibility and the ease of using your smart phone to take care of any maintenance needs.
We are not seeing builders in the Boise area building single family homes with the sole intent to rent rather than sell. We do agree that a higher percentage of rentals within a subdivision can have a negative effect, but since Boise and Meridian are building so many luxury apartments, we're not really seeing this affect within many subdivisions
The 3rd quarter SW Idaho Narpm vacancy survey was completed and the results are below.
Melissa Sharone, President
Jack Harty, with Harty Mortgage Advisors, here in the Boise area, shares more of his wit concerning the prediction of interest rates and inflation. It's always a good, yet humorous read. Enjoy!
Janet Yellen said at her 9-20-17 press conference that the failure of inflation, in a healthy job market, to rise to the Fed's target rate is a "mystery". As a consequence, predicting interest rates is a mystery. In contrast, predicting past rates is highly accurate.
Where's inflation? Economists have been looking for it under all the usual rocks, to no avail.
Photo: Economic researcher doing research
It seems that the early September dip in interest rates was a short term phenomenon.
While it did not raise short-term interest rates, the Federal Reserve announced after its meeting on 9/20/17 that it was going to sell some of the bonds it acquired during its post-Crash "accommodation". That just added momentum to the upward trend in bond yields that we've seen for the past couple of weeks. See graph following.
10 Yr T Bond Yields - Past Six Months
We are back up to the rate level the prevailed for much of the spring and summer. While initially saber-rattling towards North Korea caused investors to move into the safety of bonds, now even threatening to annihilate North Korea has not caused investors to seek haven in bonds.
The Fed said they do anticipate raising rates in the future. Current guessing is in December...but those are just guesses. The tool show below is as reliable a predictor of interest rates as any other used by commentators.
However, some cognoscenti prefer to predict rates with the following tool:
(The fellow stroking the ball is a member of the Cognoscenti family
Employment trends have been good.
August National Unemployment rate at 4.4% (U3 measure) is at low Pre-Crash level. The more indicative Unemployment Rate of 8.6% per the U6 measure, is also at a Pre-Crash level.
Relevant Idaho August Unemployment rates are at historic lows:
Ada County 2.3%
City of Boise 2.3%
Boise/Nampa MSA 2.6%
State of Idaho 2.9%
National Labor Force Participation Rate is at an virtual 40 year low (see graph). Is that affecting labor supply and pricing?
Labor Force Participation Rate: 1975 - 2017
HARTY MORTGAGE ADVISORS
121 N. 9th St. - Ste 402
Boise ID 83702
Direct: 208 514 4766
Main: 208 344 4141
SW Idaho NARPM just released their 2nd quarter vacancy report for the Treasure Valley. It is showing the average vacancy being at 3.5% which is still low compared to the last recorded national average which is at 7%. Currently FRPM has a vacancy of 2.5%. We are seeing the single family home vacancy going down from quarter 1 and the multi family has gone up slightly. I feel that the time of year is the major factor in these changes from quarter 1. Summer is a very popular time to move and all though it creates a slightly higher vacancy it is also the key time to get peak rents. This report also shows that rents are still up and holding steady. FRPM still considers this a win for investors because despite the slightly higher vacancy, properties are still getting pre-leased prior to tenant moving out and we are still getting great rent amounts.
Read full report here: SW Idaho NARPM Quarter 2 Vacancy
Melissa Sharone, President
For weeks we've seen some signs that the rental market is softening to a more traditional rental market. We're over a month away for SW Idaho's NARPM 2nd quarter rental market analysis report, but we suspect we'll see increased vacancies and lower rents.
We're seeing longer days on market which increases vacancy. Rents are also being challenged and most landlords are opting to offer move-in credits over rent decreases. Other than filling new construction, move-in-credits have been something in the past. Move-in credits are the preferred approach as they protect the price point for renewals and other similar units that were just rented months prior at the same or higher rent. However, FRPM has done some testing and we are seeing a lower rent price point is converting better than the move-in specials.
For years Boise Landlords have been rewarded by being a bit aggressive with rents, but for the moment, FRPM is not recommending an aggressive approach. This could change in a month or two, but for now, FRPM is recommending that Landlords focus on rents to reduce days-on-market and lost rent.
Please take a moment to read the article that was recently published by Kristen Curtis in the residential resource. It features the importance of having good solid lease procedures when taking on inherited tenants. Kristen has done a great job of implementing these procedures here at First Rate and it definitely helps the transition of gaining inherited tenants go much smoother.
The most recent Swope Investment Properties Newsletter has some great articles for property investors that I wanted to pass on to our blog readers.
Page One: Stacy McBain provides a great summary of what to expect from the Ada County Assessor regarding value increases. She also summarizes the process for appealing assessed property values as well as some of the factors used in assessing investment properties.
Page Two: Eric Uhlenhoff describes how putting emphasis on "market" rents, could be the way to go due to a large disparity from actual rents to projected rents within MLS listings. So long as projected rents fall within market, this certainly is sound advice.
On the bottom of page two is an invitation to the AVID Investors Club. This club has been growing and has proven to be a great resource for investors. Members not only learn more about the real estate investment and rental market, but are also making great connections. For example, an AVID member helps facilitate a hard money loan for a property owner.
Page Three: I share an update to one of the metrics I track for Ada County 4 plexes showing how Gross Rent Multiplier has spiked and what this does to value.
Also on this page, Mary Nelson explains the advantage of working with a small brokerage who focuses on personal service. I have worked the opposite side of real estate transactions where the other side is a team and I tend to view it as an assembly line process. The product passes through several hands before final assembly, which works great when producing widgets.
To subscribe to these newsletters, please contact Shane Brown at firstname.lastname@example.org or 208-501-4000.
After posting the NARPM 1st quarter vacancy last week, we wanted to take a minute to share FRPM's 1st quarter vacancy results for 2017.
The overall average for FRPM was .53%. This is for multifamily and single family homes. This continues to be a record low for the past 5 years. Below is a graph with the 1st quarter vacancy for 2013-2017. The orange line represents the vacancy for 2017. As you can see the trend of low vacancy is still going strong.
The SW Idaho Chapter of NARPM (National Association of Residential Property Managers) just released their 1st quarter vacancy survey . The overall average vacancy is 3.7% which is considerably lower than the last recorded national average of 6.9%.
The results that are graphed below break down the vacancy between counties in SW Idaho as well as multifamily compared to single family. As you can see the multifamily for Ada county is currently sitting at 5% and the single family at 2.5%. For Canyon county the rates are at 2.9% for multifamily and 3.5% for single family. We are starting to see the vacancy rise slightly due to the time of year but these results as well as FRPM's vacancy are still at almost a record low for the past 3 years. These numbers are still allowing rents to increase, which is keeping the market strong.
To read full report click here. NARPM 1st quarter 2017 vacancy survey
- Boise Area Rental Market
- Property Management
- Boise Area Real Estate Market
- Interest Rates
- Boise Real Estate Market
- Boise and Idaho in the News
- Deferred property maintenance
- Rental Property Maintenance
- Fair Housing
- Are Landlords profiting from application fees?
- Update on Vacancy
- 3rd Quarter NARPM Vacancy Results
- SW Idaho NARPM Vacancy Trends Q2-2018
- Ada County Vacancy Trends
- Tony Drost
- Melissa Sharone
- Julie Tollifson
- Jim Sharone
- Tyler Selee
- Kurtis Tarbet
- Kristen Curtis
- Tyler Brown
- Tara Pecora
- Marie Swanson
- Lizz Loop