MONEY Rentals

The Money Mistake That 48% of Renters Make

List of bills to pay, with "paid" written in red on top
David Gould—Getty Images

They assume their on-time payments will help boost their credit score, according to a new TransUnion survey.

Most Americans know that a good credit score can open the door to lower cost loans for big adult milestones, such as buying a home or car.

Yet it turns out that many renters are misinformed about what goes into that somewhat mysterious three-digit number: Nearly half of renters ages 18 to 64 think rental payments to their landlords are automatically reported to the credit bureaus, according to survey results released last week by TransUnion, one of the nation’s three major credit reporting agencies. The survey also revealed that more than half of renters believe payments for cable and internet, utility and cellphone bills are regularly reported to the bureaus.

Credit agency firms TransUnion and Experian did recently start allowing rental payments to be collected and factored into credit reports. But in practice, most landlords do not yet share with the data collectors that you’re paying on time each month, says Ken Chaplin, senior vice president of TransUnion’s consumer division. Cable, internet, utility and cell providers also typically do not, he says.

Even if your landlord or service firm is one of the few that does report, the payments may not be included in the most common credit score lenders use, called the FICO score. So if you were counting on your on-time monthly rent checks to help you build your credit score, you’re out of luck.

Keep in mind that although being conscientious on paying your rent and utilities won’t help you, your failure to make a payment can hurt you. Some landlords and utility companies do report delinquent customers—not to mention the fact that your accounts could end up in collections. So this isn’t an excuse to stop paying these bills.

Instead it should serve as a wake up call that you may need to work in other ways to improve your credit score, such as paying car loans, student loans and credit card bills on time each month.

Related:

What is a credit report and when is it used?

How is my credit score calculated and how can I improve it?

MONEY Budgeting

Guess Which U.S. City Is the Most Expensive

141014_REA_EXPENSIVELIVING
Nikreates—Alamy

Hint: It's not NYC.

On average, American households spend the largest share of their annual expenditures on housing. The average family spends $16,887 on housing per year, equating to 33% of the average household’s annual expenditures. But how much do those expenses vary from city to city, and which places are the most expensive?

Well, the Bureau of Labor Statistics recently released a report (link opens PDF) detailing Americans’ average annual expenditures on housing and related items. And contrary to popular belief, New York City is not the most expensive city to live in. Two U.S. cities have overtaken it.

A breakdown of housing costs

The BLS took a deep dive into all the costs of housing, rather than simply comparing the cost of rent or average mortgage payments. Their analysis also took into account utilities (electric, water, and natural gas), household furnishings and equipment (textiles, furniture, floor coverings, appliances, and the like), housekeeping supplies, and other household expenses. What they found was that average annual expenditures on housing were far higher in both Washington, D.C., and San Francisco than in New York.

most-expensive-city-no-longer-nyc_large
Source: Bureau of Labor Statistics.

The data is current as of 2012, and housing costs in the District of Columbia and San Francisco have risen since then. In D.C., the rise in housing costs is being led by the redevelopment and gentrification of the downtown area, which in turn is being triggered by the high relative number of government and government-related jobs, particularly in the defense contracting sector. Baby boomers are also moving from the suburbs into the city.

In San Francisco, housing costs have always been high, but they’re spiking because of a confluence of factors. The continued boom in technology companies in Silicon Valley — most notably Apple, Google, and Facebook — means that a growing cadre of high-paid employees want to live in the area. Add in a longtime lack of housing development in the city, and you have a rise in housing prices that has become a contentious issue in the San Francisco Bay area as longtime renters are priced out of the city. TechCrunch’s Kim-Mai Cutler provides a great, in-depth piece on San Francisco’s housing problem.

The difference in annual housing costs between the two most expensive cities and the national average is a staggering $10,000. Excluding New York City, the difference between the two most expensive cities and other major U.S. metropolitan areas is over $5,000 annually. If you’re thinking of moving, it’s smart to compare costs carefully before moving to one of the most expensive cities in the U.S.

National differences in housing cost

While the above data is just from major U.S. cities, we have other data from the Bureau of Economic Analysis showing the real value of housing dollars in each state compared with the national average.

real-value-of-housing_large

You can see that generally, coastal states are more expensive than non-coastal states, as many people enjoy living near the ocean. You can also see that the Northeast on average is more expensive than the rest of the country except for California. These high costs, coupled with better weather and low to no income taxes, are why many retirees move south to Florida, Texas, etc.

If considering moving to a more expensive city, you should be sure the benefits will be worth the extra expense. For instance, while I pay a high cost of living to live in New York City, the quality of life that I get in the city makes it well worth it, in my opinion. While New York state is ranked poorly in terms of the happiest states in the U.S., New York City is ranked in the top quartile by happiness among U.S. cities, according to the Gallup-Healthways Well-Being Index.

The most important thing is to live in a place where you are happy. While the main determinants of happiness are the same for everyone, the specifics vary. Be sure that an increased cost of living comes with an increased quality of life.

MONEY mortgages

The Surprising Threat to Your Financial Security in Retirement

House made out of dollar bills with ominous shadow
iStock

More Americans could face a housing-related financial hardship in retirement, according to a new Harvard study.

America’s population is going to experience a dramatic shift during the next 15 years. More than 130 million Americans will be aged 50 or over, and the entire baby boomer generation will be in retirement age — making 20% of the country’s population older than 65. If recent trends continue, there will be a larger number of retirees renting and paying mortgages than ever before.

A recent study published by Harvard’s Joint Center for Housing Studies describes how this could lead an unprecedented number of America’s aging population to face a lower quality of life or even financial hardship. However, the same study also points out that there is time for many of those who could be affected to do something about it.

Housing debt and rent costs pose a big threat

According to the data Harvard researchers put together, homeowners tend to be in a much better financial position than renters. The majority of homeowners over 50 have retirement savings with a median value of $93,000, plus $10,000 in savings. More than three-quarters of renters, on the other hand, have no retirement and only $1,000 in savings on average.

While renters — who don’t have the benefit of home equity wealth — face the biggest challenges, a growing percentage of those 50 and older are carrying mortgage debt. Income levels tend to peak for most in their late 40s before declining in the 50s, and then comes retirement. The result? Housing costs consume a growing percentage of income as those over 50 get older and enter retirement.

How bad is it? Check out this table from the Harvard study:

Source: "Housing America's Older Adults," Harvard University.
Source: “Housing America’s Older Adults,” Harvard University.

More than 40% of those over 65 with a mortgage or rent payment are considered moderately or severely burdened, meaning that at least 30% of their income goes toward housing costs. The percentage drops below 15% when they own their home. If you pay rent or carry a mortgage into retirement, there’s a big chance it will take up a significant amount of your income. In 1992, it was estimated that just more than 60% of those between 50 and 64 had a mortgage, but by 2010, the number had jumped past 70%.

Even more concerning? The rate of those over 65 still paying a mortgage has almost doubled since 1992 to nearly 40%.

The impact of housing costs on retirees

The impact is felt most by those with the lowest incomes, and there is a clear relationship between high housing costs and hardship. Those who are 65 and older and are both in the lowest income quartile and moderately or severely burdened by housing costs spend up to 30% less on food than people in the same income bracket who do not have a housing-cost burden. Those who face a housing-cost burden also spend markedly less on healthcare, including preventative care.

In many cases, these burdens can become too much to bear, often leading retirees to live with a family member — if the option is available. While this is more common in some cultures, this isn’t an appealing option to most Americans, who generally view retirement as an opportunity to be independent. More than 70% of respondents in a recent AARP survey said they want to remain in their current residence as long as they can. Unfortunately, those who carry mortgage debt into retirement are more likely to have financial difficulties and limited choices, and they’re also more likely to have less money in retirement savings.

What to do?

Considering the data and the trends the Harvard study uncovered, more and more Americans could face a housing-related financial hardship in retirement. If you want to avoid that predicament, there are things you can do at any age.

  • Refinance or no? Refinancing typically only makes sense if it will reduce the total amount you pay for your home. Saving $200 per month doesn’t do you any good if you end up paying $3,000 more over the term of the loan. However, if a lower interest rate means you’ll spend less money than you do on your current loan, refinance.
  • Reverse mortgages. If you’re in retirement and have equity in your home, a reverse mortgage might make sense. There are a few different types based on whether you need financial support via monthly income, cash to pay for repairs or taxes on your home, or other needs. However, understand how a reverse mortgage works and what you are giving up before you choose this route. There are housing counseling agencies that can help you figure out the best options for your situation, and for some reverse mortgage programs you are required to meet with a counselor first. Check out the Federal Trade Commission’s website for more information.

All that said, avoiding financial hardship in retirement takes more than managing your mortgage. A big hedge is entering retirement with as much wealth as possible. Here are some ways to do that:

  • Max out your employee match. If your employer offers a match to retirement account contributions, make sure you’re getting all of it. Even if you’re only a few years from retiring, this is free money; don’t leave it on the table. Furthermore, your 401(k) contributions reduce your taxable income, meaning it will actually hit your paycheck by a smaller amount than your contribution.
  • Catching up. The IRS allows those over age 50 to contribute an extra $1,000 per year to personal IRAs, putting their total contribution limit at $6,500. And contributions to traditional IRAs can reduce your taxable income, just like 401(k) contributions. There are some limitations, so check with your tax pro to see how it affects your situation. Also, while contributions to a Roth IRA aren’t tax-deductible, distributions in retirement are tax-free.
  • Financial assistance and property tax breaks. Whether you’re a homeowner or a renter, there are assistance programs that can help bridge the housing-cost gap. Both state and federal government programs exist, but nobody is going to knock on your door and tell you about them. A good place to start is to contact your local housing authority. The available assistance can also include property tax credits, exemptions, and deferrals. Check with your local tax commissioner to find out what is available in your area.

Stop putting it off

If you’re already in this situation, or know someone who is, then you know the emotional and financial strain it causes. If you’re afraid you might be on the path to be in those straits, then it’s up to you to take steps to change course.

It doesn’t matter whether you’re a few months from 65 or a few months into your first job: Doing nothing gets you nowhere and wastes invaluable time that you can’t get back.

MONEY Rentals

This Is How to Deal With Even the Most Hellish Landlord

You shouldn't have to suffer when your landlord neglects your home.
Simon Winnall—Getty Images

Many landlords neglect their rental properties. Here's what to do if the owner of your home fails to maintain it.

Perhaps you’ve called, texted, and emailed your landlord to tell him your heating is broken, your toilet is leaking, and the sink is making an interminable drip-drip-drip sound that’s driving you nuts.

But your landlord doesn’t seem to have any interest in fixing these issues.

What should you do if your landlord isn’t doing his job? Let’s look at some specific scenarios to give you an idea of your rights and options.

When Time Is of the Essence

Example: I haven’t had any hot water in my apartment for three days. Showering is awful and I’m having trouble getting my dishes clean—it’s so gross. What can I do?

Solution: Your landlord is obligated to repair anything deemed “essential” to the health and safety of his tenants. This includes dealing with heating, water and electrical issues; remediation of mold or fungus; battling bug infestations; and keeping the roof in working order.

Make sure that, in addition to calling, emailing or texting, you also send your repair request in writing to your landlord. This written proof could be necessary down the line if you get into a dispute with him.

Tip: Emailing and texting might not constitute “official written notice.” Your lease may specify which forms of communication qualify as “written notice,” so refer to that first and foremost. However, in the absence of any specific communication method stipulated within the lease, you should snail-mail your landlord a letter. Why? It’s the most commonly accepted legal definition of “written notice.”

Paying a little extra for registered mail is also a good idea if you’re worried your landlord is actively ignoring you, as your landlord will have to physically sign and date the receipt when he accepts the envelope. Plus, you’ll have documentation to prove that you sent the letter. (Save the registered mail receipt!)

In addition, keep detailed records of all important dates (when you first noticed the problem, when you left voice mails, etc…) and take plenty of pictures of the problem (with a date-stamp on the photos, if possible) to show the extent of the issue.

If your landlord does not respond to your request, you are within your legal rights to take any of the below steps:

  • Alerting state or local health and building inspectors
  • Suing your landlord in small claims court
  • Breaking your lease for breach of lease terms (it’s best to consult an attorney before doing this to make sure you have a solid case and haven’t failed to do anything you needed to do under the lease terms)

Should you withhold rent payment until its fixed? Not advisable. Your landlord might use this as grounds for eviction. It’s better to keep your situation simple.

Should you repair the problem yourself (or pay to have it repaired) and then deduct that amount from your rent? Again, that’s not advisable. You’re best off doing your job (paying rent and sending written requests) and urging your landlord to perform his job.

When Your Property Has Been Damaged

Example: A pipe burst in my wall, sending water all over the place. A ton of stuff in my closet was ruined. I called my landlord yesterday and he still hasn’t shown up. What now?

Solution: If your personal property is damaged due to negligence on the part of your landlord — e.g., he hasn’t been maintaining the pipes properly, which caused the burst pipe — then you may have a case against him for reimbursement.

This is only if you’ve taken all steps within your power, including moving your property out of the way of the water (if possible) and alerting your landlord to any plumbing issues that might have signaled there was a problem.

If the pipe simply burst and it wasn’t anyone’s fault — e.g., due to an “Act of God” such as weather — your landlord is not responsible for the damage. You should always pay for renter’s insurance to cover your own personal property if calamity strikes.

When It’s Not Life-Threatening

Example: My kitchen sink has been dripping for the past three weeks. It’s driving us all crazy and keeping us awake at night, but my landlord doesn’t seem to care. Help!

Solution: Unfortunately your landlord is under no specific legal obligation to make repairs that are not deemed “essential.” Non-essential or cosmetic issues are up to his discretion, including changing light bulbs, fixing leaky faucets and patching a hole in your window screen. These things are annoying to put up with, but they don’t pose any immediate risk to your health and safety.

How can you determine whether or your not you have the right to minor repairs? First, examine your lease agreement. Some leases specifically state whether a landlord will make only essential repairs, or whether he’ll conduct non-essential repairs that you bring to his attention.

You’ll also want to consider if your repair request is the sort of thing your landlord would be concerned about from a business standpoint. Your hole-ridden window screen is something he may not care about (until he needs to rent the apartment out again), but a leaky faucet could wind up boosting the water bill, which many landlords cover themselves — giving you added arguing power.

When the Problem Is Your Fault

Example: I had a party and things got a little crazy. My ceiling light fixture got knocked off and now it’s hanging by a thread. Why won’t my landlord take care of it?

Solution: A landlord is only required to make repairs necessitated by normal wear-and-tear or by a defect in the property (appliances not installed correctly, etc.).

If the issue is a result of damage, misuse or negligence on your part — or on the part of any guests, children or pets staying with you — your landlord does not have to take care of it. For instance, if your cockroach problem is a result of your failure to keep the kitchen clean, good luck talking your landlord into ponying up the money to take care of it.

In cases like these, you’ll have to take care of the issue yourself, on your own dime, or risk having the damage deducted from your security deposit when you move out.

To read more from Paula Pant of Trulia, click here.

Related:

MONEY 101: Should I Buy or Rent?

 

 

MONEY home prices

America’s ‘Gayborhoods’ Are a Lot More Expensive, a Lot Less Gay

Castro Street in San Francisco is decorated in rainbow flags and balloons for Gay Pride month.
Castro Street in San Francisco. Cammie Toloui—Alamy

What becomes of a trendy gay neighborhood when housing prices soar and straight people move in?

As gay acceptance has risen over the years, gay people have increasingly moved away from historically gay neighborhoods, such as the Castro in San Francisco and Chicago’s Boystown. Simultaneously, more and more straight individuals and couples have felt comfortable enough to move into these neighborhoods. As a result, many gay neighborhoods—call them “gayborhoods”—aren’t nearly as gay as they used to be.

That’s the gist of a new book called There Goes the Gayborhood? by Amin Ghaziani, an associate professor of sociology at the University of British Columbia. His research traces the changing face of gay neighborhoods and explores the implications of these shifts in cities around the U.S.

For instance, from 2000 to 2012, the number of same-sex couple households increased in nearly every neighborhood in Seattle, with one glaring exception: Capitol Hill, described as the “center of the city’s gay and counterculture communities,” according to Wikipedia, experienced a 23% decrease in same-sex households over the same time span, the Seattle Times noted.

“This isn’t unique to Seattle,” Ghaziani explained. As gays have moved far beyond gayborhoods to other parts of cities and into small towns and the suburbs, a “straightening” has taken place in neighborhoods like Capitol Hill.

Much of Ghaziani’s research is based on Chicago’s Boystown, where he lived for nearly a decade, and where the idea for the book was born. “My friends and I began to notice changes in the character and composition of the neighborhood,” he said to the Chicago Tribune “We’d notice more straight couples holding hands and more baby strollers. That became a symbol. Oftentimes a sex store would close and a nail salon would open in its place.”

The shifting demographics must be viewed as a sign of growing acceptance—that of straight people in traditionally gay neighborhoods, and of gay people throughout the land. Still, many of the sources quoted in Ghaziani’s book worry that the blurred lines could mean that much of what makes a gayborhood special will disappear. In an op-ed he wrote recently, Ghaziani quoted Dick Dadey, who was the executive director of Empire State Pride Agenda in the 1990s, explaining, “there is a portion of our community that wants to be separatist, to have a queer culture.” Still, Dadey said, “most of us want to be treated like everyone is,” and, “we want to be the neighbors next door, not the lesbian or gay couple next door.”

Then there are the financial implications of all of these shifts. “It’s impossible to discuss gay neighborhoods without considering economic factors like rent and housing prices,” Ghaziani said in an email to MONEY. He pointed out some data from Trulia in the book showing that several traditionally gay neighborhoods, like West Hollywood and New York’s West Village, are extremely expensive places to live.

Meanwhile, according to 2013 report from Trulia, prices in urban U.S. neighborhoods have been increasing at a faster pace than the suburbs, and prices soared in gay-friendly city neighborhoods in particular:

Neighborhoods where same-sex male couples account for more than 1% of all households (that’s three times the national average) had price increases, on average, of 13.8%. In neighborhoods where same-sex female couples account for more than 1% of all households, prices increased by 16.5% – more than one-and-a-half times the national increase.

These numbers are backed up by other research, such as that highlighted earlier this year by Richard Florida, the celebrated urban theorist and author of The Rise of the Creative Class. In a City Lab post, Florida summed up recent research indicating “a connection between gay neighborhoods and some of the markers of gentrification,” and that “neighborhoods that began the decade with larger concentrations of gay men saw greater income growth, and, especially in the Northeast, greater population growth as well.”

Ghaziani writes, “I don’t think gayborhoods are dying.” But Florida doesn’t sound quite as convinced, writing, “As these areas of the city continue to change, potentially pricing out some of the gay couples who moved in decades ago, gayborhoods could just as easily become a thing of the past.”

MONEY Food & Drink

Grill Without Getting Grilled By Your Landlord

This guy is not doing it right. Anthony Saint James—Getty Images

Grilling is a key Fourth of July tradition, but renters are generally left out of the fun. Here's how to take your grilling indoors without sacrificing taste in the process.

This Friday, millions of people across the country will take to the backyard and celebrate their independence by grilling up burgers, hot dogs, and other all-American fare. But, like every year, one group will feel left out of the fun: renters.

Landlords just aren’t big on their tenants having cookouts. In a Rent.com survey, 60% of respondents stated they were barred from having a grill on their property, and more than 25% said they lacked a common area for grilling. Even those that do have access to a shared grill aren’t in the clear. Almost half complained their neighbors never seemed to clean up after themselves, listing a dirty grill as their primary peeve.

Luckily, renters don’t have to give up on their cheeseburger and bratwurst dreams. Thanks the to magic of indoor grilling, you can whip of a Fourth of July feast to remember in the comfort (and air conditioning) of your own home. Here are five tips from Sur La Table’s Sephi Coyle, director of culinary programs, on how to get the tastiest results.

Invest In a Good Cast-Iron Grill Pan
The key to indoor grilling is achieving consistent high heat, and to do that, you need a good grill pan. Coyle says a quality piece of cast-iron will cook everything quickly and efficiently, and even leave those trademark grill marks on your food. Perhaps best of all, a decent grill pan (also known as a griddle or skillet) shouldn’t cause to much pain to your wallet. Slate’s J. Bryan Lowder says a decent model will set you back between $40 and $80.

Don’t Be Afraid To Use The Oven
As anyone who has ever grilled before knows, underdone is preferable to overdone. Coyle recommends a light touch on the grill, followed by a trip to the oven for any still-undercooked food. That’s going to taste a lot better than outright burning your patties on the griddle in an effort to get them fully cooked.

Keep Adding Flavor
You can add flavor before, during, and after grilling, and Coyle says you should do all three. Marinate food before putting it on the grill, and then use a brush to baste items while they’re cooking. Eating Well has a chart with different marination times depending on what you’re grilling, and also offers a few marinade recipe suggestions.

After you’re done, serve up your stuff with some serious condiments. Coyle suggests pesto, salsa verde, or the classic BBQ sauce. Serious Eats taste tested 16 different sauces and picked three winners: Bull’s-Eye Original, TJ’s Bold & Smoky, and Stubb’s original BBQ. Match your meat with one of these top picks and you’re guaranteed a successful cook-out (or in this case, cook-in).

Pick The Right Oil
When grilling, you don’t want the cooking oil contaminating your food’s flavor. Coyle says the trick is to use vegetable or canola oil since both have a neutral flavor and high smoking point, the latter of which will give you a better sear.

Make Sure To Have The Tools You Need
Just because you’re grilling indoors doesn’t mean you don’t need much of the same equipment that an outdoor grill requires. You’ll want some tongs, a spatula, and silicone pastry brushes for marinating. The Sweethome, a review site for household products, has listings for the best BBQ tongs and spatula, and Amazon lists a number of highly rated brushes for under $10.

Happy grilling!

MONEY

6 Acronyms Every Beginner Real Estate Investor Should Know

H-O-M-E letters in wooden blocks
Image Source—Getty Images

Pretty much every time you learn something new, you also learn a whole new vocabulary to go along with it. Real estate investing is no different. Real estate investors must understand the terms and investment vocabulary. Here are some definitions of common acronyms to get you started:

1. PITI

Principal (P), Interest (I), property Taxes (T) and Insurance (I). This is basically the “bottom line” or the minimum you need to calculate when thinking about purchasing an investment property with a loan. Usually it is calculated overall and on a month-to-month basis.

The overall number is what you would potentially spend on the property over the life of the loan. Month-to-month is the portion of PITI you have to pay each month to stay in good standing. This information will help determine how much rent you should charge.

Related: Trying to Choose The Right Loan? Stop Looking at Just The Rates!

2. LTV

Loan-to-Value, also important if you’re taking out a loan on your investment property, is calculated by dividing the loan by the property’s value, then expressing that as a percentage. For example, if the loan is $200,000 and the value of the property is $250,000, the LTV is 80%.

The lower the LTV, the more equity you have in the property, which means you have more room to negotiate should you decide to sell.

3. GOI

Gross Operating Income is the actual annual income collected from the property, which includes all sources of income (laundry, parking, storage, etc.) and takes into account any vacancies.

4. NOI

Net Operating Income is the income left over from your rents after paying all your monthly operating expenses. So, subtract your expenses from your GOI to get you the property’s NOI. For example, if you take in $10,000 in rents on all the units and spent $8,000 on maintenance, janitorial duties, supplies, accounting, insurance, taxes, and utilities, your NOI for the month was $2,000.

5. DCR

Debt Coverage Ratio is a term commonly used by lenders in underwriting loans for income-generating properties. It’s calculated by dividing the NOI by the total debt. Ratios of 1.20 and higher are considered average.

Related: Understanding Debt Service Coverage Ratio

6. CCR

Conditions, Covenants, and Restrictions are promises written into contracts where the parties agree to perform, or not perform, certain actions.

CCRs can occur in several contexts. There can be CCRs written into a deed when you purchase a property. Also, your tenants could sign a rental agreement in which they agree to certain conditions (such as “no pets allowed” and “you can live here as long as you pay rent, otherwise we can evict you”).

I’m sorry to disappoint you on that last one. CCR on the radio is much more exciting than the real estate investing version of CCR. But it’s an important term, so I hope I’m forgiven. Either way, I hope the acronyms listed above will help you in your quest to invest in real estate.

More from BiggerPockets:
10 Things I Hate About Working From Home
10 Rules For Investing in Real Estate Without Looking Like an Idiot
6 Tips to Turn Bad Tenants Into Amazing Tenants

This article originally appeared on BiggerPockets, the real estate investing social network. © 2014 BiggerPockets Inc.

MONEY Investing

The Top 5 Ways to Make More Money on Your Rental Properties

If you own rental property, be sure to maximize your profits on your current investments before rushing out to buy new ones.

Rather than just acquiring as many properties as possible, let’s take a step back and think about whether the best way to make more money is to focus on your current portfolio.

1. Decrease Vacancy

The best way to minimize vacancies is to find a long-term tenant so that you don’t have to deal with turnover. This is covered separately by my next point because it is not the only way to keep your property occupied.

In the event that your tenant must move, vacancy can also be minimized by keeping turnaround time to a minimum. A friend of mine owns a condo in the D.C. area that is rented to 3 individual roommates. Although multiple tenants have moved on, he has kept occupancy at essentially 100% by posting ads the minute he learns of the move. Demand in the area is so high that he will have immediate interest and line up a new tenant to move in on the coattails of the old one.

You might think, “how does that apply to my property in an area with lower demand?” The thing is, nearly every property in every neighborhood has solid demand at a price. If your vacancies are consistently high, you may be doing it to yourself and need to think about your price point.

Every month of vacancy costs you 8.3% of your potential yearly revenue, so you would be better off renting every property one month faster for 5% less rent, two months faster for 10% less rent, and so on.

Another way to think about vacancy is this. If a property does not have some characteristic that sets it apart from the rest and sells itself such as a prime location or a to-die-for kitchen, you can give it one by providing the best value in town.

Related: The Biggest Threats To Your Real Estate Investment Property And What You Can Do To Stop Them

2. Minimize Turnover

Turnover costs money in multiple ways. There are advertising costs, the cost of patching and painting walls and replacing flooring that your previous tenant would have lived with, and, of course, vacancy. It’s a little counterintuitive, but this is another area where relatively lower rent may have the tendency to increase revenue.

One of your goals should be to find quality tenants that take care of your property and pay consistently. When you find these people, do what you can to keep them!

Some people will inevitably leave because they are moving across the country or buying a home, but the last thing that you want is to lose your best tenants to the landlord down the street, dealing with the expense of acquiring a new tenant and lost revenue in the vacancy.

The price of rent is not the only factor involved in tenant retention. The other key is customer service. Whether you personally manage your properties or have a property manager, make sure your tenants are treated with respect and professionalism, their concerns are valued, and matters are dealt with urgently and to their satisfaction. A good tenant/landlord relationship keeps tenants from thinking about moving.

To assess whether your property manager is performing in a way that fosters good tenant/landlord relationships, send a postcard soliciting feedback from your tenants, letting them know their opinion is valued and they can contact you directly if they are dissatisfied with their manager.

3. Increase Rent Strategically

Now, after telling you that lower rents can lead to higher revenue, I will proceed to advise increasing your rents on your longer-term tenants. This is really not a contradiction at all. Rather, it is a delicate balance that requires knowledge of your property’s value relative to your competition.

As I mentioned, tenants may be more loyal if they can’t find lower rent elsewhere. But this doesn’t mean that you should never raise rents when you have good reason to do so. Moving costs tenants money too. If the value of their current rental is significantly better than the value of a new rental plus the cost of moving, you still have the upper hand.

Make sure you know the rents in the area, researching sites such as Zillow, Rentometer, Craigslist, and the MLS if you have access. You may find there is plenty of room to increase your revenue a small amount each year (1%-3%) while remaining competitive.

Two tactics I use to increase rents: Communicate an offset to new costs such as increased HOA fees, which cover utilities and amenities that they enjoy, and have them coincide with an upgrade to the rental. For instance, I may plan to paint the exterior of the home or upgrade old windows from single to dual pane anyway, but I will schedule the work to coincide with a lease renewal and the tenant feels they are getting something out of the deal.

I may even ask them if there is anything that would make them more comfortable and select items from this list that will justify rent increases while increasing the market value of the home. In other words, make improvements that are necessary for maintenance or have immediate return on investment.

4. Be Diligent on Late Fees

Showing kindness and respect to your tenants does not mean being a pushover when it comes to rent collection and late fees. Collections are not the most enjoyable part of being a landlord, but are essential to running a profitable business. Make sure your tenants understand that this is a business, they have signed a contract, and it is your job to complete this transaction, following the contract and all applicable laws (including eviction proceedings if necessary).

Related: 6 Sure Ways To Never Be The Bearer Of That “Worst Tenant” Story

If you allow tenants to get away with paying late without the appropriate fees, you are leaving money on the table. And, your tenants may try to get away with late payments several more times, causing you extra work and stress.

If your tenant sends you a late check without including the late fees, politely explain that rent is not considered paid until all fees are collected, and that unfortunately you cannot accept this payment until all fees are paid. If you hold firm, they will quickly learn that you cannot be taken advantage of and will most likely comply.

More from BiggerPockets:
Wicked Cool Ways to Finance Your Next House Flip
10 Renovation Tips That Will Save You Time and Money
Video: Protect Yourself When Purchasing a Property As-Is

5. Add Revenue Streams

In multi-family properties, look for the opportunity to add services like coin-operated laundry and vending machines, which will not only provide revenue but will add resale value by raising the property’s return on asset value, or capitalization rate.

In single-family homes, offer extra house cleaning and landscaping services to tenants when they sign the lease. They may be happy to pay extra to avoid responsibilities they’d otherwise take on. You can negotiate the rates of independent landscaping and cleaning services, contract them out, and collect a fee as the contractor. For instance, if a cleaner agrees on a $75/month fee, you may offer the service to your tenant for $85/month, increasing your annual revenue by $120.

Overall, you may find that you can reach your business goals not only through acquiring a large number of properties but by operating a smaller number of properties more intelligently.

This article originally appeared on BiggerPockets, the real estate investing social network. © 2014 BiggerPockets Inc.

MONEY Rentals

Rent Too $@#% High? These 7 Tips Can Get You a Better Deal

Jimmy McMillan, The Rent is Too Damn High guy
There are better ways to lower your rent than running for Governor of New York. David Shankbone

Rents are surging across the nation, but you don't need to join the "Rent is Too Damn High" party to get a discount.

Renters who aren’t leasing space under a rock have probably noticed prices are kind of insane lately. Since last year, rents are up everywhere (in some cities, over 10%), and an average 2-bedroom in a major city could cost as much as $3,550 a month.

Short of running for political office, how can you cut your rent bill from impossible to merely outrageous? We’ve got a couple of tips.

1. Have low realistic expectations

The economy is getting better, more people are going back to work, and most of them are renting. That means there’s a huge clamor for condos, especially in major metropolitan areas, and landlords can set their prices accordingly. Gary Malin, president of the New York City brokerage firm Citi Habitats, warns waiting for an out-of-this-world deal in a hot area is a sure way to end up with no place to live.

Instead of looking for a huge bargain, he suggests, try to negotiate somewhere between $25-100 off your monthly rent. (Talk in dollars, not percentages, so your landlord doesn’t have to break out a calculator.) In San Francisco, 50 bucks off might just be a 1% discount on a typical two-bedroom’s monthly bill, but over a year it works out to $600 in savings. That’s not nothing.

2. Show the landlord how awesome you are

How awesome you are as a tenant, that is. Someone with solid financials who will sign quickly can land a discount even in tight markets, Malin says.

Build a strong application by including all the necessary paperwork and emphasizing your strengths (current employment and great credit can go a long way). Complimenting the apartment doesn’t hurt. Include references from previous landlords: Niccole Schreck of Rent.com says letters from past property owners attesting to your amazingness can win your new lessor’s confidence—and maybe a bargain as well.

Try this: owners of smaller complexes have the most to lose if tenants don’t pay up. If you can show you’re a prize, you might nab a better deal in buildings with fewer units.

3. Go by the numbers

When asking for a discount, approach the landlord “intellectually, not emotionally,” Malin says. Translation: no sob stories. Instead, do your research and show the property manager why you should get a better rate. Schreck advises renters to look up the prices of other units in the neighborhood (use Rent.com and similar sites) and make notes of the amenities other buildings offer, like gyms or laundry rooms. If surrounding real estate rents for less or offers more perks, use that to your advantage.

4. Be flexible about location, location, location

Jason Kaczmarczyk, partner at the Boston-based Encore Realty, says he saves clients thousands by steering them from the sought-after Brookline neighborhood to the more affordable Cleveland Circle. The kicker? Cleveland Circle is just feet from the Brookline town limits—and it has free parking.

To find a cheaper area, use your commute time to create a list of all the neighborhoods where you could feasibly live. At Trulia.com, enter where you work and generate a map of your city, color-coded by shortest travel time. From there, look for lower-priced parts of town.

5. Wait for winter

The summer months are the No. 1 season for new leases, meaning huge competition and high rates. Once temperatures drop, so do prices, as landlords get antsy. Consider subletting for the summer and starting your search in October or November. Malin says landlords who don’t rent a unit by Thanksgiving might cut rent by up to 10% to avoid the risk it will sit empty until January.

Off-season renters are also twice as likely to find “move-in incentives” such as paying brokerage fees, a free month’s rent, or complimentary gym membership. Some landlords prefer these over discounts, and Schreck says they’re typically easier to negotiate.

Keep in mind though: it’s no fun to move in the snow.

6. Read the lease agreement

We know you’re excited, but rushing through your lease can cost you bigtime. As MONEY’s Amanda Gengler writes, a recent Rent.com survey found that 26% of renters lost their entire security deposit. She recommends checking the fine print—painting your apartment or putting holes in the walls might be off limits—and making sure anything the landlord tells you in person (“of COURSE you can have a cat!”) is in writing, attached to the lease if necessary. Check that the utility bills included in your rent match the landlord’s promises.

7. Offer to sign a longer lease

The one thing landlords hate most is vacancies, and signing for longer means your property owner won’t have to worry about filling your apartment for an additional year. This may not work in hot spots like New York City, as landlords prefer to reassess market conditions at the end of every year and decide whether (read: how much) to raise rent.

But in slower markets with more vacancies, a longer lease can earn you some concessions. Rent.com has a list of the 10 fastest growing cities (ie. places people actually want to live) with above average vacancy rates to help you decide if you should use this tactic.

More: Rents Just Won’t Stop Going Up

MONEY Rentals

The Top 10 Cities for Singles Who Rent

If you're single and looking for a place to live, here are the 10 best cities for those ready to mingle.

Thinking of moving to a new city? Lots of lists will help you find places with the lowest (or most outrageous) housing prices and highest incomes, but for young people looking to meet someone, there are more things to consider than pure affordability.

Rent.com partnered with Onboard Informatics to rank cities based on factors like quality of nightlife, restaurants, lifestyle (what percentage of residents do things like attend concerts and cultural events), and, primarily, the percentage of single adults.

Here’s what they found.

Methodology: All indexes were ranked on a scale of 1-1000. This list is based on cities with more than 50,000 rental dwellings, a high concentration of single adults and an overall population greater than 100,000. More details here.

  • San Francisco, CA

    It may be expensive, but the City by the Bay is safe, ranks high on lifestyle, and the average income is off the charts. Best of all? 39% of town is single.

    The Good

    Single Adults: 39%

    Non-Family Households: 58%

    Average Household Income: $104,540

    Safety Index: 822

    Lifestyle Index: 736

    The Bad

    Median Rental Rate (1BR): $2,920

    Nightlife Options Index: 374

    Restaurant Option Index: 236

     

     

     

  • Manhattan, NY

    When it comes to nightlife, lifestyle, and great food, nobody tops the Big Apple. Like SF, cost is a (huge) factor, but if you can afford it, there’s nowhere better.

    The Good

    Single Adults: 38%

    Non-Family Households: 60%

    Average Household Income: $125,205

    Safety Index: 896

    Lifestyle Index: 781

    Nightlife Options Index: 1000

    Restaurant Option Index: 1000

    Frequent Coffee Shop Goers Index: 1000

    The Bad

    Median Rental Rate (1BR): $3,800

     

     

  • Washington, D.C.

    It’s a company town, but that town is very single and very safe. Average salaries are also high, but there isn’t much nightlife or fine dining to spend that disposable income on.

    The Good

    Single Adults: 38%

    Non-Family Households: 58%

    Average Household Income: $93,637

    Safety Index: 776

    Lifestyle Index: 652

    The Bad

    Median Rental Rate (1BR): $2,300

    Nightlife Options Index: 173

    Restaurant Option Index: 228

     

     

     

  • Boston, MA

    The Hub’s restaurant and nightlife options don’t exactly compare to New York, but it’s a safe, fun city where one-third of the adult population is single.

    The Good

    Single Adults: 33%

    Non-Family Households: 55%

    Average Household Income: $76,661

    Safety Index: 719

    Lifestyle Index: 671

    The Bad

    Median Rental Rate (1BR): $3,150

    Nightlife Options Index: 192

    Restaurant Option Index: 224

     

     

  • Seattle, WA

    The second West Coast city on the list boasts lots of restaurant goers, good cultural events, and rentals in the neighborhood of affordable—at least for a big city.

    The Good

    Single Adults: 30%

    Non-Family Households: 57%

    Average Household Income: $88,211

    Lifestyle Index: 732

    Frequent Restaurant Goers Index: 616

    The Bad

    Median Rental Rate (1BR): $1,584

    Nightlife Options Index: 302

    Restaurant Option Index: 199

  • Philadelphia, PA

    Philly can’t stand up to higher-ranked towns in most categories, but the rent isn’t too bad, more than a fourth of the population is single, and the nightlife is better than all but a few cities on this list.

    The Good

    Single Adults: 26%

    Median Rental Rate (1BR): $1,295

    Safety Index: 686

    Nightlife Options Index: 502

    The Bad

    Restaurant Option Index: 340

    Frequent Restaurant Goers Index: 439

  • Minneapolis, MN

    The most notable of the Twin Cities has lots of singles and lots of rental housing. Nothing too special as we approach the back of the list, but Minneapolis stands her ground in most categories.

    The Good

    Single Adults: 25%

    Non-Family Households: 57%

    Median Rental Rate (1BR): $1,395

    Lifestyle Index: 643

    Frequent Restaurant Goers Index: 555

    The Bad

    Nightlife Options Index: 149

    Restaurant Option Index: 108

     

     

  • Portland, OR

    Portlandia‘s home is safe, fun, and great for people who like to eat out. The rent is also relatively low compared to other listed cities.

    The Good

    Single Adults: 24%

    Median Rental Rate (1BR): $1,335

    Safety Index: 632

    Lifestyle Index: 668

    Frequent Restaurant Goers Index: 585

    The Bad

    Nightlife Options Index: 383

    Restaurant Option Index: 168

  • Jersey City, NJ

    Jersey is safe and good for restaurants and culture, but the price of rent might make you think twice.

    The Good

    Single Adults: 23%

    Average Household Income: $77,804

    Safety Index: 766

    Lifestyle Index: 623

    Restaurant Option Index: 512

    The Bad

    Median Rental Rate (1BR): $2,480

    Nightlife Options Index: 421

  • Chicago, IL

    Chi-Town has the cheapest median rent on the list, with high nightlife and lifestyle ratings to boot. It’s also safer (on the whole) than you probably think.

    The Good

    Single Adults: 23%

    Median Rental Rate (1BR): $1,150

    Safety Index: 665

    Lifestyle Index: 604

    Nightlife Options Index: 869

    Restaurant Option Index: 507

    The Bad

    Frequent Restaurant Goers Index: 475

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