The Economy Keeps Getting Better…Slowly But Surely.
West Michigan is leading the recovery in Michigan. In fact, things are so good real estate is becoming scarce for investors, homebuyers and renters. I recently heard a real estate broker tell me that there were over 15 offers for one home with two above the asking price—and this was a fixer-upper in GR. This demand is driving up real estate prices and rent, which creates a whole set of new challenges and opportunities.
There are a lot of new rental housing projects on the horizon for Grand Rapids. This is an opportunity for developers — but more competition for landlords. This won’t create an immediate problem as most rental units have a waiting list. Staying competitive with amenities and great management skills will ensure you are in the game. (If you don’t have a waiting list but have vacancies, you might want to consider taking one or more RPOA courses on property management.)
Another side effect: Housing assistance providers (HAP) in the West Michigan area are having a hard time finding rental units for their clients. Vacant units are hard to find, let alone units at a price these families can afford. Most of their clients are struggling financially, have a hard time finding a job or have other tenant history issues that make them riskier tenants.
Why would a rental property owner want to rent to someone that is “at risk”? There are families that face issues beyond their control. Think of the spouse who has been a stay-at-home parent raising the kids and then the other spouse up and leaves, taking the family’s only income. This family is at great risk for eviction. It’s tough for an adult who hasn’t worked for a while to secure a good paying job. It could easily be a year or more before this parent re-enters the world of work at a livable wage for their family. How about the older person who is “teched” out of a job? Or the family is evicted because an older child was dealing drugs and was hauled off to jail? How about the disabled person that can’t afford market rates? What do these families do for housing until they can resolve their immediate problems? It goes without saying that these families’ rental histories are going to look shaky. What to do?
The RPOA is meeting with HAP to discuss various ways to address this problem. One suggested solution has been to create a partnership with the community by promoting to landlords the idea of setting aside one unit at a time that would be made available to at-risk tenants at a lower than market rate. The rental rate is phased in slowly and eventually peaks at market rate. Meanwhile, tenants are provided whatever assistance and counseling that is needed to get them back on their feet. The discounted rental rate is considered a charitable contribution. The program spreads the risk across the rental industry. Instead of fewer landlords renting to multiple at-risk families, each landlord takes on a small risk. This solution has been used successfully in Salt Lake City, Utah.
If you have other ideas, the RPOA would like to hear them! Shoot us an email and let us know what you think. It’s been proven that great ideas can come from a larger group of thinkers.
In the meantime, have a great summer!