How to Rent an Apartment
Having trouble leasing an apartment in this market? Here’s some tips:
by Dustin Rinker & Josh Bibeau on May 12th, 2022
Finding a rental property is very difficult in this market. Properties are flying off the shelf sometimes in hours of being listed. Many prospective renters have indicated to our office how difficult it is to find a place to see, let alone apply and sign a lease on it. Here are some tips for renting an apartment if you’re having trouble -
Ask good questions - but don’t waste the landlords time. Know they have more applicants than they know what to do with.
Don’t tell your life’s story or share your hardships immediately. If there’s questions regarding application info please answer them, but have a poker face until then.
If you like a property, read the entire listing! There may be a disqualifying pet policy, utility information, or hidden fees. Managers dislike answering questions that are laid out clearly in the listing.
Give your references a heads up that they may receive a call from a manager. This goes the same for previous landlords, employers, etc. If you list someone on your application and they warmly answer a call from a manager giving you a glowing reference, your chances of getting offered a lease increase.
Stay cool & patient. Managers can’t make more housing units, and managers are human too! You can blow your chances of renting if you have an emotional outburst at management.
Happy leasing folks!
Thoughts: josh@bigfootmg.com
Inflation & Real Estate
I was speaking to a colleague the other day and he stated, “I feel bad for anyone who doesn’t own real estate in Montana now.” While this was said aniqudotelaly, I would concur that if you own MT RE, you are a lucky duck. There are many factors that carry this statement. Let’s explore a couple.
Inflation makes real estate more valuable, this is general & applicable to all markets. As the cost of goods increases, of course housing is included. If you have cash in the bank every day it is worth less (especially in times of high inflation), but with property ownership it has been growing in value everyday. Stable growth happens in housing throughout times of inflation.¹ One would think we are in a period of hyperinflation based on the increase in housing prices in Montana, in Helena we are seeing the median home up 26% from a year ago! This has little to do with inflation, but rather that the demand for Montana real estate is higher than ever!
Montana is a hot & attainable destination! The old adage “Montana’s full” doesn’t seem to deter folks from snatching their piece of the “last best place.” For a long time American’s dreamed of vacationing & retiring in Montana, but with remote-work options & an expansion of Montana’s economy that dream is becoming a reality & lifestyle. People are making the move now! Montana’s population grew by 1.6% during the pandemic.² You can’t blame new residents for wanting to live here, but let’s see what happens when we get a “real” winter.
Thoughts? Email us at josh@bigfootmg.com
2022 Market Outlooks
The continued housing crunch puts upward pressure on rental rates
By Dustin Rinker
The housing market in the Helena economic area continues to show a shortage. Rental rates continue to climb with a 21% annual increase from last spring alone for 2 bedroom units (with a $1150 median for 2 bedrooms). This only increases with larger housing products; with 29% and 28% annual increases on 3 bedroom and 4 bedroom units respectively.
This shows that the demand for housing has remained steady even on the tail end of the Covid-19 influenced housing boom over the last 2 years. In such a short time period, it remains to be seen whether this over the top demand will continue, or if building will catch up with the local demand. Overall it appears that both rentals and general housing will continue to be in high demand.
Our opinion based on the data we have available and our experience on the ground is that through the spring and summer rates will remain high and vacancy very low; barring unforeseen circumstances or economic issues.
Thoughts? Email us at dustin@bigfootmg.com
Property Winterization
A proactive approach to preparing for winter can save big down the line.
by Dustin Rinker on November 10th, 2021
Preparing investment properties for the challenges of Winter in Northern climates is critical to prevent potential damages, limit liabilities, and save on utility costs. A proactive approach will pay dividends and help make the properties look attractive throughout the year. Here is a checklist to consider in preparing for Winter:
Contract with vendors early for snow/ice removal; their client lists fill up fast.
Schedule sprinkler blowouts as applicable.
Schedule Fall Cleanups (leaf/debris removal & final mowing) before the snow falls.
Put out sand/gravel buckets for tenant use in appropriate multifamily locations.
Identify any areas that need heat tape - both plumbing and roofing to prevent freezing and ice dam formation.
Deliver furnace filters, or remind tenants to replace them as applicable.
Double check utility contracts to ensure the power/heat will go back into your name if a tenant is delinquent in their utility bills or if there is a vacancy.
This is a non-exhaustive list of our process to prepare for winter for our properties - we hope this helps you prepare for the coming change in the weather!
Thoughts?: dustin@bigfootmg.com
Demand for Short Term Rentals Increases
Consequences for the housing shortage compound, but create opportunities.
by Dustin Rinker on October 12th, 2021
The housing shortage in Western Montana continues to be pronounced into the Fall. Typically demand for rentals starts to wane as school starts, the weather changes and most people settle into for the coming fiscal year - but this year once again demand for housing continues to hold steady. The continued high demand for housing has created more opportunities for short term investors.
Normally short term rentals (defined as guests staying for less than 30 days) are used for exactly that - short term stays. But medium term rentals (30 days - 6 months) are in very scarce supply. When landlords can get their pick of tenants for long term leases - there is no reason to entertain shorter term leases. But desperate to find accommodations; many people are turning to AirBnb and VRBO to find rentals - and are leasing at high premiums.
AirBnb/Vrbo rates are somewhere between hotel rooms and unfurnished units - so for many renters it’s a more affordable option than a Hotel. Investors are recognizing the trend as well. There has been an increase in short term rental units by 20% in 2021 alone - and vacancy rates are very low.
Opportunities continue to grow for those who are paying attention to the market; which is why we expanded our management services to include short term rentals here at Bigfoot Management Group.
Thoughts?: dustin@bigfootmg.com
Maintenance vs. Capital Improvement
With rising material costs what should you do?
by Josh Bibeau on June 11th, 2021
Last year found many property managers working remotely, opening hours for appointment only, and limiting maintenance during the height of the COVID Pandemic. Private landlords also limited interaction with tenants to curb the spread of COVID. This could mean that after a year of deferred maintenance and more tenants staying at home we will see an increase in maintenance calls this summer. People are finally leaving their homes to travel and would love that issue resolved when they come back. The summer is a typical time to resolve non-emergency maintenance issues, and this summer will be similar. Two things are very different about this summer, literally every material cost & labor shortage.
Whirlpool announced an up to 12% increase in appliance costs¹. Lumber prices are up in some places 288%!² Copper is close to doubling cost since before the pandemic.³ Sherman Williams announced paint prices to increase across the board by 7%.⁴ The cost of maintenance work is more expensive than ever, but average rent in Montana is higher also! If you have not addressed rents since 2019, they may be in store for an increase. Rent in Lewis & Clark County saw an 11.32% increase in 2020.⁵ Typically we see 1% each year, a percentage lower than inflation! As you look at maintenance costs, I urge you to view them as capital improvements, and raise rent accordingly. People want to live in nice places, and only landlords have the ability to provide quality rentals. Tenants will pay what a place is worth! Let’s make the investment worthy of the rent collected!
Thoughts?: josh@bigfootmg.com
¹https://fortune.com/2021/06/10/lumber-prices-2021-chart-price-of-lumber-production-wood-supply-costs-update-june/ ²https://fortune.com/2021/06/10/lumber-prices-2021-chart-price-of-lumber-production-wood-supply-costs-update-june/ ³https://www.cnbc.com/2021/05/06/copper-is-the-new-oil-and-could-hit-20000-per-ton-analysts-say.html ⁴https://www.cnn.com/2021/06/09/business/paint-prices-sherwin-williams/index.html
Rise of Lifetime Renters
Is renting throwing away money or managing risk vs freedom?
by Josh Bibeau on May 12th, 2021
Many current renters are facing a crisis. They had planned to make a home purchase, saved for years, followed all the steps (lenders, realtors, offers, etc.), but were unable to purchase their first home. I am seeing this trend rise due to an extremely competitive market, influx of cash buyers, and low inventory. Does this mean these folks are destined to live a lower quality of life? Not at all, but with the barrier to entry into homeownership growing many renters are looking to make the most of their situations.
Renters take advantage of affordability, maintenance free living, and flexibility. A 2000 sq ft townhome in Helena, MT would likely cost over $1,600 for a monthly mortgage payment, but renting would likely be closer to $1,300. If that townhome is paid off, the owner may even ask as low as $1000. Renters also enjoy knowing if the oven breaks, it's not their problem. They enjoy the roof over their head without the fear it may fall down, and if it does, they move and someone else deals with it! Renters have unlimited flexibility, and can move without the hassle owners may face. No listings, showings, escrows, inspections - just give notice and go! In this unpredictable market and economy, the trade-off renters benefit from doesn’t seem bad at all!
Now, I still believe home ownership is the most stable and easiest entry to generational wealth building, but some are finding with the immediate trade-offs, renting is worth it. Time will tell where our market goes, but if you have a roof over your head and you live in Montana - you are doubly blessed!!
Thoughts?: josh@bigfootmg.com
Unconscionability & Leases
Our legislators have a new favorite word.
by Josh Bibeau on April 17th, 2021
House Bill 402 was signed into law on Friday, April 16th. It will affect how leasing & enforcement of leases happen in Montana. As I read the bill I couldn't help but notice the use of unconscionability, as it appears at least fifteen times in the bill.
Here is a copy of the bill: https://leg.mt.gov/bills/2021/billpdf/HB0402.pdf
Cornell Law’s Legal Information Institute describes it like this: “If a contract is unfair or oppressive to one party in a way that suggests abuses during its formation, a court may find it unconscionable and refuse to enforce it. A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining.”₁ Most of the bill seems common sense to me: put something unreasonable in your lease, don’t expect the courts to honor it. Does this mean that tenants should just sign any term in any lease and expect the courts to side with the tenant? Tenants should still use caution when signing a legal document, but I’m sure courts will find plenty of unconscionable terms in Montana leases. If you have a lease, might be time to look over those terms and filter it through a reasonability index. None of us have any justification for presenting unreasonable terms in our leases, even with the extremely competitive market we are all benefiting from now.
Is the legislature asking us to grow a conscience? I believe so.
Thoughts?: josh@bigfootmg.com
Renter & Owner Assistance
Options are available for those in need.
by Dustin Rinker on March 10th, 2021
There is a new Emergency Rental Assistance package coming through that will soon be available for renters and landlords who have been financially impacted by Covid-19. Renters may be eligible for both Utility and Rent assistance. Landlords can apply for the assistance on behalf of the tenants but will still need signatures and documentation from their tenants. To streamline the process it is recommended that tenants file their 2020 taxes and have their 2020 tax return on hand to submit with their application for assistance.
Here are some eligibility parameters for tenants:
- Household income is not to exceed 80% of area median income.
- Household must have experienced financial hardship due to Covid-19.
- Must be able to show they are at risk of homelessness or housing instability (Eviction notice, etc.)
To prepare to apply, tenants should gather the following documents:
- Lease agreement
- Demonstration of need (Eviction notice, late payment notice, etc.)
- Income Documentation (2020 Tax return or all forms of income for household for past 2 months)
Landlords will need a W9 and to prepare to get a tenant’s signature and documentation if applying on their behalf.
The program is not ready to receive applications yet but because of limited funds anyone needing assistance should prepare to apply now as well as check HOUSING.MT.GOV for program updates.
Real Estate Investing:
A Hedge Against Inflation.
There’s little doubt that inflationary pressures are building going into 2021. With current market manipulations by the FED through Quantitative Easing (Through QE, about 22% of all US Dollars were ‘printed’ in 2020), market bailouts, and the rapidly rising Federal Deficit all point towards inflation rising in the near term. Some claim that the real rates of inflation are much higher than reported through traditional measures like the Consumer Price Index (CPI). I am far from an expert in inflationary pressures – however this immediately brings my mind into what asset classes are the best hedges against rising inflation for my portfolio. For several reasons, Real Estate is one of the best historical asset classes to protect your money from inflation. Simply put – it is because of historical rates of appreciation that match or exceed inflation in addition to the additional rent income that RE Investing produces.
On their own commodities are considered to be a good hedge against inflation. Precious metals like Gold and Silver are popular as they in theory keep up with inflation as they increase in value over time. Real Estate shares this function through consistent appreciation over time. Commodities however do not produce consistent income that real estate produces through rents. Not only does the value of real estate increase over time and will hopefully outpace inflation – but the Rental Income produced will also proportionally rise (in most markets) along with inflation to protect the buying power that a month of rent can produce.
Real Estate remains an important part of a diversified investment portfolio and it may become even more important if inflation continues to rise.
Thoughts?: dustin@bigfootmg.com
Eviction Ban Extended
The eviction ban has been extended though Jan 31st, what can investors do?
On January 4th, the Consolidated Appropriations Act of 2021 was passed and signed into law extending the eviction moratorium through January 31st 2021. This sparks many questions directly related to the continued presence of the Coronavirus. How long will the ban continue to be extended for? What can landlords do in these situations?
(Disclaimer: This isn’t legal advice but my views on the situation.)
According to the eviction moratorium, a non-paying tenant needs to provide a written declaration under penalty of perjury that includes: their statement that they’ve attempted all means of acquiring assistance, that they have no housing alternatives, that they are attempting to make partial payments, and more. Short story - if these things aren’t happening and a non-paying tenant hasn’t delivered this information to the landlord, evictions can likely proceed. Check with your legal counsel for their advice on any specific situation.
These regulatory risks to real estate investing underscore some of the fundamental aspects of managing a rental property - namely, the initial tenant screening. A robust tenant screening continues to be one of the most critical parts of the leasing process here at Bigfoot Management Group, as it should be with even the smallest investor. A multi point screening considering credit, financial strength, personal & professional references and a criminal background check have become all the more important when an eviction may be impossible on the other side of signing a lease agreement.
Thoughts?: dustin@bigfootmg.com
The Political Pendulum
It all begins with an idea.
Generations react to political changes & what it says for real estate.
After all that this year has brought us a little change might be helpful, right!? Our nation is constantly in a political pendulum swing in both state and federal systems, as is the real estate market. That market typically swings from sellers to buyers, although with this current market, it seems to be swinging towards sellers almost indefinitely. This can’t last forever, but it is encouraging one trend: Multi-Family Sales! According to the Helena Area MLS, from 9/1/19 to 12/9/19 only 18 multifamily properties changed hands in our market. In the same period this year, 31 properties. With 10 on the market today. What is driving this? I will take a guess and say that the generations are reacting to 2020. Baby Boomers are cashing out when the market is high, which they should! They have worked hard to build portfolios and found stability in rentals, but change could be around the corner. One possible change that some fear is the dissolution of the 1031 exchange, which has helped portfolios expand with tax deferment. Another change is the eviction moratorium, which could be extended, and brings great instability to an otherwise stable investment. With these changes buyers don’t seem dis-swayed! In my opinion it is because we are seeing Gen-X & Millennials jumping into the multi-family market in droves, after watching from afar and not seeing an opportunity, they see it now. Let me know your thoughts! josh@bigfootmg.com