Tenants Advocates & Association
Aho, MSN Real Estate
Renting an apartment was never fun, but these days it's downright brutal.
It begins with a strip-search of one's personal data, a "privilege" for which the renter pays via a $35-plus screening or application fee, moves through an automated revenue-management system that imposes upon him the highest possible daily market rent and ends with add-ons such as mandatory renter's insurance, multiple pet fees or extra coverage for the owner's pool lest another tenant cause damage.
"It's intimidating," says Ken Volk, who analyzes 20-page leases for tenants as president of Arizona Tenants Advocates, a tenant services company in Tempe, Ariz. "It makes it so people can't afford to get into a lot of places, because of all the extra fees."
easily and cheaply shared means apartment managers can adopt
ever-more sophisticated tools to minimize their risk and boost profits.
And if some of these practices are common only among large outfits today,
the tipping point is within sight. Soon they will be standard. They include:
"The world is flush with more information today than we've ever had, and the same thing is happening with the apartment industry," says David Cardwell, vice president of capital markets and technology for the National Multi Housing Council, a trade association of large apartment developers and managers. "Information management has allowed a lot of business activities to be centralized, and apartments are no different."
to get a home loan than a rental
"These days you can't do that, because of Fair Housing," he says. "Now you have to quantify it. That hunch stuff is very hard to quantify."
Fair housing laws are not new, but the anti-discrimination protections are often credited with the soaring popularity of so-called objective background-screening programs available today.
Apartment managers can punch limits legal ones, based on income or criminal or rental infractions into a computer. A background screen checks an applicant's history against those limits and spits out "accepted," "denied" or "accepted with conditions."
As long as the apartment manager applies the same limits to everyone, it's presumably difficult for those denied to allege discrimination.
To protect privacy, no one sees the details. If you're the rejected applicant, you can contact the screening company directly for details by mail. By law, inaccuracies must be cleared up, usually within 30 days. (Hopefully you have a place to live until then.)
Perhaps more importantly, these programs are now cheap. Background-screening companies have had a few years to consolidate, and the big fish can offer a comprehensive check for as little as $15.
For the prospective
renter, this means the country just got a whole lot smaller; it's simply
no longer possible to leave your past behind (or ensure that your past
isn't mistaken for somebody else's past). A screen checks:
Big apartment complexes check most, if not all, of these factors, as do independent managers of smaller properties. (In Idaho, Drost says he's been rejecting about half of his applicants lately.)
"There are more property managers getting together, we're seeing where the loopholes are and we're closing them up," says Sylvia Hill, past president of the National Association of Residential Property Managers, which has grown to 3,000 members from seven in 1989. "It's a lot more difficult for somebody who doesn't have the good credit, doesn't have the income to rent because there are a lot more people to check who are professional."
Before mortgage lenders tightened their standards last year, it wasn't uncommon to hear stories of people who were rejected for apartments but approved for home loans, property managers say.
A screening by LeasingDesk once rejected a Dallas applicant because of two felony convictions in Kansas, even though she'd cleared a federal criminal background check for an airline job, Carner said. "She had passed the FAA check, but the apartment check denied her."
the price went up $100 today
Some apartment corporations update their prices as often as six times a day, says Kevin Doyle, general manager of apartments.com, a national listing service. The goal is not to fill apartments, but to generate the highest possible rent, says Janine Steiner Jovanovic, president of M/PF YieldStar, a pricing optimization service.
Every night, the program calculates a new price, which could be $100 more than the day before, says Steiner Jovanovic. The on-site manager must punch in a new move-in date or lease term to generate a new price.
"They don't have to think about and justify the rent. And they don't," Steiner Jovanovic says. "Price becomes less of a barrier to getting a deal closed."
M/PF YieldStar's client list has doubled in the past year, and it hopes to have 20% of apartment complexes on board within five years.
"As you get more and more penetration and more people use revenue management, it's just going to become the norm," Steiner Jovanovic says. Even small-budget property managers are using programs such as Rentometer to calculate the market price.
If you're not already feeling powerless, consider this: M/PF YieldStar is considering incorporating an applicant's financial score into the quoted rent, similar to the way in which auto insurance companies set higher premiums for drivers with low credit scores.
Rent in disguise
Once you're in, life is still not as simple as it once was. Now, along with the sting of "first, last and security" (as in, first months rent, last months rent and security deposit), comes an added pinch: fees.
Don't be surprised to find application fees, administrative fees, credit-check fees, cleaning fees, move-in fees, surety bond fees, pet fees or redecorating fees, to name a few all nonrefundable.
Some apartments even require that tenants buy renter's insurance, which can lower management's own premiums after an incident.
"It's gotten really bad," says Volk, of Arizona Tenants Advocates. "In many instances there's no accountability and they're charging far more than their costs."
Volk has seen $200 administrative fees that don't say what they're for, pet "rent" added to pet charges, even fees imposed for ordinary wear and tear, something historically absorbed by building owners.
"You might actually pay $150 or $200 just for the privilege of moving in," he says. "There's a fee for this, a fee for that. You get a fee for breathing."
In another page from the hotel and phone industries, the once simple and humble bill is now a confounding and intimidating fee-for-all.
Nor does it end once you're moved in. The rent may stand, as stipulated by the lease. But if you want to live a little, plan on drawing extra from your bank account for facility fees, storage fees, parking fees, utility-management fees or business-center fees.
"Let's say you own a 10-unit apartment or a 1,000-unit apartment. If that apartment building is full, how do you make more money? You start by charging fees," says Del Walmsley, a rental-property owner and board member of the Houston Apartment Association. "These are all revenue enhancers, that's what they are."
Apartment managers say fees are more equitable because they break out costs by users. But not all fees such as excessive late fees may be legal or justified. The problem is that, unlike health inspectors and restaurants, housing officers don't conduct spot lease checks to ensure compliance. It's up to you, the tenant, to:
Fees essentially bump up the rent. But if the manager has a lot of units to fill and you're a good prospective tenant, ask for a waiver or two. If a short-term lease surcharge is to cover the costs of turning an apartment, then try to opt out of a "move-in fee," which should cover the same.
"Don't be afraid to negotiate," says Beirne. "I think some people think that because it's an apartment they can't do it. But you can.
"It's just like you do at the car dealership. Say, 'I really want to move in here, but I don't want to pay these two fees.' You can do that."
Original Article © 2008 Microsoft
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