Rental Fees and What They Cover
Increasing rental fees have many Americans spending more money on housing month after month. Covering the cost of rent can be a struggle for many as many housing options have become unaffordable in many areas across the country. Rent to income amounts are typically taken into consideration to determine the affordability of rent. A landlord typically goes by the rule of thumb of 30 percent annual income (not salary, just take home pay). With other living and entertainment expenses, the 30 percent is comfortable but can also be stretched higher as each person has a different comfort level of spending. Some cities such as San Francisco and New York City often involve paying higher levels of rent. Rent prices are also often raised in more sought after areas that are closer to transportation and other conveniences.
The renter pool is extremely full, and the market rates of rent are up across the board. Housing availability can become a premium in some cities in the United States, and rents will only match what people are willing to pay for them. Rents are also raised in some markets due to affordable housing mandates such as Section 8 and others.
Some rental fees are all inclusive, meaning that they may provide for landscaping, water, sewer, electricity, or any other related costs. Other rental costs include renting a furnished versus unfurnished property. Security deposits are par for the course and in the cases of pets being allowed in or at a property then a pet fee or additional pet deposit may be assessed. Move-in fees are also added in some cases. A variety of other fees have popped up that may apply to different rental properties such as a lock change fee, key fee, lease initiation fee, move-in fee. While not too common these hidden fees can take tenants by surprise and add on costs to obtaining a rental property. Because there is such a strong demand for rental housing many property owners and managers can charge additional fees with renters coughing up the added fees in order to secure a rental.
Owner-occupied households have declined, and renter-occupied households have increased according to the U.S. Census Bureau. The majority of the United States most populous metro areas have more rental households than owner households. Many tenants today are renters-by-choice as many Americans have delayed the process of homeownership. While the job market is growing pay isn’t necessarily increasing, leading more people to find renting more affordable than buying a home.
Many Millennials are moving out of their parents’ house and creating a new household. The Millennial age group (ages 25 to 29) are driving a large portion of the rental market as they enter the workforce and have a lack of confidence in buying a home in the near future. Student debt and the job market are all primary factors that have pushed this generation toward rental housing. While the sale of homes is predicted to continue an upward trend, many renters are staying put and renewing leases without a large purchase of a home planned for in the near term. Investors snatched up good deals after the housing crisis took place in 2008, and those property owners are now sitting pretty as appreciation and rent rates continue to rise. Demand is also there which makes owning an investment property an easy choice for many. The price-to-rent ratios continue to remain high despite lower interest rates. In many markets across the United States, high-end housing inventory is tight which makes renting in this portion of the market even that much more of a premium.
Utilizing the services of a property manager can cost a fee but what the property manager can do for the property owner can be well worth the money. From advertising vacancies, screening tenants and then handling the logistics of paperwork and the tenant moving in. Additionally, handling the collection of rent money and any necessary repairs are all added perks of what a property manager can do for the property owner. In most cases, a good property manager can save time and money for the owner making their services well worthwhile.