TenantIf your rent went up this spring, you are not alone. The rental market is playing out a classic supply-and-demand scenario: Demand is increasing and supply has remained neutral as existing renters have stayed put. Add to that rising costs for oil, and gas, and the result is a bigger monthly tab for renters.

In the first quarter of 2011, rents rose 2% nationally and are expected to increase by 3% to 4% over the remainder of the year, according to Christina Aragon at Rent.com (EBAY). Vacancy rates have been dropping as well. Nationwide, they were 8% in the first quarter of 2010. This year, in the same period, that number was down to 6.2%. According to a new survey of 1,252 property managers by credit research company TransUnion, 64% of large property owners raised rents last year. TransUnion also reported that half of all property managers saw an increase in applicants moving into rentals from foreclosed properties. Demand is also stemming from young professionals ready to move out of roommate situations into one-bedroom apartments, says Aragon.

The tightening rental market may be a good sign for home sellers (some economists say it's an early indicator for a housing market rebound) but not so great for renters, who face rising costs, fewer concessions, and more competition for good apartments. If you're in the rental market -- and more than a third of Americans are -- what can you do?


Understand How a Landlord Reads Your Credit Report

Applying for an apartment or other rental, invariably requires a credit check. As more and more foreclosed homeowners move into the by-lease market, the emphasis on sterling credit scores is lessening. Instead, landlords are focused on other credit indicators, like a good track record for recurring monthly bills.

Steve Roe, a vice president for TransUnion's rental screening unit, says a foreclosure is not quite the black mark on a credit report it once was. Many property managers "remove it from the overall equation and look at overall credit profile," he told DailyFinance. Instead, landlords are looking at overall credit worthiness, examining whether your recurring bills are paid and whether there's a history of late payments.

Christina Aragon, director of strategy and consumer insights for Rent.com, says potential renters need to understand what is an explainable ding on a credit report, and what is not. The ones in the latter category include late payments for utilities and day-to-day bills. For smaller landlords who may not impose a formal credit check, the most important thing for rental applicants is to show is the ability to pay rent on time with a letter or recommendation from prior landlords.

But landlords, especially in large properties, are not just reading your credit report. "Consumers need to understand that the majority do check credit and criminal background," says Roe.

Know What You Can Afford

Multifamily rental buildings are typically classified either A, B or C. A-class buildings are exactly what they sound like: New buildings that offer location, amenities and other luxury perks. Move down the ladder and the combination of location, amenities and building age place a building in a category. What can you afford?

Many landlords look at an applicant's rent-to-income ratio. One rule of thumb, especially in big cities like New York, is that income needs to be around 40 times the monthly rent. For a $1,000 monthly rent, that means an income of $40,000. A slightly more lenient rule of thumb for affordability is that monthly rent should not be more than one-third of monthly income. If you're bringing home $2,100 in pay every month, that means you can afford around $700 in rent. Bigger landlords may also keep an eye on an applicant's debt-to-income ratio, which is sum of all your debts (credit cards, auto loans, etc.,) compared to your income.

Be A Proactive Renter

If you are happy in your rental unit and plan to stay awhile, Aragon advises locking in a rate with a 12- or 18-month lease, as prices are only going to continue rising in the next year. In the not-so-distant past, landlords were giving away concessions, like a month or two of free rent, to tenants. That time has come to and end, says Gary Malin, president of CitiHabitats. While he says there is little room for negotiation in today's tight market, it never hurts to ask. Landlords are eager to keep good tenants who pay rent on time and abide by the lease terms, which may give such tenants negotiating power.

Read more about rentals at AOL Real Estate

• Rental Demand - And Prices - Climb Back Toward Peak
• Last-Minute Apartment Rental Tips
• Tips for Finding a Rental Apartment

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pankaj13

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July 06 2011 at 12:27 PM Report abuse rate up rate down Reply
themtnsvoice

I think that the only reason rents are going up is that the big banks are getting into the rental business and they are telling the news media to TELL people rents are going up. Which in turn allows rent to go up faster, and they make more money.

Truth is that there are millions of vacant homes out there, and you can get incredible steals on rent if you look hard enough. People that are handy can also find "Fixer Uppers" and trade work on the property for rent.

But in regards to BIG CITIES, well maybe rents are going up. But then again, big cities are just large cages to pack the stupidest of the rats in. When things really start crumbling, I almost feel sorry for those in the big cities. They will die so fast, and often so violently.

People paying attention. People with wisdom. People that are paying attention to the signs of the season. These people will start migrating out from the cities into rural areas, to the mountains, to secluded subdivisions etc.

Time is coming.

- david
TheMountainsVoice.com

July 06 2011 at 9:36 AM Report abuse rate up rate down Reply
markthomas673

According to a new survey of 1,252 property managers by credit research company TransUnion, 64% of large property owners raised rents last year.Before you refinance, check your credit report for anything that could foul up a refinance. You don't want to lay out the money if a credit problem is going to keep you from refinancing, search online for "Refinance 123" I just used them and they are the best, they got me 3.113% rate

July 06 2011 at 3:29 AM Report abuse rate up rate down Reply
Donald G

As a small time landlord I can tell you that one thing I look for is employment for a long time at the same job. Those that hold the same job tend to be more responsible. Also had a open house at one of my rentals last Sat. and got a dozen qualified applicants. Stopped another half dozen from applying due to I had found my next tenant.,

July 05 2011 at 8:30 PM Report abuse +1 rate up rate down Reply
Condley

As a landlord I can write a 100 page article on what I have seen. Tenants who abuse their children, do drugs, get involved in low life gangs, skip out on their rent, and live like pigs. No.... I take that back. I've never seen pigs live like some of these people. I think everyone should have some rental property. It gives you an idea of why our country is in such a mess!

July 05 2011 at 8:15 PM Report abuse +3 rate up rate down Reply
Bill

I am a landlord and that's good advise. Good tenants are hard to find. I am even into giving less of a rate to the good ones. We don't want down time while we search for a good tenant.

July 05 2011 at 6:06 PM Report abuse rate up rate down Reply
hackersyes

try and get your landlord to rid your building of bed bugs? good luck

July 05 2011 at 5:17 PM Report abuse +1 rate up rate down Reply
savemycountry911

My brother has rentals. People leave owing him money and tear the places up. You can't really make money renting.

July 05 2011 at 3:14 PM Report abuse +1 rate up rate down Reply
ausino

We have not seen that in parts of Brooklyn yet. I'm a building managere and I still offer preferential rents ( down from market or legal rent ) Tony

July 05 2011 at 2:30 PM Report abuse rate up rate down Reply