Topic: The Current Des Moines Rental Market
May 21, 2020 Meetup
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The Panel Guests
Ben Flurey has been in property management in the Des Moines area for his entire career. He grew up with his grandparents owning and managing rental properties in Northern Iowa. The vision for RPM Iowa is to strive for the best possible communication and customer service for all customers, residents, and clients. Their approach is simple: “you first.” Come join the experience!
Brad Neal owns and operates Renters Warehouse Iowa in Urbandale, Iowa. Brad is also a licensed attorney in Iowa, and practiced law in Eastern Iowa and Central Iowa for ten years prior to starting Renters Warehouse Iowa. Renters Warehouse Iowa manages residential rental properties from single family homes up to mid-sized multifamily properties throughout Central Iowa from its Urbandale location.
Pros and Cons of Hiring a Property Manager
Whether you’re renting your own house or investing in multiple properties with the intention to build a rental portfolio, it’s important to know your options. The pros and cons can be on either side of the equation depending on your personal outlook as a property owner. If you’re taking the plunge into DIY landlording, check out this post.
Overall Rental Market Outlook
For many landlords, March was a month of confusion and panic about rent payments. According to Brad at Renters Warehouse, April and May proved that at least in the Des Moines area the reality isn’t as bleak as the media might be portraying.
Some payments rolled in later than would usually be acceptable, but they rolled in none the less. Collection rate was about 90% by the 10th and closer to 95% by the 17th. “We closed April at 98% collected payments.” A similar trend seems to be following for May.
Increased Rental Applications
Rental applications have been through the roof lately for both of our rental expert interviewees. With everyone online more there’s more people shopping for a new place to rent. Online property listings have increased in popularity that virtual tours are becoming standard practice.
More virtual tours in response to social distancing measures is one change that is likely to stick around. The increased number of applications is true of the Midwest overall according to regional Renters Warehouse data. Collections have also been steady.
What’s the impact of downtown Des Moines development on surrounding rentals?
On one hand, the downtown buildings aren’t really comparable to any surrounding single family or even smaller multifamily buildings. Downtown developers are pushing a more luxurious, amenity-filled living experience.
On the other hand, a lot of the these developments have been offering decreased or free months of rent to get units occupied. Front end concessions are often seen as discounted rent and increased affordability to prospective tenants.
Suddenly, a tenant who would qualify for $1000-1200 now can afford a $1600 unit because of the deal. So, nearby properties that advertise at $1200 offer concessions which then attract tenants who normally can afford $900 or so.
A Surprising Way to Attract Tenants
According to Brad, he sees more interest from tenants when a unit comes with a free TV compared to decreased or free rent. Who’d have guessed that?
Security Deposit Strategies
It’s very hard for our speakers to recommend a security deposit that is less than a month’s rent because security deposits tend to increase a tenant’s commitment to the unit and pride of residence. Some landlords opt to charge the maximum allowed in the state of Iowa which is two months rent. This is one strategy to safeguard the landlord in case the tenant has a lower credit score or a less than favorable application. For more expensive units, asking for multiple rent upfront can become cost prohibitive depending.
Keeping COVID-19 in mind, it might be a good idea to get a tenant locked in with a higher deposit and lower rent rate. We just don’t know what will happen in the future and whether or not good tenants will be harder to find. No matter which route you go as a landlord, make sure you have a written set of application standards AND that you follow them!
Until Next Time…
Disclaimer: Please consult with Real Estate, Tax, and/or Legal professionals before making any decisions. Coluzzi Real Estate INC sponsors the meetup, but does not profit from the business of our invited experts.