7 Ways To Help Lower Income Renters
How can landlords help lower income renters secure housing without bankrupting themselves? There should be some common sense middle ground which enables real estate investors and businesses to grow their own finances, while helping others.
Housing affordability is an issue. It’s not just the lowest income earners that are running into challenges either. Even the middle class workers are paying half of their incomes, if not more, for rent. Here are seven ideas you may want to explore if you are looking to help renters:
1. Sustainable Rent Increases: The rent raising race has been fast and furious over the past few years. In some areas, rents have doubled in the last few years, with wages trailing far behind. Taxes, inflation on consumer goods, and new health insurance requirements have made it harder for people to save money.
Sustainability is key. If rents get too far out of control, they are counterproductive. That can lead to bigger dips, negative cash flow and insolvency. There is also a common sense factor at play. If you’ve got a great family in a rental, you don’t want to price them out. It’s true that in some places it is becoming more difficult for income property investors to find deals that make sense without dramatically raising the rent. However, it is also true that if no one buys those overpriced properties, that eventually the prices will be lowered to sustainable levels.
2. Common Sense Rental Application Requirements: Landlords want the best possible tenants. Unfortunately, some are being unrealistic, or could lower the bar a little without really taking on more risk. Some may want to take another look at their rental application fees and requirements for background checks. Perceived increases in risk in these areas can normally be offset with better leases and leasing strategies.
3. Connect Renters To Local Assistance: If you don’t have the financial bandwidth to help them, connect them to a third party assistance program. This can include local assistance for rental deposits, Section 8 housing vouchers, utilities, and more.
4. Financial Education: Current rent rates alone can eat up more than half of many people’s paychecks. Aside from rent, the reason that many people are struggling is lack of financial education. They just haven’t been taught how to budget, how to save, and how to watch out for predatory marketing and lending practices. Not everyone is looking for a lesson in how to manage their money, but providing resources for this education can help make a massive difference in others’ lives. In turn, it can help groom stronger renters and future homeowners.
5. Income Enhancement: Renters can only reduce their expenses so far. Even without credit cards, student loans, cable TV, or mobile phone bills, life isn’t cheap in America. Most will need a car and gas to get to work. They will be fined heavily if they don’t shell out big bucks for health insurance each month, and take care of their taxes. Let’s not forget food either. If you aren’t making at least $15.30 an hour ($30,000 per year), you probably aren’t making enough to live on in the U.S. today. Never mind preparing for tomorrow. Other studies suggest $70,000 per year should be the minimum benchmark salary. It can pay for landlords to help turn prospective renters on to ways to boost their incomes.
6. Groom Renters to Become Owners: Turn them on to credit enhancement, savings, and prepare them to buy a home from you. It is estimated that 7.3 million buyers will come back to the market. That’s in addition to millennials and other movers. Many investors won’t want to miss out on participating in this new curve.
7. Commit a Portion of Your Business to Affordable Housing: This could be a certain percentage of your income or deal volume, but everyone can find a way to help.