Wow Fees!

Wow Fees!

[IN]
If you are not yet aware some big hedge fund billionaires are buying up rental houses. Two are working my small town.

This is changing the face of renting houses. One has over 35,000 homes nationwide.

The other has thousands and is buying 1000 each week. They want to buy my entire portfolio. He said they have “billion$$$”.

They are spreading out from the large cities. One company-

• App fee: $75 per person
• Animal Registration Fee: $350 each animal
• Animal rent: $50 each animal
• HVAC filter fee: $15 per month
• Smart house fee: $25 per month if it’s a smart house.

“Do not call the office. No one will talk with you until your application is approved. At that point a leasing agent will show you the home”.

[MI]
Does anyone remember when a phone bill was one side of one page? Maybe $7 for a month. Then they deregulated the phone company and broke it up. Now the bill is about 8 pages on both sides with line after line of charges.

What’s happening in the rental market is the same thing. They dream up line after line of charges to jack up the price. All those parts of the house that get depreciated – the rugs, the fence, the appliances, etc will become line items with a monthly fee for them.

It’s freakin’ ridiculous. Unfortunately, many will just go along with it.

Remember when, even in the 80’s, prices got too expensive in Calif and people started moving to Oregon, Wash and Idaho and Denver? Prices of housing went way up and locals cashed in and sold to the “invaders”. Lots of them whined and said ‘Californication” and that it was “unfair”. Still, they sold and pocketed those checks.

So now the same thing is happening. The hedge funds are buying up the rentals. They will drive the rent prices through the roof and make the general public their slaves for life. Like the “company stores” of older times, they will buy up the grocery stores and all the other ones too. Everything you do or consume will send your money to the hedge funds/big operators.
I predict that very soon we are going to see the hedge funds bribe congress to pass a law that says your paycheck will contain an automatic deduction for rent, just like for social security. These hedge funds are not going to stand around waiting for you to pay them. They are going to automatically TAKE the money from you.

I also predict that rent will become week to week and not monthly because this will increase their “take”. (I read somewhere this is the way it is done in London, England and that rent is week to week and you pay 4 weeks in advance. In Japan, I read that all rent MUST be guaranteed. If you don’t have a cosigner, there are companies that will post a guarantee bond for a fee.

Small property management companies will be eliminated as the hedge funds take more and more of the market and consolidate.

We, as a society and country are headed for big trouble.

More predictions: The part of the population with decent jobs will wind up paying more and more of a percentage of their pay for rent. They will NEVER get out from it and never own their own homes. The rest of the population that can’t afford the $2500+ monthly rents and all the extra charges will be forced into govt housing (slums) and be under govt rules. (“We see you have not complied with our latest rules. You will be relocated to the gulag/camps. It is for the protection of the children”). –24.180.xx.xx

[SC]
Don’t be so doom and gloom – Just Google ZILLOWs 300 Mil fLip disaster – 7000 homes they need to unload – Paid to much – Could Not get the work done and so on.

Brad Don’t be surprised if some one like you who knows the business and the local market ends up buying some of the units for pennies on the dollar.

Please note – the Market normally wins in the END. The real problem is big investors or companies who have a safety net – such as Gov’t bail outs or other special gov’t sponsored write offs.

[MO]
While it is true that large capital funds have been buying up homes by the 1000s at least since 2008-2009, according to industry stats, “Ma and Pa” land lords are still the majority owners by a long shot.

“The Census Bureau counted nearly 20 million rental properties, with 48.2 million individual units, in its 2018 Rental Housing Finance Survey, the most recent one conducted. Individual investors owned nearly 14.3 million of those properties (71.6%), comprising almost 19.9 million units (41.2%).”

Granted, this research is a few years old, but the Ma and Pa land lord biz is still great. Most of the big boys own the big toys; large apartment complexes with professional staff that they can apply a cookie-cutter model of management and maintenance to, forecast CapEx and IRR, etc.

The SFH and small plexes continue to be dominated by individual landlords, and business is good in spite of unconstitutional seizure of property rights via eviction moratoriums and other Govt shenanigans.
But…and I think this is Brad’s point…the FEES! Look at those fees! If you aren’t charging apps fees, pet fees, etc…today is the day to start. They are common, normal, and expected.

Every time I see one of these posts, I re-evaluate my fees against the big boys. Looks like it’s time for another pet fee increase.

[MA]
I’d sell into that in a heart beat … then enjoy a few years of R&R. Then buy them back for pennies. Seen the cycle too many times.

[PA]
I don’t understand the ‘smart house’ fee. Yes, I understand you can have your refrigerator make your shopping list. I understand you can walk past the light switch and tell alexa or siri to turn the lights on or off rather than reach your arm out and do it yourself. My nephew’s house goes into very quiet breezy ocean sounds at 9:30 each night !!! But why the fee if the tenant programs everything to suit their personal life?

[NY]
tryan,i agree 100% Nicole,i think people want that stuff because it is new and trendy and they will pay for it so might as well charge for it,makes it seem even more cool and hip if you pay extra for it.

[TN]
I think they are buying up the whole country. From where I came from and the way I grew up, this all is disheartening to me. There is nothing wrong with making money, but this is pure greed. They are making housing unattainable and unaffordable for a majority of people. And their not held accountable, because they won’t even answer their phones. They know they would get flack if they did.

I really hate this modern world and how people are working against each other more and more, instead of working as a whole to help each other, so we can all have a better life and not feel like we are constantly in battle alone.

Richard has a very good point, in the direction we are going.

I admire the stories of times past when people would help each other build their barns or houses. Times when someone broke down on the side of the road and someone would stop and help. Times when people were friends that actually spoke to each other in person and would not want anything to do with FB and the like. Those times are gone for the most part. The really sad thing is that it is contagious.

I feel like we used to live in a happier society but now it is filled with depressed people.

Back on topic, I have noticed here that others are charging higher fees and BS fees. It’s the BS fees that really tick me off. As Sid said though, people just pay it and don’t really question it.

[MO]
And people pay the fees! Flush with money. Get it while you can.

[PA]
Along the lines of what sid said above about most of us – mom and pop landlords. My tenant pool cannot and will not be able to rent from the big corporations. They won’t be able to afford it. My places are old. They are not modern, shiny and sparkly. My tenants are good with that because they cannot afford the places that are new and updated. Perhaps they would like granite or quartz counter tops or grey shades rather than my beiges but they are in heaven that mine are Lowes off the shelf laminate rather than contact paper covered plywood and they accept clean and functional. No one blinks that there are drop ceilings. I’ve only ever had a handful of single family properties (never a multi unit) with central air. The people were bonkers rather than feel it was ‘a requirement’. Disposals and dish washers are TOTALLY nonexistent in my world.

[TX]
I was having this conversation with the daughter of my Pastor. She is just barely 20 something with a husband and a couple of big dogs. They are renting at one of the newer apartment complexes in town. All the fees they pay are over 50% of what their rent costs. Here’s a few that I remember: parking, resort fee(pool, hot tub, gym, etc.), Technology fee (online billing, maintenance requests, and access to view exterior cameras), Smart home (light switches and wall plugs), gate access fee, Filter fee (heater filter under counter water filter), eco-friendly fee (LED bulbs, trash and recyclable bins), and pet fees. None other than the pet fees are negotiable, everyone pays. They also rent garages, storage closets, party rooms, and access to a business center (temporary office cubicle and printer) that you can sign up for.

Richard’s phone bill is a good example of this happening in another industry. They advertise $39 per month but by the time you add all the fees it is closer to $60 per month. I see the same thing happening in this industry over the next very few years.

It kind of explains why these big entities are willing to pay top dollar. They aren’t getting just rent, they are getting rent + 50%.

[NY]
every effen thing is becoming a subscription. how can they get away w charging for an air filter? and can one legally charge a fee to process an esa?

this will not fail in my opinion. they will lobby congress to support their business model and exempt them from state laws or get creative with tax liabilities. I bet they are not in NY or CA yet at the retail level.

mom n pop will get stuck w the real deadbeats that will never come choose to being approved for these units. in the end this will further divide the haves n have nots and push the social justice agenda further as a correction to their greed. of course they will get the contract to manage the new govt housing which they will already own and receive more money for because govt run is not inexpensive.

[PA]
I think the point that Brad is sharing is with the market being so fragmented, someone will always emerge as a leader. You can make a great deal of money by following the leader without being that top dog.
In this case, if a syndicate comes marching into town charging huge fees – look at your fees. You might want to raise them to keep up.

That said Brad, when it is time flush out the giant, let me know. I have a pocketbook and it still has some checks in it too. People do business with folks who you know like and trust. You are a straight shooter –24.101.xxx.xxx

[IL]
We ‘seniors’ remember an easier time. Unfortunately, times have changed. It’s a throw away society. What’s the saying? What ever the market can bare. It is everywhere, sports, politics, business. As for myself, I watch the area. I would not have prospective tenants if I had the highest fees. The fees need to be reasonable. I’m in Illinois, the politician once the most powerful in the state, Micheal Madigan will be indited on some 22 charges including racketeering. There’s an example of greed.

[MO]
What about these fee charges for support animals?! Animal Registration Fee: $350 each animal Especially this one!
Animal rent: $50 each animal This will cause more people to play the emotional support animal game!!

[ID]
If big corporations really do take over the rental scene, its good for all of us. Those who don’t like to have any contact with tenants will have the big corps training tenants to pay fees and not expect any human contact.

Those of us who meet face to face with our tenants can provide a niche market where there is good service and the personal touch.

All of us get to raise rent to match what the big corps are charging. –76.178.xxx.xxx

[PA]
I wonder what percentage of these places are in rent controlled areas? Seems like a good solution to that.

d [MO]
NE, good point. So let’s say there’s a rent controlled area that says you cannot go up more than 7% per year.

• How about charging a $100 “re-verification of lease” fee?
• $150 annual pet registration fee?
• $200 annual maintenance fee?
• $100 document prep fee?
• $50 per maintenance visit surcharge?

Law makers do this all the time to avoid having to put taxes on the ballot for voters: they simply invent fees.

[MI]
Grab ’em by the ankles, lift and shake!

NE [PA]
That’s what I’m getting at Sid. Jack the fees yearly instead of the rent. If they move, shrugs.

[PA]
PG–Right—Real Estate is local. We have the advantage over big outside investors.

[MD]
Some of my rentals are in rent controlled areas. Check your local laws, my local laws indicate that you can not collect more than X times the monthly rent . You can call the fees/charges anything you want, but they in total can not exceed Xtimes the rent….in my case 2 times the monthly rent…call it security deposit, pet fee, abc fee, xyz charge…whatever but it may not exceed 2 times the rent.

[PA]
At lease signing or at renewal Laura? I’m sure there are socialist war zones where this won’t be possible, but in some newly created rent control areas, I would imagine this can be easily done. The politicians in their infinite wisdom, haven’t dotted all the i’s and crossed all the T’s yet. What’s the saying for these kind of restrictions? Show me a rule and I’ll show you a way around it, right?

[IN]
I like the last line: “Do not call the office. No one will talk with you until your application is approved. At that point a leasing agent will show you the home”
I have been there for 5 yrs now. Guess I was ahead of the game…. lol.

Smart home fee: if the home already has smart things like a smart thermostat when they bought it, it’s a $25 fee on top of the rent.

Garage door opener connects to phone, maybe RING doorbell.

[MO]
One goal of the property management company fees is that they collect enough fees to make office staff payroll.

[TN]
“a la carte pricing is preferable to all in inclusive pricing”

Why is that? Is it a psychological thing?

[IL]
This sounds like good news to have large players to be on our sides. Can you imagine them using their influences to make the landlord/tenant laws more fair and not too tenant sided like in my city, Chicago. Yes I would welcome them with open arms. Also, if they charge too much fee, that would only make our rentals more attractive because we don’t charge those non-sense fees.

[MO]
I don’t know, but I remember when all inclusive pricing was popular for many businesses,the all you can eat restaurants dominated for decades, now they are gone.

Vacations were another business that largely abandoned all inclusive pricing , except for cruise ships catering to boomers.
Maybe all inclusive was king for boomers and a lacarte pricing suits millennials preferences.

[PA]
To record a deed or mortgage in most of Penna., it costs around $80. Philly decided to turn recording fees into a funding source for yet another welfare program—er, sorry, “affordable housing.” Costs you $257 to record a deed.

[FL]
What is the name of these large companies buying when the market is hot from a sellers point of view?

[PA]
Mom and Pop aren’t as stupid as they think and looks like Glenn Beck is not as crazy as he sounds! He has been talking about this sort of thing for a while. I really appreciate Brad for bringing this to our attention. We keep getting postcards in the mail to buy our houses by the fistful. The market and the world are nuts. I don’t want to provide a ring doorbell, just don’t want the phone call about it’s not syncing with their phone, I’d be lost so will forgo the fee.

[OH]
Only fee I’m considering tacking on is the annual rental registration fee that the cities charge the owner/landlord.
That way I’m simply passing on the Gov’t fees that many in this post are complaining about, same as every other industry seems to do, IE line item taxes and regulatory fees on your phone bill, utility bill, etc. There is no reason these cities need an annual inspection or list of our tenants and charge $150 per year. Not even sure it’s totally legal, but they charge them anyways. So, since it’s a “tax” that only applies to rental property and not owner occupied, seems reasonable that extra tax/fee should be paid by the tenants. Thoughts?

Mike [PA]
Unless they buy an entire city these hi fees will help us smaller LLs. Ive seen investor groups buy package deals for rentals only to see them sell of because they underestimated the C or D tenants.

[TX]
How do you contact these corporate landlords? I would love to sell several homes in a state that hates landlords so I can buy more homes in a state that is ok with us.

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