San Diego's housing crisis is pushing into the rental market.
Rising prices combined with a shortage of inventory are making it difficult for families to find places to live.
"I have never seen inventory as low as it is right now of available properties,” said Bob Davie, owner of San Diego Residential Property Management.
If you're trying to rent a house, that's probably not what you wanted to hear. Davie's the guy who would know; he’s been in the business for more than 20 years.
"There are statistically more bodies moving into the county than moving out,” he said. Davie said that has created a supply and demand issue.
In San Diego, a decently priced single-family home can go for around $2,500 to $3,000 a month for rent. In this current rental market, tenants are doing whatever it takes to appeal to landlords.
"They want to know what is it going to take to acquire that property,” Davie said.
He has seen prospective tenants offering a larger deposit and a longer lease, or even outbidding each other on monthly rent.
"They’ve made an appointment to view the property in advance with the understanding that they were going to you say outbid. I would say offer more than the market rent in order to acquire it,” Davie said.
So what can you do?
According to Davie, you need to know what type of property you want and what you're willing to accept.
After that, he suggests getting the application process done early and come to showings prepared.
"[Write] a paragraph or two of who you are as a family or a tenant, why is it you're out in the market looking -- maybe it's been a job transfer. A homeowner wants to know who is occupying their property,” he said.
Most property managers will want to know your credit history. Don't worry; the initial checks shouldn’t hurt your score.
"Inquiries have a very minimal effect on scores and actually have the least impact of anything else,” said Rod Griffin, director of consumer education and awareness for Experian.
To help make yourself the ideal candidate, Griffin recommends getting your credit report three to six months in advance of your move, so there are no surprises.
"A number by itself doesn't help you. You don't know what to do with it; it's just a number,” Griffin said. “Get the risk factors that go with it. At Experian, if you get a score, you're going to get the risk factors as well. Address those risk factors; they empower you to act.”
In many cases, landlords require credit checks in advance of showings, but they should be soft inquiries and not negatively impact your credit.
If that's not the case, the credit company wants to know. Griffin said they want you to engage with them.
You can always connect with the credit company and explain the situation.
According to Experian, “Most apartment complexes and management companies will review your credit history, in addition to a tenant screening report, as part of their rental review process. While a tenant screening report will show your rental history [experian.com], landlords and leasing companies check your credit report to see whether you pay your other bills on time and manage your debts responsibly. Landlords may also check your credit score. There are credit scores specifically for making rental decisions. These scores evaluate your financial situation and help a landlord determine the likelihood that you will pay your rent on time."
If you’ve had credit trouble, making improvements to your credit will depend on your specific situation. There are no quick fixes, but there are steps you can take to improve your credit rating along with some tips to consider before you apply. Here are a few best practices to keep in mind before entering San Diego’s rental market:
• CHECK YOUR SCORE: Check all three of your credit reports and get your credit score at least three months before applying for a lease. If you are applying jointly, make sure your spouse or partner gets their reports and credit score, too. Review your reports for accuracy and dispute any inaccuracies.
• ASSESS YOUR RISK: Focus on the risk factors provided with your credit score to set an action plan to improve scores if necessary. Your risk factors will help you understand what changes you can make to increase all your scores and put you in a better position to qualify for the lease you want with the best rates and terms.
• AVOID LATE PAYMENTS: In the months or years leading up to your move, be sure not to miss any payments and keep your balances as low as possible on your existing credit accounts. Even one late payment can hurt you and high balances on your credit cards increase your utilization rate, which hurts credit scores and your chances at qualification. Even if you do qualify, your previous payment history could result in higher lease terms, heavier security deposit requirements or other fees.
• SAVE, SAVE, SAVE: In addition to your lease payments, you may need a significant security deposit, renter’s insurance, utility deposits and other fees. Make sure to put aside enough money to cover these fees and budget for appliances like a refrigerator, washer and dryer, and microwave that may not be included in the lease.
• CREATE A BUDGET: Make a budget and give it a trial run. Before you commit to a lease amount, figure out what your monthly expenses will be and start living as though you’re already in the apartment, condo or house. Remember, you may see increases in utility bills, such as electricity, water and trash. Add up the total increase in expenses and put it aside in a savings account each month to see if you’re truly ready to take the leap.
• BE PATIENT: Keep in mind that preparing for a new lease isn’t a race. If you’re unable to qualify with the best rates and terms right away, it’s ok to wait (assuming your current lease is not expiring and can’t be renewed). There’s nothing wrong with taking more time to build your credit rating further and save more for your dream location.
