Irvine private rental market?

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irvinehomeowner

irvinehomeowner

Well-known member
I did a check recently on rentals in Irvine and it doesn't seem like they have gone down that much in the last 2 years.

What I do notice is that in certain areas, there are quite a few rentals available.

If anyone is a private landlord or a renter... how is it?

Are you able to find renters easily? Are you able to find a rental easily?

Have you had to lower your rents? Are you able to negotiate lower rents with the landlord?

Since one of the home buying factors on the IHB was rental parity... I am wondering how is the "health" of the Irvine rental market in relation to the housing market.

 
irvinehomeowner said:
I did a check recently on rentals in Irvine and it doesn't seem like they have gone down that much in the last 2 years.

What I do notice is that in certain areas, there are quite a few rentals available.

If anyone is a private landlord or a renter... how is it?

Are you able to find renters easily? Are you able to find a rental easily?

Have you had to lower your rents? Are you able to negotiate lower rents with the landlord?

Since one of the home buying factors on the IHB was rental parity... I am wondering how is the "health" of the Irvine rental market in relation to the housing market.
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I manage a number of homes for private owners here in Irvine.  For the very small sample size that I can see, I can attest to a very noticeable decline in creditworthiness of tenants, and a decline in rental costs. Seasonal numbers can help clarify: in Sept. 2008 the average $/sqft lease price was $1.66, whereas this September the price has dropped to an average of $1.58/sqft, which is rather significant (~5%).  Usually rents drop OR purchase prices drop.  If they are both dropping, it should either indicate an oversupply or net emigration from the area.

-IR2
 
I always use IR' rent per square foot metric to see if i should try to negotiate a lower rent, i pay $80 more a month than what i should using $1.58 a sq foot, but the landlord is a very good landlord, im guessing we would get the reduction (currently month to month) if we asked but given the amount involved havent done it yet and probably wont as long as it stays under $100.
 
I manage a number of homes for private owners here in Irvine.  For the very small sample size that I can see, I can attest to a very noticeable decline in creditworthiness of tenants, and a decline in rental costs. Seasonal numbers can help clarify: in Sept. 2008 the average $/sqft lease price was $1.66, whereas this September the price has dropped to an average of $1.58/sqft, which is rather significant (~5%).  Usually rents drop OR purchase prices drop.  If they are both dropping, it should either indicate an oversupply or net emigration from the area.

-IR2
Click to expand...

Does this average apply across all rental types - i.e condo, townhouse, duplex, SFR; and number of bedrooms?
 
Good topic.  My wife and I are just about to renew our lease and wondering if we should buy now as it feels like its getting closer and closer to rental parity.

Here is the big question - when you think of rental parity, do you consider your mortgage deduction or not?  When I factor in deduction, its definitely closer to rental parity but what happens if I want to move and rent my unit out?  I dont get the deduction and end up losing a lot monthly.

IR2 - are you still tracking irvine rentals and sales in your spreadsheets? 
 
rkp said:
Good topic.  My wife and I are just about to renew our lease and wondering if we should buy now as it feels like its getting closer and closer to rental parity.

Here is the big question - when you think of rental parity, do you consider your mortgage deduction or not?  When I factor in deduction, its definitely closer to rental parity but what happens if I want to move and rent my unit out?  I dont get the deduction and end up losing a lot monthly.

IR2 - are you still tracking irvine rentals and sales in your spreadsheets? 
Click to expand...

You are absolutely right, i just posted this a short while ago on OCR to make people aware of the difference in rental parity as an owner occupant vs renting out your unit.

"Given your line of work, im sure you ran through a bunch of sensitivity analysis, but im guessing some folks dont realize (probably not many here that dont realize it), that while your net payment now may be rent equivalent as an owner occupant (because you can deduct the interest), the calculation changes dramatically when you move out and try to rent it if your AGI is over 150K, which will likely result in it being a cash flow negative property (because you cant deduct the rental losses). This has been my main concern on pulling the trigger on stuff where the net payment is pretty much the same as the rent. If you net payment is say $3,000, that is because you are probably realizing a $700 - $900 tax benefit every month (depending on marginal tax rates), but that could potentially be the same amount you lose a month for a current buyer who is forced to rent their property in 5 years (or maybe longer depending on how things play out).

With that said, like you said, you have to live life and who knows what the heck is going to happen. My wife goes through cycles where she is ok with renting and then not. Right now she is in the "not" mode and is pushing for something to buy before the end of the year. I hate having to balance a happy wife with financial risk."
 
Also, that is why i dont like how IR (renter not realtor), calculates his rental parity on IHB. His calculation makes things even rosier as an owner occupant since it pulls out the principal portion of the payment. I think cash flow is more important
 
This is an excellent first post.  That is why I've tried to take IR2 $/sq ft rental number and reduce it by a fudge factor to do my
rental parity estimate. Maybe I'm just too conservative....


rkp said:
Good topic.  My wife and I are just about to renew our lease and wondering if we should buy now as it feels like its getting closer and closer to rental parity.

Here is the big question - when you think of rental parity, do you consider your mortgage deduction or not?  When I factor in deduction, its definitely closer to rental parity but what happens if I want to move and rent my unit out?  I dont get the deduction and end up losing a lot monthly.

IR2 - are you still tracking irvine rentals and sales in your spreadsheets? 
Click to expand...
 
nytransplant said:
Does this average apply across all rental types - i.e condo, townhouse, duplex, SFR; and number of bedrooms?
Click to expand...

The average is for condos (townhome is a style of condo) and SFRs on the MLS.  It does not generally include multifamily (duplex, triplex, and quads) or IAC apartments, with a few exceptions. You may parse it any way you like, and each of the headers have been pre-filled with an autofilter. It is a semi-raw export from the MLS.

My hope is that tenants and landlords alike use the info to arm themselves and set reasonable expectations.
The link is at my website: www.IrvineRealtorSite.com and is updated at the end of the first week of each month.

Good luck,
-IrvineRealtor
 
As with re-sale homes, you need to adjust the average rental per SF rate based upon location, size, and upgrades.  Obviously a smaller condo will rent at a higher per SF than a 2,500sf home will.  That being said, I've noticed that rentals that are priced right (just like homes) are leased out very quickly. 
 
How much does an apartment complex affect private rentals?  Because even living in a condo that is the same dimensions as an apartment is theoretically better than living in an apartment in some ways - unless its a condo community  thats mostly rented out.  Neighbors tend to be longer term, they care more about keeping their places up (in theory...), they care more about not pissing each other off since they can't just move out at the end of hte lease (in theory....), etc etc.  Although on the flip side they can't get evicted for breaking an HOA rule or doing something really irritating like smoking under your window.

I mean I'm sure there is SOME overlap, but it seems to me like apartment complexes get people who move a lot more, have less savings (the deposit and required credit to rent in a complex is SUPER low comparatively), and ... I dunno.    It just seems like the people looking would be different - let alone people who want larger properties (3br+) or SFRs.
 
My experiences with IAC apartments was horrible.  Unless you live on the very top floor of the building, you can hear the every footstep of your upstairs neighbor.  The reason being that they don't use concrete to separate each floor, just wood.  :(  So I can see many IAC renters wanting to rent out private detached townhouses.
 
Aparments are also less likely to have washer driers in the units - usually they are laundry rooms or they send the rent SKY high, especially in IAC.  We looked around there and found that they wanted 1500 for a 1br with a washer/dryer and many apartment properties make you rent or buy your own appliances.      And I think you're a lot less likely to have a private rental surrounded by neighbors who cram a bunch of people in each unit (at least, in Irvine).    Much less likely to have 5 college students living next door to you in a private rental than in an IAC unit.  Price isn't the end all be all to renters, location matters a LOT (especially if you have kids and you want them in a certain school) and amenities like what kind of utilities are covered, appliances, hte parking situation, etc all matter. 

I never lived in IAC but my bf did when we met and one thing I hated about it was the cramped high density feel of the complex - something about the way the places were arranged felt dark and cramped to me.  Also according to his roomate the interior walls were paper thin..... ahem.
 
I lived in several IAC complexes and now rent a private SFR. The IACs were expensive but I did feel they provided excellent amenities and services. I made good use of the gym, business center, salt water pools, and club house. Yes it was crowded and it pissed me off when I couldn't get a close parking spot after a long night at work but such is life in any apt complex. I also liberally used the maintenance services--they did air filter changes, pest spraying, fixed the washer, and even changed light bulbs!

In my private rental, I have way more space and privacy than any IAC apartment but it too come at a higher cost. My landlord while good, is no where near as efficient as an on site IAC maintenance person. I do have many community amenities similar to IAC but just older and further away. Overall I have been very happy moving from IAC into a private rental but there are trade offs.
 
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