By Ben Holubecki, STML Realty Group, Glen Ellyn, IL
One area that really took a hit during the economic downturn over the past few years was the ability to lease property to employees being hired and transferred. Nobody was hiring, and it seemed that very few companies were taking on the expense of transferring their employees to other markets. Although the job market continues to stagnate, overall it does appear that in many markets companies are beginning to add staff, and once again we are seeing an influx of transferring employees and executives.
Renting a property to an incoming transferee presents a few issues that need to be considered that don’t necessarily apply to local tenants.
1. Timeframes are much more rigid.
When an employee needs to transfer, they need to move. They typically have a start date for work set already. They have received instructions from their HR department to secure housing and are under pressure to get things coordinated as soon as possible. These tenants have a matter of days or weeks to completely relocate their lives. They don’t have the ability to move back a move-in due to utility problems or issues with a previous tenant move-out. When dealing with a transferee, it is important make sure that everyone commits to specific dates and that the property is 100% ready for occupancy on the lease start date.
2. You may not be able to assess creditworthiness.
For international transferees, it is very difficult and sometimes impossible to retrieve a credit report. In many cases all that we have to make a decision on is a letter from the employer and the estimated income details provided by the applicant. This makes it increasingly important to verify every single piece of information that is provided, which includes contacting the employer to verify job offer details and income. If the company is making the investment to relocate an employee, they will do whatever they can to verify the information and expedite the process. If the information is difficult or impossible to verify, this should act as an immediate red flag.
3. If the tenant is working with their own agent, you may never get a chance to meet the tenant or review the lease terms with them.
While this does otherwise happen occasionally when other agents are involved, it is the norm when dealing with transferees. These tenants are very often only in town for a day or two at a time to look at properties and get corporate affairs in order. By the time that they decide that they want to rent our property, they have left town to return home. Much or all of the communication is done via solely the other agent involved. While this is not a huge deal in most cases, it has to be taken into account, as we will likely have no chance to begin real dialogue with the tenant until the time of occupancy. It is also possible that the exact terms of the lease have not been clearly conveyed to the tenant with the detail that you are comfortable. It is a good idea to bring a copy of the lease to the move-in in order to review any important items within the lease that you would like to clarify, as we know that many tenants do not review their lease completely prior to move-in.
4. Tenants may be unaware of utility guidelines and setup procedures.
Our experience is that the employees that companies are willing to transfer are generally pretty successful and many of them are property owners in their current location, not renters. Many of them have not rented for many years and this is a fairly unfamiliar process. They are not familiar with the local utility companies or the process for setting up their accounts. It is particularly important to provide these details as early and as clearly as possible to avoid any delay in switching utilities, and any chance of an accidental disconnection of service. Provide as much detail as possible, no matter how obvious or excessive it seems.
5. Don’t assume tenants understand local weather conditions.
I write from experience on this item. You absolutely can’t assume that someone coming from another location (especially internationally) understands the local weather. One of the worst maintenance situations we ever experienced was a townhome near Chicago that we rented to an executive from Italy. This tenant planned a trip home to Italy during December. The temperature had not fallen below 50 degrees in Chicago when he left and he had never experienced a winter in the U.S., so he did what he would normally do when vacationing back in Italy—he turned the heat off completely. Within a week, the temperature had fallen below zero, the pipes broke, and the nightmare ensued. He had never experienced that type of temperature change before. From that point on, I’ve made it a point to explain the details of the local weather to anyone relocating from a different type of climate.
The fact that executive rentals are now being scooped up by transferring execs is a great sign for our industry, as our higher end rentals are filling more quickly with high quality, longer-term tenants. However, every relocation deal presents its own set of challenges and issues that need to be addressed to ensure that we are providing top-level service to our tenants and clients.