As the saying goes, there is always a market for the best. That’s the case in Marin County where the rental price of single family homes in the luxury market has risen significantly in the past two years.
Research of Marin’s high-end rental market by Foundation Homes International (FHI), a property management and real estate firm based in Kentfield, found that from 2015 to 2017, single family housing rents across the board in Marin were up 3.45 percent, while in the $8,000 per month and higher category, the increase was 10.46 percent.
“The general view of Marin is that it is expensive and getting increasingly so. What we found is that the county cannot be viewed as a single rental market, either by geography or by price category,” said Christopher Barrow, co-founder of FHI along with his wife, Darcy.
The Barrows specialize in high-end single family home rentals that go for $5,000–$10,000 per month, and FHI has than $100 million in residential real estate assets under management in the county.
“People who live in Marin have very specific criteria, and they are both willing to pay for it and to take their time until they find what they want.” Barrow said. “There is high demand in specific ZIP codes for specific types of homes and, like the sales market, relatively low inventory.”
The majority of the high-end rentals are in central and southern Marin, closer to San Francisco.
Why rent an expensive home instead of buying one?
“There are a number of factors, but it’s primarily driven by lifestyle and desire for flexibility,” Barrow said. Also, “When you consider property taxes and a mortgage on a multi-million dollar home, renting is also more attractive.”
About 80 percent of rents seek proximity to a quality school then things like granite counter tops, hardwood floors, and recessed lighting. Thirdly, they consider size.
So, who is doing the renting? It’s those who may have sold their home and are waiting for the next opportunity, or a business owner who may be investing money in the business now, intending to buy down the road, or employees who have moved across the country to take a job with the company is subsidizing their rent.
Many who are new to the Bay Area experience sticker shock.
“It’s our job to educate them on the market in the Bay Area,” Barrow said.
Also a factor is the higher incomes people are make in the Bay Area.
“The high prices are just numbers to them,” Barrow said. “For people who are very tuned in to their financial situation, renting is not a practical investment of money but their (level of) lifestyle drives it, and they are just going to have to pay for it.”
Barrow compared it to driving an electric car versus paying for a high-end luxury car with all the amenities.
“It’s all in how you want to arrive.”
The FHI report also found that the average days on market for rentals in this geographic area increased from 43 to 57 days from 2015 to 2017, indicating that while prices were slightly higher, it took longer to fill vacancies last year than the two previous years.
As high-end property managers, the Barrows run into situations that require special handling.
“After 13 years in the real estate business we noticed a need in the market for high end service with a whole different set of needs,” Darcy Barrow said.
One thing owners need to understand is that renters are paying a lot of money and expect a lot for it.
“There is an emotional currency for the property owner. They are turning a precious asset into a rental. It’s their home, with memories. And those owners tend to micromanage. They are accidental landlords who didn’t necessarily buy the home to rent it,” Chris Barrow said.
Owners might rent it for various reasons that include extensive travel, like setting up a business in another state.
“One man from China bought a house here when mortgage rates were low, knowing he would be moving here in a few years,” Barrow said.
One owner had a dishwasher that acted up. When the renters complained, the owner said his solution was to give it a kick.
High-end renters don’t want to have to kick the dishwasher, however, Barrow said.
“Our job is to educate owners for a viable place in the marketplace, to convey to the owner they need to deliver what the renter is paying for,” he said.
On the other end, they need to educate renters that renting a home is different than renting an apartment.
“There is no super in the building. We do coddling and hand holding,” he said.
Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.