Rental market split in Delaware’s beach towns
By Pam George
Special to Delaware Business Times
JoAnn Babbie has learned the secret to finding a full-time rental property at the beach: Make friends with a rental agent. “He sends me emails almost weekly with what’s on the market and what’s coming on the market,” said the Rehoboth Beach-area resident, who has successfully rented three single-family homes over the years.
The insider tips are critical these days. The inventory for full-time rentals is so tight that people are submitting applications without first seeing the home, said Mary Lou Elrod, the rental manager for Joe Maggio Realty in Rehoboth Beach. “We don’t even get the chance to advertise the property.”
Conversely, the vacation rental market still has plenty of inventory, and many travelers are now waiting to make plans.
Heated competition for full-time rentals
New home construction is dominating the real estate market at the beach, and demand for full-time rental properties is rising.
Some tenants are caught between a home that sold quickly and one still under construction. They need a place to stay in the interim, Elrod said. Others want to rent awhile at the beach before they decide where to buy.
Landlords cater to these customers because typically they have more money to spend on rent than young adults. Those who plan to buy a new home tend to have their finances in order, Elrod noted.
In addition to building new communities, development has increased the number of restaurants, shops and services in the area. These businesses need full-time employees, who need lodging, said Sharon Palmer-Stauffer, vice president of rental operations for Coldwell Banker Resort Realty in Rehoboth Beach.
“If their budget is $1,500 a month or less, it’s really tough for them,” she said. “Many are working close to minimum-wage jobs.”
Depending on the property’s location – and proximity to the beach – rents can run from $1,000 a month for a two-bedroom condo to $3,000 a month for six bedrooms, according to Jo-Ann Bacher, rental manager at Jack Lingo Realtor in Rehoboth Beach.
Many decide to team up. “It’s one way for people to make it,” Babbie acknowledged. “It’s what a large percentage of the population who work here have to do. Community living is popular here.”
Surplus vacation homes
The beach is a resort market, after all, and a good number of landlords want to use their beach property part of the year, usually in the off-season. They don’t want a year-long tenant, according to a number of real estate agents and property owners.
What’s more, by renting their property in summer, they can make up to $1,000 a week instead of $1,500 a month.
However, the traditional summer season is only 11 weeks, and these owners have serious competition. “More people are renting their properties than ever before,” Bacher said.
Owners this summer may face some nail-biting moments while waiting for the booking calendar to fill up.
Elrod of Joe Maggio Realty said many held off renting due to the wet spring weather. She expected bookings to pick up after Father’s Day.
Twenty years ago, these latecomers would have a hard time finding a home. No longer. “Someone just came in today and rented for today through the week,” Bacher said in mid-June.
Many vacationers also want shorter stays. Owners with availability may comply.
“They’d prefer to have a full week’s rental,” Palmer-Stauffer said, “but something is better than nothing.”
More ways to rent
“There is a huge rental pool in VRBO and Airbnb – owners are doing it themselves,” Palmer-Stauffer said.
The DIY approach is best for those who live near their rental property, she said. Many of her clients don’t want the hassle of dealing with the tenants.
For buyers, dealing directly with an owner comes with a risk. About six times a year, Palmer-Stauffer encounters the victims of scams who paid in advance, only to find their contact never owned the property.
“There are people who create ads by lifting photos off the internet,” she explained. “They’re slick; they only take certified checks.”
Agents must abide by federal laws and a code of ethics. They’re also well-versed in landlord-tenant laws that can help a tenant regain a security deposit or deal with a dispute.
“If you don’t, you could lose your license,” Palmer-Stauffer said. “We want to be stewards of our area.”