Go-Between Firms Match Apartments and Renters : Housing: Orange County locater services offer convenience and efficiency to potential tenants, while landlords get ‘qualified traffic.’

At a time when “For Rent” signs are a common lawn ornament, bringing tenants to landlords has become a growing business.

To would-be renters, apartment-locating companies offer vacancy listings and guidance--free. To apartment managers, who pay a fee, they send people who know what they are about to see and are thus likely to sign a lease.

“They consistently send me qualified traffic,” said Sherry Rubin, an Irvine property manager who recently rented four apartments to people sent by Apartment Locators Inc., a San Diego company that in April opened its first Orange County office.

To Rubin, “qualified traffic” means people who are serious about her apartments: “They’re already pre-sold on the property. They know we don’t take pets, and they know what the price ranges are.”

Apartment Locators charges half of one month’s rent as a finder’s fee. “It’s a lot,” Rubin said, “especially when you’re moving upscale property.” But because very few apartment buildings are 100% occupied, she said, managers will pay money to fill their vacant units. “It’s very competitive. You use anything in this business.”

Apartment Locators has competition in Renter Express in Costa Mesa. The company was started by Roommate Express, which helps people find roommates.

Manager John Donnelly said Renter Express has placed a few dozen people each month since opening last summer. The company added a computer system in April, he said, and now matches renters with apartments that offer features that they are seeking.

People sometimes call from other states to look through the listings, said Steve Smith, another Renter Express manager. His employees take down the price range and amenities desired, generate a list for the customer and often fax it back. The company also keeps licensed real estate agents on call for customers who would like to be shown apartments, Smith said.

Renter Express charges landlords from $200 to $400 as a finder’s fee, rather than half a month’s rent. “We did that at the beginning,” Chris DeMassa, who owns Renter Express and Roommate Express, said of the 50% fee, “but it was too much for the area.”

Property manager Rubin said that, although she finds some tenants through a locater service, the majority of her clients are people who are driving or walking by and stop to ask about vacancies in her building.

Rubin’s 403-unit Irvine apartment building is 98.3% occupied, she said.

By comparison, the apartment occupancy rate for all of Orange County was 93.2% in June, according to the Apartment Assn. of Orange County, which polls its 3,500 members yearly. That was an improvement from a rate of 92.0% in June, 1992.

But a manager for Apartment Guide, which is distributed free at 3,300 markets and stores in the Southland, argues that renting has slowed significantly since last year. Earnest Oriente said his 200 Orange County apartment advertisers tell him that they are seeing fewer people interested in apartments and that fewer leases are being signed. In South County, where Oriente said his higher-priced apartments are, 64% fewer leases were signed in February than during the same month last year.

“More people are leaving the state or doubling up,” Oriente said.

Apartment Locators, which started five years ago in San Diego, tries to set itself apart from the magazine and newspaper listings. “We sit down face to face with people,” owner Ken London said. “We’ve picked people up at airports. We don’t just throw a list at someone.”

One satisfied customer is Juan Gomez, a 32-year-old claims examiner who recently moved from San Diego and found an Irvine apartment through Apartment Locators.

“They were very attentive, willing to listen,” Gomez said. He requested a one-bedroom apartment for $600 to $800 a month with a pool, tennis courts and security. Apartment Locators gave him a list of five possibilities, and he now lives in one of them, complete with pool, whirlpool, even a small weight room.

The biggest advantage was convenience, Gomez said. “It saves you a phone call to find out if they even have (an apartment) available, and what the (price) ranges are.”

London said his group has placed more than 5,000 people since opening in San Diego. He also has an office in Oceanside.

Colleen Wagner, who manages the company’s Orange County office, said she does not check potential renters’ credit; she leaves that to the landlord or management company. What she does is determine if the renter has sufficient income to pay the rent and asks about the renter’s credit history.

Some apartment industry experts question whether locater firms have a future.

Marjorie Frank of the California Apartment Assn., which has 25,000 members statewide, said the services aren’t that new.

“He’s probably one of the few that have lasted,” she said of London. “There is not a huge need to saturate the market with a lot of locater-type services.”

Also, landlords who have only a few properties would not be likely to pay half a month’s rent to a locater service, Frank said. “They’d be giving up such a huge source of revenue for themselves,” she said. Small apartment owners, she said, typically use newspaper ads and listings in magazines to attract renters.

DeMassa of Renter Express conceded that the apartment locating business may face difficulties in Orange County. Renter Express has yet to get out of the red. “We can lose money at this until we get it going,” DeMassa said. “We’ve got another year or two of losses ahead of us.”

Indeed, telephone numbers of several locating companies listed in current Yellow Pages directories are now disconnected.

“We’ve outlasted about three or four waves of competitors,” DeMassa said. “Right now nobody can get a foothold because the communities won’t pay what we need.”

Steven Friedman, regional director for accounting firm Ernst & Young’s real estate advisory services, said, “A half month’s rent is fairly significant.” Apartment Locators may have done well in San Diego, he said, because of the high transient population of military personnel and retirees. But he expressed doubt that Orange County has as many people looking for apartments.

And large apartment complexes may not see any value in pre-screening, Friedman said. “Pre-screening is what you have the leasing people on site for anyway.”

That pre-screening process, in which the agents decide which apartments a prospective renter should see, causes some concern with groups responsible for keeping an eye on fair housing.

The 1968 Fair Housing Act made it illegal to discriminate against racial minorities and other federally protected groups.

A 1989 federal study, however, found that African-Americans and Latinos encounter some form of discrimination at least half the time when they try to rent or purchase homes.

The pre-screening process used by apartment locating companies has the potential to be misused, said Clara Harris, director of the Heartland Human Relations and Fair Housing Assn., a nonprofit San Diego organization that took part in the 1989 federal study.

“It has the potential to discriminate,” Harris said of the personal interview system used by Apartment Locators.

Harris said that in the 1989 survey, African-American and Latino testers were often told of higher rents and higher deposits. Whites were sometimes offered special deals and “afforded all kinds of courtesies.”

Wagner, who runs Apartment Locators’ office in Irvine, said all her agents study the Fair Housing Act as part of their licensing procedure. “We absolutely comply,” she said. “In the five years that we’ve worked, we’ve never had a complaint.” She said agents screen only income levels, credit history and previous evictions.

Smith of Renter Express said that discrimination could not get a foothold at his company, either, because its pre-screening relates only to ability to pay the rent. “Mostly it’s all been done over the phone,” he said. “Gender and race is in no way part of our application.”

Rental Rate Recedes

Renting a two-bedroom, one-bath apartment in Orange County got more expensive during the late 1980s, reaching a peak of $780 a month in 1991. The rate has slipped slightly since then. Average, not adjusted for inflation: 1993*: $764 * As of May 31 Source: 1993 Orange County Apartment Survey