Rents going down?

[EasyMoney_in_NC]

One would think with the current foreclosure rate and increasing mortgage rates, rentals would be a hot item with rents on the increase. I have two rentals that just became vacant, and for the first time in their lives (6 years +) neither are re-rented. It pains me to think that I may have to reduce rents to get them occupied, but my wife commented that the current fuel prices along with other increases across the board may be causing people to look at spending less for housing and thats why these houses are sitting. I'm beginning to think she's correct, all the while hoping she's wrong. Now a reduction of $50 a month is only one months rent (in total) each year.........not that bad, but rent should be going up with urgency not down!


For those getting into rentals, be careful, you may need to develop your plan around lower numbers to be safe, and hope they don't end up being a real number.

Anyone else seeing this problem?

 

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[Runum]

I don't really see rents changing in our area. I did have to get more creative in filling may last two vacancies though. We had a thread about it. I got them filled within 2 weeks of being more aggressive. I have been concerned about food and gas prices and my renters though.

Rental marketing thread: http://www.thefastlanetomillions.com/real-estate-residential/15011-rental-marketing-tricks.html

 

[Yankees338]

One would think with the current foreclosure rate and increasing mortgage rates, rentals would be a hot item with rents on the increase. I have two rentals that just became vacant, and for the first time in their lives (6 years +) neither are re-rented. It pains me to think that I may have to reduce rents to get them occupied, but my wife commented that the current fuel prices along with other increases across the board may be causing people to look at spending less for housing and thats why these houses are sitting. I'm beginning to think she's correct, all the while hoping she's wrong. Now a reduction of $50 a month is only one months rent (in total) each year.........not that bad, but rent should be going up with urgency not down!


For those getting into rentals, be careful, you may need to develop your plan around lower numbers to be safe, and hope they don't end up being a real number.

Anyone else seeing this problem?

I understand what you're saying, but there could also be another rationale: If houses aren't selling, landlords and owners could decide to put them on the rental market instead to try to cover their mortgage. Then, they can sell later when the market rebounds. It's obviously not an optimal time to sell, so many people may choose to wait it out. This increase in rental supply may be causing the equilibrium price to drop in your area.

 

[erikko]

in our country, rental fees are greatly affected by fuel costs and food prices, they are like dominoes.

 

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[hatterasguy]

The problem we have around here are all the houses that people refuse to sell for various reasons are now rentals. Lots of houses were listed at inflated 2004 prices for a year, since they couldn't get their money now they are rentals, until the market returns. So the competition is a bit more, prices havn't really changed much though.

I expect rents to increase around here in the next couple of years, because when the market comes back all these rentals will be sold. Eco 101, decreasing supply should drive up cost.

 

[tbsells]

I think the others who have mentioned the larger than normal supply of rental homes are correct. Renters now have the ability to shop around a little more. Like buyers, they are looking for better quality and lower price.

This hasn't been much of an issue for me lately. My issue has been collecting rent. Its tougher than its ever been, I almost afraid of what this winter will bring with increased heating costs, etc.

 

[PurEnergy]

I've got one vacant right now. I haven't raised the rent in years. After doing some research, I've raised the rent from $625 to $700. My nearest competitor is $800 and it's because he's got a detached garage and I have a carport. I've got 25 calls in the last three days. We'll see how it goes.

As far as turnover, I've got a buddy in town with over 50 houses. He said they are turning over a lot right now. He said he had 10 empty at one point recently. He also said if they weren't torn up they were rented out again the next week or so.

I think people are positioning themselves for this economy. I also think there are a lot more rentals than there were the closer you get to the median home price in the area. The lower end seems pretty good right now.

 

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[andviv]

Anyone else seeing this problem?

Yes.
SteveO has said in the past that, when the economy turns bad, many families double-up, sharing houses to save on expenses. I think that may be happening on hard-hit areas. More people take roommates thus less properties are rented.

 

[Kung Fu Steve]

I don't understand how people flip houses in this enviornment. I have several housees by me that just won't move! One has been on the market for several months, the other is being foreclosed on. I am wondering if I should put my apartment search on hold and try to purchase these two town houses right across my driveway!

 

[SteveO]

I am wondering if I should put my apartment search on hold and try to purchase these two town houses right across my driveway!

The 10 million dollar question is... why???

 

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[EasyMoney_in_NC]

Well I'm happy to report that my vacant properties are no longer vacant (well theoretically). I took a deposit for one the beginning of the week (reduced the price $50 to generate phone calls) and took a deposit for the other one tonight (went back up to my reg. price after having reduced it). Looks like I get to sign two new leases tomorrow! Definitely taking longer (45 days +) and the callers (based on my phone pre-qualifying conversations) are without a doubt, less caliber than previous years.
Just hope these two end up turning out okay and get me through another year.
On another happy note, the guy (an agent) who put the tenant and myself together (was someone I knew through my wife's work), has a couple of clients that may be capable and interested in buying my package of rentals (not officially for sale but would certainly not pass up a huge pay day!).......we'll see where that goes.

 

[Runum]

Congrats. Hope things stabilize for you for at least a year.:cheers:

 

[cmartin371]

I have seen the price of rentals soften a bit up here in my area of the Northeast. It seems as though renters can get a little more bang for the buck from even a year ago.

 

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[hakrjak]

One would think with the current foreclosure rate and increasing mortgage rates, rentals would be a hot item with rents on the increase. I have two rentals that just became vacant, and for the first time in their lives (6 years +) neither are re-rented. It pains me to think that I may have to reduce rents to get them occupied, but my wife commented that the current fuel prices along with other increases across the board may be causing people to look at spending less for housing and thats why these houses are sitting. I'm beginning to think she's correct, all the while hoping she's wrong. Now a reduction of $50 a month is only one months rent (in total) each year.........not that bad, but rent should be going up with urgency not down!


For those getting into rentals, be careful, you may need to develop your plan around lower numbers to be safe, and hope they don't end up being a real number.

Anyone else seeing this problem?

Yeh in the parts of town where most of my rentals are (low income) the rents have been stagnant or have decreased in the past 5 yrs or so. I think a lot of it has to do with inflation in other areas (Groceries & Fuel) -- and these types of renters will move home with Mom & Dad before they'll pay an extra $50-100 a month in rent. They'll also be the type of renters to consider a roommate more readily, or to consider living in a cheaper dump apartment, etc....

My properties in the good neighborhoods have been holding their rents and 1 increased in the past 5 yrs.

Cheers,

- Hakrjak