Has rental market cooled??

Question

Hey there fellow landlords! Anyone else challenged to find tenants for your property? We’ve had our 1/2 duplex on the market since late July (a few days before the end of the month, so about 30 days now) and we haven’t had anyone serious come through yet. It’s priced competitively using area comps (even slightly lower), it shows well, and we even allow dogs (no cats). We’ve shown it several times, but no one seems to be really motivated. We’re thinking it could be seasonality, especially since our place is ideal for families and perhaps most families have done their moving for the year before school starts. Anyone else experiencing this?? How long did it take to find your tenants??

Nathan Gesner · Answer

I network with hundreds of property managers around the country. Most of them saw price reductions and longer days on market this summer. It's partly the economy, but it's also common during an election year when people are a little unsure about where the country is headed.

Lower the price, not your standards. You can aim for a higher price next year when things are (hopefully) more settled.

Brian Bohrer · Answer

I recently attended a meeting with the Council or Elite Property Managers at the Pikes Peak Association of Realtors in Colorado Springs and was shocked at how many property managers were stating vacancies of over 5% - 7%!  These are the best of the best in the Springs for property managers of all sizes and the general consensus was that you need to beat the market down to market rent and not chase it.  That means effectively pricing your rental to others in your area and even looking at apartment rent rates to compare with your SFH.  One manager of a large portfolio stated that he has seen some housing types and markets hit near their 2019 pricing levels...

Money is getting tight and tenants are looking for what fits their budget, not the amenities they can afford.  A man much smarter than I once said, "You will never make up for one month's lost rent, if it's not renting at your current price, drop the price a $100 per week until you find someone".  I wish you the best of luck!  Please don't hesitate to reach out if there is anything I can do to help.  Take care :)

Brittany Guimond · Answer

Reporting back — thanks for all your help on this one! We found a tenant right before the beginning on September and offered them $500 off if they signed a lease starting 9/1, and it worked! Their credit wasn’t great, but they gave me the backstory and they were very communicative. It was down to our unit and a competitor unit, so when I explained to them how pet rent works in Colorado (max of $35/month total), they decided to move forward with us. It sounds like a lot of landlords don’t know about the new(ish) law and I assume knowing that helped us stand out. Either way, it was 1 month of vacancy and a LOT of marketing efforts before we found our tenants, and they’ve been great so far. Best of luck to everyone out there dealing with the slow market, it’s tough!

James Carlson · Answer

@Brittany Guimond

We do medium-term rentals in Denver and Colorado Springs. We've stayed rented with little vacancy. However ...

We have been aggressive with price reductions to keep people in. Our SFH in the Springs is well below what we were getting just last year. We're lucky enough to have low rates and so we've got a buffer to drop prices.

That's all to say, yes, we are seeing a dip.

Ray Hage · Answer

It has definitely been slowing here in South Florida. Rentals are staying on the market a lot longer. This is mainly due to the large amount of inventory and still high prices (though they are trending downwards).

Kim Meredith Hampton · Answer

@Brittany Guimond Has been the slowest summer I have seen in decades! And now the sales have slowed too, so hopefully turning the corner for a buyers market.

Don't forget its an election year and inflation isout of control. Our renewal stats this year at 82%, people are staying put! Going to have to reduce to cut down on vacancy.

On the other hand, my short term company has done better than usual for a slow summer market. This year is just weird.

Robin Searle · Answer

My STRs in Colorado Springs have had a very profitable summer. We have a long term rental on the west side and just rented it within two weeks. I would say we actually priced that one on the high side. All of the units are smaller - one to two bedrooms. Our medium term rental on the west side we have just lucked out with and have a tenant paying top dollar and he keeps extending.

CJ M. · Answer

@Brittany Guimond

In the Midwest, I've found demand and prices have been way up...but tenant 'craziness' has also been way up.

Jake Knight · Answer

It's definitely market dependent but we've seen a slow down here and we're more affordable than your location.  This is not unusual here, our markets are very seasonal.  It's also an election year which can affect people behavior.  I would be aggressive with price drops and try unique things to make your property stand out.

Marcus R. · Answer

@Brittany Guimond - Yup, definitely seeing the same.  Noticing a slow down lately for one unit but this is historically slow season.

Anything particular that helped you get it rented?  I've dropped the price but may also offer a concession similar to yours to help with moving costs.