Skip to content
×
Pro Members Get Full Access
Succeed in real estate investing with proven toolkits that have helped thousands of aspiring and existing investors achieve financial freedom.
$0 TODAY
$32.50/month, billed annually after your 7-day trial.
Cancel anytime
Find the right properties and ace your analysis
Market Finder with key investor metrics for all US markets, plus a list of recommended markets.
Deal Finder with investor-focused filters and notifications for new properties
Unlimited access to 9+ rental analysis calculators and rent estimator tools
Off-market deal finding software from Invelo ($638 value)
Supercharge your network
Pro profile badge
Pro exclusive community forums and threads
Build your landlord command center
All-in-one property management software from RentRedi ($240 value)
Portfolio monitoring and accounting from Stessa
Lawyer-approved lease agreement packages for all 50-states ($4,950 value) *annual subscribers only
Shortcut the learning curve
Live Q&A sessions with experts
Webinar replay archive
50% off investing courses ($290 value)
Already a Pro Member? Sign in here
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

User Stats

2,812
Posts
2,448
Votes
Rick Pozos
  • Wholesaler, Rehabber and Landlord
  • San Antonio, TX
2,448
Votes |
2,812
Posts

Who said rents never go down?

Rick Pozos
  • Wholesaler, Rehabber and Landlord
  • San Antonio, TX
Posted Aug 27 2024, 11:32

When interest rates shot up, the market seized. It happened to office, multi-family and single family markets. Now that rates have come down a little, maybe there will be a little easing up on the downward number of sales. There is another issue that this is causing, rental rate pressure. Rental rates are coming down due to some excess inventory. Also, when landlords can not sell their home because no one can afford 7% interest with 3% interest rate prices, something has to happen. 

One must realize that a 3% interest rate for a $400k mortgage will have a payment of  $1686 P&I only.

When that interest rate is 6%, to keep a payment close to under $1700 the mortgage is going to be about $283,000

That is about 30% drop in price to stay at the same mortgage payment. If homeowners or investors are not willing to drop prices fast enough, what are they going to do, RENT. This causes more properties on the market for rent, further pressure on rental prices.

The result is that prices are going down. More landlords are offering incentives to keep their properties rented. This is happening across Texas and the Southeast, but I think it will happen across the nation. What do you think??

https://www.expressnews.com/business/real-estate/article/zil...

User Stats

4,023
Posts
3,705
Votes
Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
3,705
Votes |
4,023
Posts
Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
Replied Aug 27 2024, 11:45

There is strong evidence of slowed consumer spending. I think a good amount of STR and MTR investors are pivoting to long term rentals thus increasing the number of available units adding downward pressure on rent prices. The best markets have been saturated for years (Airbnb/STR got way to trendy) and locals tend to hate them so additional LTR units will be welcomed. 

Some investors will cash-flow negatively, be upside down, or both but every REI strategy comes with risks. Can you pivot or sell for a profit is the difference.

User Stats

3,397
Posts
2,490
Votes
David Krulac
  • Mechanicsburg, PA
2,490
Votes |
3,397
Posts
David Krulac
  • Mechanicsburg, PA
Replied Aug 28 2024, 15:38

As they say all real estate is local.  We have only invested in a few states, and there are something like 3,200 counties in the US.  Each one has different economies.  We have been sucesssful renting properties in the fastest growing counties in several states and have been doing it for decades.  We have never lowered rents, sometimes rents have not increased and stayed the same.  Since Covid rents have risen sharply. Some rents have gone up 40% or more over that period.  We are full, and currently have no vacancies.  We anticipate more vacanies on the horizon, but we do not anticipating lowering rents.  We did not lower rents in 2008, and or goal is the same now. 

BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes

User Stats

14,044
Posts
10,752
Votes
Theresa Harris
Pro Member
#3 Managing Your Property Contributor
10,752
Votes |
14,044
Posts
Theresa Harris
Pro Member
#3 Managing Your Property Contributor
Replied Aug 28 2024, 15:58

I agree with David-trends are dependent on locations.  Where I am, rents have gone up and there is a shortage of rentals.

User Stats

26,433
Posts
39,040
Votes
Nathan Gesner
Agent
  • Real Estate Broker
  • Cody, WY
39,040
Votes |
26,433
Posts
Nathan Gesner
Agent
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Aug 29 2024, 05:36

I network with hundreds of property managers around the country. Some of them are reducing rent rates and rentals are sitting on the market. My market is strong with little inventory and increasing rent rates.

In my market, the monthly rent payment on a 3bed/2bath is about 40% cheaper than the monthly mortgage. It doesn't make sense for someone to purchase when they can rent for so much cheaper.

What happens in the future? That depends on who runs the White House, whether China invades, whether Yellowstone blows up, and 10,000 other unknowns.

  • Property Manager Wyoming (#12599)

American West Realty & Management Logo