Originally posted by @Eric Palmer:
Its great to see this conversation on the rent issues. As investors we do try to figure out how to take risk out our properties but this, wow. We just bought our single-family house (third property first two are multifamily) and have another tenant leaving at the end of the month leaving two units vacate. I really feel for my wife because I am currently deployed with the military and can get back to help. What would be your analysis / indicators on how to gage rents if we go into an extended time of economic challenges. Currently we have 12 months of reserves. Our initial thoughts are to do improvements and hold the units vacate for 30 days to see what the market does.
12 months of reserves is quite a luxury. Well done. A good place to start is what it was already renting for, if you felt like that was priced well for the market. If you're doing improvements, you should simply add some kind of premium on top of the previous rate. You could also do online research to see what similar units in your area are asking. If you want to go even a step further, you could get a realtor involved who could run comps to see what you should be asking. Every month it's on the market is a month of rent you could be adding to your reserve or paying bills/paying down mortgage, or (ideally) saving for another property.
Quick turnover at a lower rate is often much better than the home sitting vacant for a month or two waiting on a slightly higher price. For example, you can wait two months to rent unit x for $1100/month or you can rent it quickly for $1000/month. If you wait on the higher rate, you're out $2200 for two months rent. If you rent it now for 1k, then you're making only $1200 less over the course of the year. Also, now you have the unit occupied and once their lease is up, you can increase to that $1100 or $1150/month and the tenant will likely stay.
Thank you for your service.
