Some Anecdotal Stories – is this a trend.? I don’t know for sure.
We’ve been experiencing a little downward pressure on rents in some areas.. I think.
Remember when someone tells you the words, “I think”… it really means they don’t know for sure. Let me explain further here… and I’ll let you be the judge…
EXAMPLE #1 – RENTS FLAT/FALLING…?
Last November we closed escrow with a young couple that purchased their first investment property which was a Duplex located at 2721 El Caprice, Rancho Cordova, Ca.
They elected to do much of the work themselves and had one side ready for us to show about the end of November. Even with the holidays we had a tenant in place on the completed side for $1,100 per month that moved in on December 5th.
The other side was not completed until about the middle of December or later. When we hadn’t rented it up by the end of January I didn’t get too worried because historically it is a little slower during those months of December and January.
It wasn’t until the middle of February that I began to notice other units we manage were taking a little longer to rent so we decided to lower the rent to $1,000 per month to see if we couldn’t get a little more action, which has been what was needed.
While we still haven’t placed a tenant in this unit yet, we’ve had 3 applications given to us but the 1st two didn’t qualify because of credit or income issues that we discovered during the “screening process”.
EXAMPLE TWO – RENTS FLAT/FALLING…?
Last August we leased up for a client a 3 Bedroom Duplex unit at 6834 Woodmore Oaks in Orangevale that is next to a 7/11 Store for $1,250 per month.
Fast forward to this year we are now marketing for rent a 3 bedroom 2 bath unit at 6826 Trovita Way, Citrus Heights that is only about a mile away from the Woodmore Oaks property above.
The Trovita Way Duplex has the exact same floor plan as the Woodmore Oaks property with Trovita having just about a total remodel/update that included:
- New carpet,
- New two color paint scheme in & out along with new 6 panel colonial doors
- New appliances,
- New tile shower enclosures and new tile floors in all the high traffic areas,
- New sod in the front with new shrubs to accent some of the mature plants already there and a big clean up and upgrade of the backyard landscaping as well along with other items to long to list here.
While we did try and market this property while the “fix-up” was in progress, it wasn’t until we lowered the “asking rent” from $1,250 down to $1,200 per month that the phone started to ring a lot more often.
In the last few days now, we’ve shown this unit to 4 or 5 prospects. We’ve already received an application on the 2 bedroom unit next door. As of today, March 18th we’ve had a lady that saw the unit last night call and say she was going to send in her application and pay her application fees so we’ll see. In the meantime, we’ve scheduled another showing at 5:30 this evening.
EXAMPLE THREE – RENTS FLAT/FALLING…?
We had a nice 2 bedroom 2.5 Bath TownHome on Briar Ridge in a great area of Citrus Heights that stood vacant for about 2 and 1/2 months. Now keep in mind, we got this back vacant in the middle of November of last year. I hate it when a tenant moves out during the “holiday” period because it does slow down then as I said above. The rent for this Town Home was $1,250 for over 4 years, but when it didn’t rent up right away, the owner did give us the authority to lower the rent to see if that helped.
So to make a long story short when I was showing a single story town home in Folsom, to a prospective tenant, he wasn’t satisfied with the size of this place and asked if I had something else in a good area. Well, he’s the one that ultimately rented the Briar Ridge Town Home at $1,150 and he wasn’t afraid to negotiate a deal. We gave him 1/2 off the 1st month’s rent as well.
I’ll have a better feeling in the next couple of weeks when we have some more inventory come up to be shown, but it looks like it’s become more of a “tenant’s market”.
Come back for ideas of how to keep your rentals filled in a down market later.
As For Interest Rates…?
Our company shares some space with Sunrise Vista Mortgage Corporation and a Credit Repair company. One of their loan officers came into my office today and let me know that the Fed is driving down rates to the point that he feels we’ll be in the 4% range soon…
NOW…..In the mean time…?