Here in Brevard we are seeing a growing number of homes for rent. According to a recent report, in the past 10 years, there have been over 40,000 new homes built in Brevard. Many of those homes currently sit unoccupied.
Property taxes have increased and insurance has increased, but rents have decreased. People are out of work. We are seeing families moving in together, Grandma and Grandpa, their children and their grandchildren. People are doing what they can to save money today.
So, what happens when a rental sits on the market for 2, 3 or 4 months empty? No calls. No tenants. When the phone does ring one of the first questions I ask is, "how many people will be living in the home?" The responses come back, "10 or 12." The house is 3 bedrooms, 2 baths. That's a tremendous amount of wear and tear on the property. Where will they all sleep? And, where will they park their 6 cars? It can be a difficult situation.
But, what about that tenant that calls on the $800 rental and asks, "Can you drop the rent to $750, that's really the most I am comfortable paying. I am in a position that I could start moving in at the beginning of next week." The house has been empty for 3 months. That's 3 months at $800 which is a $2400 loss already. A $50 decrease in rent is $600 over the period of a year. If you say no, there's no guarantee when the next potential tenant comes along. Another empty month is another $800 down the drain. In our market, if the tenant meets your qualifications, I say, "do it."
"But, 2 years ago I was getting $900 for that house, " I hear landlords say. Unfortunately, that was two years ago. Things have changed since then.
An empty house is a liability for you and your insurance company. Some companies insist they only be empty for 30 days at most. Otherswise, they can cancel your policy. It's tough on the appliances, plumbing, electric for the house to sit empty for any period of time, especially in the cold weather we've been having. In some areas, vagrants, vandals or people breaking in could become a concern.
So, don't be the fool when that next tenant comes along and asks if you can drop the rent a little. Look at the numbers, you're not making anything with the place sitting empty.
Remember: You never know when the next qualified tenant will come along.
Sandy Shores REALTOR®, Melbourne/Palm Bay FL Real Estate
Brevard County, Florida's Space Coast Real Estate & Investing
I specialize in Residential, Investment & Relocations.
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I buy, sell, rent, own and manage Investment Property
that for you
I wrote a similar blog not long ago. You are losing out on a lot of money waiting for that extra 50 bucks per month. 1 or 2 months of vacancy ruins that margin quite quickly.
Love the photo Sandy, and good points. The glut of rental homes comes on the heels of 'cash' buyers who have invested, can't sell, so they rent -- don't you think?
Love the photo too!!! I couldnt agree with you more, I dont know what some owners are thinking. good post!
The numbers make perfect sense Sandy. A good tenant and having the home occupied seems well worth a small decrease in rent.
Sandy,
Better to work with a good tenant than to hold out for one that may never come!
Ann Hayden in Wildwood, MO
Sandy, It makes sense right now to lower the rent.....especially if and when you find a good tenant who will care for the property. I used to rent out my mom's apartment for her and could have gotten more but I looked for good tenants and got them.
Sandy, excellent point. Better to rent out right away at a slightly lower rate than having a long vacancy period, in the end it'll be the same or even better financially. In addition, the landlord doesn't have to pay the utilities while the home is vacant.
The rental market around here is fairly hot. Unfortunately it is so full of fraud and misrepresentation that we are not having any part of it.
David, Oh, I'm sorry I missed it. A couple of months down time kills a landlords cash flow. Better to get it rented quickly, for a bit less, to that qualified tenant.
Carla, Yes, in our area we do have a glut of homes for rent. There are so many reasons for it. reluctant seller turning into landlords, too many new homes built and landlords holding out for that higher rent.
Jesse, I think often it just takes a bit of time to get back to reality to realize that the high end rents are a thing of the past.
Mary, I agree. Sometimes it's best to bite the bullet and get that tenant sooner, rather than later.
Ann, So true. It is better to take that qualified tenant today, rather wait for that one that may never come.
Carole, Smart lady! So you know how important it is to get the right tenant. And often if you rent the property at that competitive rental amount your tenant is not out looking for a lower priced rental in a year.
Silvia, In the end it really does work out about the same. So we should get take that tenant now. The utilities go into the tenants name upon move, thus the landlord is no longer responsible for them.
Gabe, Really? The rental market there has been hot? Our market has been very sluggish. Currently, I primarily handle my own rentals. I am not taking on any new rental placements or property management because of the slow market.
It sure is a number's game. Rather get a sound Tenant at a reduce rent than wait weeks to get the house rented.
Sandy,
Ten people in a three bedroom would scare me....
Ann Hayden in Wildwood, MO
Yea Sandy two years ago They were also selling for more money also.
JM, I'm with you. Take that good tenant today. You may not get another one or it could take you months before you do.
Ann, Me too! It's amazing when asked what people will say when I ask how many will be moving in. They start listing off family members. It's alot of wear and tear on a property.
John, That's for sure. So very true. Things have changed and they will continue to change, won't they?