The economy‚Äôs decline leveled off significantly from April through June, confirming¬† that the worst is behind us.
GDP declined at an annualized rate of 1 percent in the second quarter, after shrinking an amazing 6.4 percent earlier this year. But consumer spending, 70 percent of economic activity,¬† continues to fall as Americans continue to save and¬† reduce debt. Economists express concern that our basic spending habits have been permanently altered by this great recession. This is also having an effect on rentals as renters downsize or insist on rent reductions.
With this as a backdrop we looked at rental rates which a are a prime factor in evaluating a property. We clearly have a long way to go. The Dept of Commerce chart indicates we are at a fragile beginning of a recovery. The key to successful property ownership now will be to keep it occupied and ride this out.
Rent reductions at a 22 year high
In the second quarter the vacancy rate of 7.6%¬† was an increase of 1.5% YOY. Landlords have been facing rising opposition to rent rates agreed to during the boom years. Tenants everywhere are asking for and getting rent reductions. Rents are in decline in every market nationwide in the current quarter with three with marginal exceptions, Tampa, Kansas City¬† and San Antonio.
According to an Apartments.com study: For the first time in six years, rents are down nationwide and vacancies are up.
- Adding to this market pressure is competition felt from the shadow market or a surge of investor owned homes and condos that account for almost half of the rental stock, expanding the national rental supply.
- Despite these recent obstacles, a national Apartments.com survey found that an overwhelming majority of renters are still looking for a new place to live this year and more than half are planning to pay the same or more in rent. (via Reuters)
What To Do About Rent Reductions
If your are facing rent reductions and you want to retain the tenant, then ask for a new lease. In¬† the 2001 recession, unemployment didnt really recede for 18 months after the recession was technically over. Tenant retention locked in with a new¬† lease is good strategy and will help you ride out this great recession.
How to Rent it Faster
Stage it. Home staging for a¬† rental plays the same role as staging for a sale.¬† Painting the interior a light neutral color, is an inexpensive way to get a new and clean look and feel. Tired looking places take longer to rent. Leave lights on in each room, and leave blinds open to make rooms look brighter and larger.
Sell it. Renting your unit or home is a sales process. Walk through the house as if you were a renter. Consider the negatives and be ready with answers that overcome its shortcomings. Be ready to talk up its features. Create a checklist of the things you like about the house. Use it to sell potential tenants. Check comparable rents with listing sites such as apartment.com or Craigslist. Consider consulting with a professional property manager to determine the right rent range if you still have difficulty.
Focus Your Advertising
Use Print Too
Consider the profile of the people you are trying to reach and then advertise in the places where they would be likely to look for a rental unit. If you are renting that basic apartment or studio, you have a good chance of attracting people in need of a lower monthly rent. Think students or people starting out or starting over.
Targeting your advertising you will save days on market. University campuses, free neighborhood papers, postings in local supermarkets or coffee houses might be the best place to reach that person.
Of Course,¬† the Internet
If you don’t have a professional website you could use the blogs. Sites such as blogger or even Facebook have become so easy to use that you might consider a page for your rental property that features a slide show of vacancies as they come up.
As you receive phone calls you might ask them to go to your marketing page slide show and create an interactive conversation right there.
Do It Yourself: Social Media