Dead, Dead, Dead

I was anticipating a bit of problem in the local rental market because of all the houses that aren’t selling coming into the rental pool. That has caused a problem, with really nice houses that middle class people can’t afford to buy being rented out at what must be about 1/3 of the mortgage cost.

But apparently, as a separate issue, our local rental market seems to have completely died.

In 2 months, I have gotten 3 applications: one from people with no rental references at all who stated they plan to buy this spring. One from a woman with 3 kids and an income of $200 a month (yes, two hundred, I didn’t forget a zero). One from a couple who have never paid a bill in their lives, including utilties, bottled water, and a collection from a pizza restaurant. Just to make the last better, he is a registered sex offender with 2 sex convictions, two stolen cars, and 8 pages of criminal record for minor things like drunk driving and breaking and entering.

I dropped the rent $50. Then another $50. No difference.

I just called several ads in the newspapr with a $500 range of prices and nobody is getting applications at all. They are getting very few calls from people who are extremely unqualified. If I drop the rent $300, nobody is getting applicants in that price range either.

Most of the calls I get are from people who are moving to the area and planning to buy this spring, so they just need a place for a couple of months. (hey, at least the buyers are appearing again)

Things are suposed to be slow here in the winter, but it’s spring already.

I’ve never seen anything like this. It’s hard to find good tenants, but I normally get dozens of losers trying to rent from me. Even the losers seem to have disappeared.

I’m starting to see ads for very nice houses that say “no credit check”. Well, I suppose those houses will be cheap as fixer-uppers in short order.

<<Well, I suppose those houses will be cheap as fixer-uppers in short order.>>

As will be the landlord’s credit rating!



What state are you in? Just curious.



Unfortunately, THAT is a phrase I’m hearing more and more everyday.


You need to be SELLING HOUSES to those people who are LOOKING to buy in a few months.

If you buy 4 homes this year at 50% to 70% of the ARV you’ll be swimming in money!!!

I’ve done 2 already in 2008 in a DEAD market. Made $55K on one and $47K on the other. I have 2 more that are in P&S right now. Every one of these homes was UNDER PRICED by at least $25K when I finshed the project and it went to market. Both sold in less than 45 days. Nice neat rehabs, not over done, but PRICED BETTER THAN THE COMPETITION!!! If I can’t steal, it I DON’T BUY IT!!! Oh…and my market SUCKS, loads of inventory, BOAT loads of foreclosures.

Forget the rentals for a while and BUILD YOUR CASH!!! If you really work you could make half a million dollars in the next 3 years!!! That’s doing just 1 house a quarter (completely do-able)!!!

I know a lot of guy’s like the long term rentals business. But I have to tell you…My private banker never calls to complain about a broken water pipe. When you hit $500K of net worth (LIQUID), your considered a HIGH NET WORTH CLIENT!!! The whole WORLD changes then. Banks COMPETE for high net worth customers. They’ll get you 7% to 9% a year on your money because if they DON’T you’ll be MOVING that dough to someplace that can. 8% of $500K is $40,000 a year!!! And if you’ve built up a nice rehab/flip business you shouldn’t have to even TOUCH that money unless your MAKING A LOT MORE with it. if you find a great deal on a property that you can make $75K on, you just tap into that $500K, after all, it is YOUR money. At that point it’s not IF your become a millionaire…IT’S WHEN!!!

It sounds like the rental business is going to SUCK around you until inventory levels stop climbing. DON’T EVEN TRY TO FIGHT IT!! It’s happening were I am too. It’s a LOSERS GAME at this point in the cycle. In time, it will become VERY profitable to be a landlord again. Be patient, but MAKE MONEY while you wait.

Your not the ONLY landlord facing this. I know DOZENS in the same boat. Wouldn’t it stand to reason that as this gets worse a good percentage of those landloards are just going to throw in the towel?? (It happens in EVERY boom/bust cycle)
What better way to aquire more rentals (if you want to) than to BUY them in a few years from guy’s who have HAD ENOUGH, and JUST WANT OUT!!!


We went through very tough times in the rental business here about 1 1/2 years ago. One of the biggest landlords in town had more than 1/3 of his units vacant. I was very fortunate (lucky) that my vacancy rate was considerably better than that, but I can’t attribute that to anything other than luck. Now, 18 months later, the rental market is very tight. We have the smallest number of rentals in the paper that I’ve seen in a long time. Having said that, rents have dropped slightly and we have a very poor pool of tenants to choose from. I’m currently at less than 10% vacancy, but that could certainly change in the blink of an eye.

There are very few out of state investors left in our market and the number of new landlords is also down significantly. The FAD is over (at least here).

I’m not saying this has any relevance to any other area.


Mike, I’m in Oregon. Fortunately, because deep cycles are standard here, I plan for it, and I am covered. But it’s still tough to go though.

I’ve got 2 showings today. One has that “listen to the music” thing on his cell phone and plays some sort of deep heavy metal devil speaking music, so I am not optimistic about the quality of his application.

The other one says their current landlord is selling their house. That’s usually tenant speak for they are getting evicted, but you never know. Occassionally a tenant does get their house sold out from underneath them.

Thanks fdjake. I’ve got one rehab going right now and I’ve been out looking for something else to purchase.

Wow, Tatotrot that sounds rough. From what I read in this and other forums you are not alone. In this type of market I guess it is normal for stick-built home / single family home investors to see times like this. Fortunatly I do not have this type of problem with Mobile Home Parks because it is the most affordable living in most cases. Our tenant pool actually gets better when the market goes south.

Anyways I hope things turn for the better real soon for you.

Richard Stephens

It’s real interesting to hear of other markets.

This last January, the usual December slump didn’t end and suddenly 17 of my 45 units were empty. There were 12 vacant houses on our board to be cleaned at one time.

Very scary. I even thought of pulling furniture and renting a few unfurnished to the dreaded locals. But in mid-February they started filling again, we were able to handle basic debt payment.

Now everything is full with a waiting list again. It really helps to have the “worst possible” scenario thought out ahead of time.

Could you change your marketing, Tatertot? Think of some other ways (referral bonuses?) to pull in friends/relatives of your good tenants?

fdjake is right, change your plan. Do something else. One idea…

If there is a glut of inexpensive unfurnished rentals, why not try a teaser ad for a furnished unit. See if there is a market.

There is plenty of demand for furnished, hotel-like rentals in my town. The median family income here is $26,300/year so this is not an upscale place.

Oregon should be able to handle a market of furnished rentals. Then you will be doing what no one else is doing. If you want to research this, go to your local hotels and see what they are charging, their fill rate, and who is staying there and for how long. Those are your tenants.

Good luck. And don’t forget to charge them 2 or 3x the rate of unfurnished. Just stay under the good hotels.