Rental Market takes a hit?

I read this article and wanted to get some insight from some of you property managers out there. I know all real estate is local, but I would like to know if this something that is really affecting peoples business.


Will it lower rents?? Probably not by much where I am. Will it hurt long time landlords such as myself?? Not at all.

Here in NYC, I went through TWO boom and bust cycles from the late 1970’s. In the last bust cycle, in the early 1990’s, I was renting 2BR apartments for $800/month, when they were renting for $850 to $875/month. When the market bottomed, it droppped to $800 to $825/month, and I lowered my asking to $775, to get it below the $800 price point.

How much did the $25/month hurt me?? In fact, RE taxes was lowered, interest rates went down, more than offsetting the $25.00/month.

Prices more than doubled since the market peaked here, and new buyers carry 3 times the mortgage I’m carrying. In the last “down market”, starting in 1987, I had rental which I paid 150K for in 1982, when someone bought the identical one next to me, in 1986, and paid 350K. He had to rent his units for much more than me, had constant tenant turnover, and gave up in 1990 when he can no lower carry the “negative cash flow”. He sold it for $300K in 1990.

The next guy did no better. He bought it for $300K, and gave up in 1993, the nadir of the market, and sold it for $275K.

In fact, I feel GOOD about it. All these owners who OVERPAID for the condos, don’t want to sell it for less, will have second thoughts when they have vacancies for months at a time, bad tenants, negative cash flow, and will throw in the towel sooner or later.

RIGHT NOW, I’m charging my tenants $1,200/month for 2BR apartments, and I haven’t raised the rents for almost five years. The median rent in the area is around $1,500/month, ranging from $1,100 (usually an illegal apartment) to $2,100/month. The median had gone up quite a bit recently, and I believe it’s due to the fact new owners need the higher rents to carry the huge mortgages, and still LOSE MONEY. Meanwhile, I’m making money on charging $1,200.

For instance, a SFH rental I got, FMV of 375K, I owe 65K on a mortgage that started at 75K. Unless some guy who’s selling and got NO MORTGAGE, he can’t compete with me.

I’m going to raise my rents a bit now, and a good indicator for me is when I quote the rent, people ask me if it’s an illegal unit. It’s not.

Will these new owners owing huge mortgages renting apartments and still lose money hurt me?? I don’t think so. In fact, I have to raise the rents a bit now.

The people in this article are not trying to rent properties they are trying to sell them. In my opinion, when it is hard for people to buy houses since they have to live somewhere, that means they rent from me. The real determining factor as to if I make money are not is the job market. The job market is strong here and the foreclosure rate is high. These people don’t fall off the face of the earth, they have to rent from me.

I can only speak of my own market, but things here are the best they’ve been in the last 3 1/2 years. There is a tremendous demand for rentals as a result of all the foreclosures. Amateur landlords have been washed out of the market in large numbers, leaving lower supply and higher demand.


If new funding is an indicator; commercial financing has increased by 10% year over year in Q0207.


Scott Miller

What is the best source you all use to find out what rents are going for in the different areas of were you live?

All of the information is right at your fingertips. Just look to the local newspapers and the classified ads for unfurnished/furnished apartments. There you can see what the market rents are. If you live in the areas call some of the numbers and even go and view some of the apartments as if you want to rent. There you can see what your competition is like and what advantages/disadvantages you have over your competitors.

It’s not hard