Growing a Rental Business in a Recession

Rental Business – Right now many landlords are wondering how they can sustain their real estate investment business during the pandemic. Many have wondered about the possibility of raising the rent over the next months.Growing a Rental Business in a Recession

The reason they wonder this is many states have legislation in place about how and when a landlord can raise the rent. For many landlords, if they do not make the decision to raise rents soon, they will not be able to raise them until the next year.

In the recent past, rentals have been a landlord controlled market as the demand and need for rentals far outpaced the supply. When there are more renters than available rentals prices can be raised. Now the rental market has shifted to a renter controlled one where there is an abundance of rentals available.

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Growing a Rental Business in a Recession

Renters are currently holding the power regarding rent and landlords that realize this and adjust their rent prices accordingly will be more successful over the next year of business. It is also good to note though, that renters are not necessarily excited about the shift in the rental market since a renter’s market is often induced by loss of jobs and economic slump.

Right now the current number of unemployed Americans hit 3 million as of the last week of March. This number does not include disenfranchised workers such as taxi and Uber drivers, real estate agents, construction workers, and more. The larger number of people out of work makes a huge impact on the rental market and renter’s abilities to stay in a rental.

Another factor that will push vacancy rates higher is the number of families moving back in together, adult children going home to parents, and homeowners renting extra space in their homes to make ends meet. As vacancy increases so will the competition among landlords to provide rentals that renters want to live in because now renters have the choice instead of desperation.

Some agencies have noted a 13% reduction in rental search traffic for vacant rentals in recent past months. This is an early indicator that fewer people are needing or wanting rentals. Vacancies cost a landlord money as they pay the costs of their property while no one is paying them to live there. Add in the marketing to get the word out about vacancy and maintenance upkeep and rental properties begin to become a money pit.

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Now more than ever landlords should consider keeping rent prices as low as possible and focusing on customer service to keep tenants from leaving and attract tenants from other more highly-priced homes. Keeping vacancy low is the new strategy to keep your rental business successful and even possibly increasing it.

There are many ways to keep rent low without lowering your rent prices. You can waive late fees, offer incentives for paying on time, require a lower deposit, and offer move-in incentives.

Related: More Sellers are Now Entering the Market

The next 12 months are expected to be a renters market and changing strategies to keep vacancy low will be key to keeping your rentals successful.

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