Chandler Properties Blog

In the last year, rental rates have plummeted in the Chattanooga, Tennessee area. I have 5 rental units and just about every one of them is renting for less than it did two years ago. A property that I used to rent for $625 a month just rented out for $550 a month. The economic downturn has really hit the landlord in the wallet.

When the housing crisis first happened I figured it would be a boon for landlords. After all, with family homes being foreclosed on and credit being tightened, people would have to live somewhere. This has not played out how I thought it would. I have talked to several other landlords in my area and they are all experiencing the same results. The conclusion that I have come to is that people are moving back in with their families. A lot of newly graduated students, recent divorcees, and singles must be moving in with friends and family members.

Last November, when the financial crisis first happened I held firm to my guns and did not drop rent for 6 months on my $425 unit. I had been getting $465 for two years and did not want to take a hit. In April 09’ I finally gave in and rented to a strong tenant for $415. I was reluctant to rent at the lower rates and it cost me 6 months of rent.

Anybody else experiencing the same kind of results?

Here’s a link to an interview Becky Quick of CNBC did with Warren Buffett today.  The video is about 10 minutes and covers his view on the current economy, what he was doing the weekend that Lehman Brothers failed, and what key economic indicators he looks at to determine the health of the economy.

 A couple interesting points I got from the interview were as follows:

1.  Becky asked him what he looked at to determine how the economy was doing.  He responded that he looks at the daily results of a lot of the businesses that Berkshire owns.  He also looks at the Fed’s balance sheet, etc.  When Becky followed up and asked him what one report he would want to get if he were stranded on a desert island and had to gauge the economy.  I thought he gave an insightful answer.  He said train freight car loadings and truck tonnage moved.  That’s pretty interesting.  I guess that gives him a good understanding of how much goods are getting sold/produced at any given time.

2.  He also spoke about the economy.  He basically said things had leveled out, but there had been no bounce.  He seemed to be somewhat lukewarm on his answer.  He felt things were much better than a year ago, but not back to normal.

I always enjoy hearing Buffett’s take on financial matters.  If you want to watch the full interview, here is the link.

 http://www.cnbc.com/id/32873440/