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?

Spring is in the air and tenants have finally started renting again.  Two weeks ago I rented my Sharon Drive apartment which had sat empty for over five months.  Having a unit open for that long was unnerving and I was beginning to wonder if it would ever rent.  I have never had a property sit empty that long in seven years of owning rentals.  Renting in winter time is always difficult, but with the downturn in the economy this time was exceptionally difficult.  I had several interested prospects, but most did not qualify either because of bad credit or bad rental history.  As much as it hurt to be without rent for five months I was not about ease up on my tenant standards.  It’s a lot easier to get a bad tenant into an apartment than to get them out.  

I was please to get a young couple in the apartment the other week.  They had good credit and excellent personal references.  I did have to drop the rent from the original $465 to $415, but I think the decrease in rent is just part of the recession.  It’s great to be getting rent on the unit and not having to pay the utility bill.

The lessons learned from this experience are:

1) Build into financial projections the potential of having a property sit vacant for an extended period of time.  Make sure I always have enough cash to cover these types of events.

2) Don’t let up on my rental standards.  Eventually a good tenant will come along and a little lost rent is better than the cost and hassle of trying to evict a bad tenant.

I’d be interested to know if any of you out there experienced a rough winter with vacancies and have noticed a pick up in rentals this spring.  If you have feel free to post a comment.