Barbera Lickness wrote: I would be interested in an honest discussion about the true vacancy rate, average rent prices, costs of providing rental units etc. and the things contributing to the problems of high vacancy rates and rent prices.
My response: True vacancy rate is hard to predict. GVA Marquette claims the vacancy rate is 7.0%. Many landlords I know claim it is much higher. I was personally at 20% in August, so I dropped rent dramatically and gave away the farm. I am now down to 4% vacant. It cost me a lot. I know good landlords still reporting 20+% vacancy rate. The only observation I have is that the LARGER units appear softest. I have 4 br apartments that have been vacant since Spring. I dropped the rent from $1200/mo down to $950/mo and still cannot rent them. 2 years ago, I had a long waiting list for these apartments. It speculate that many non-profits have finished building new units and many investors have left the stock market and are now renting out homes. Cost of providing rental units depends on the type of unit. Duplexes have very low overhead as the tenants pay most utilities, snow removal etc. Apartment buildings usually run 45 - 60% expense. IE, 45% - 60% of the rent go to utilities, yard work, maintenance, legal, advertising, property mgmt, maintenance staff, taxes, rubbish, repairs, etc. The remainder must cover the debt service and capital improvements. Eeking out a profit is tough, and eeking out positive cash flow is very hard. The cash flow is much harder because the "principle" part of the debt service sucks up the "profit." I hope this makes sense. Notice what happens if you buy "wrong." If you pay too much, the remainder does not cover the debt service, or if you buy a property that has unusually high maintenance (either because it was deferred or has abusive tenants), the expenses get out of control quickly. In these cases, the LL is likely to go under. What caused the dramatic increase in vacancies? Many solid income earners took advantage of the low interest rates and purchased -- instead of continuing to rent. Many folk at the bottom of the income ladder started making less during the recession and had to double up or move home to Mom and Dad. The supply of housing has increased. Non-profits have built new and many investors decided to become landlords -- buying up homes and turning them into rentals. Fourth, the city is beating up landlords for renting to people that cause trouble (rather than blaming the tenants). This has forced us all to do more aggressive background checks. These background checks keep out folk with shaky pasts. This has driven vacancies up and increased the load on our homeless shelters. National Homeless week is coming up. I wonder if any of the homeless advocates will bring up the fact that rental vacancies are up and so are the homeless headcounts. Should make us all go hmmm... I hope this post is useful. Bill Cullen Whittier Landlord REMINDERS: 1. Think a member has violated the rules? Email the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
