Landlords Begin to Feel the Squeeze
By all reports, we continue to see signs of a slow down in the housing market. Drops in the housing starts, sales, and now, rental markets are all indicators that the real estate boom may be tempering.
In 2005, rent levels in many cities have continued to be either flat or in decline. In Boston, rent levels are down 10% and in San Francisco, its dropped 13%. And, according to the latest Census Bureau data, vacancy rates are increasing. In the past ten years, rates have increased 10%, up from 7.5%.
There is growing concern among many investors who purchased rental properties in the past few years that the slow down will continue. Some have begun taking steps to lessen the impact. A couple of suggestions from landlords include:
Paying down mortgages. No rent payments make it difficult to maintain a positive cash flow. By eliminating mortgage payments, you may be able to turn a monthly loss into a profit.
Tighten rental requirements and screen applicants thoroughly. During lean times, landlords may be inclined to lower their standards in order to just get people into their rental properties. This could create bigger problems if they rent to the wrong person. Bad tenants can trash apartments, refuse to pay rent, and prolong the eviction process causing signficant losses to landlords.