BiggerPockets

Location, location, location. Ring any bells?
Ohio currently has the second highest vacancy rate in the country at over 10% for residential units. While OH is a large area, that kind of data is something to consider when purchasing an investment. Population growth and job growth are two other MAJOR factors to consider.

While the holiday season is almsot always a slow time, the other factors mentioned above certainly do not help, only add to the problem. I would suggest doing some major research and due diligence before buying in your area mentioned.

Kel,

A big part of what you're seeing is just the time of year. People don't want to move during the Ohio winter and vacancies tick up from Thanksgiving to about March.

There is also additional stress right now in some parts of Ohio due to the auto industry problems. That will probably resolve itself over time. Obama certainly isn't going to let those union jobs disappear and I believe that there will be a blank check to prop up those union jobs.

My personal belief is that we're currently in an odd phase where tenants are getting into financial problem and leaving to live with relatives. I'm seeing people double up at a much higher rate than normal. I don't think that will be a permanent situation because people can't get along with each other.

Having said all that, the economy is in a VERY risky position. We could easily fall into a depression (or worse) and it's anybody's guess what will happen in the rental business if that occurs. In the great depression, there were tenant "strikes" and a lot of pressure on the government to stop evictions.

Mike

Thanks guys for all your input. I really appreciate it. It's given me food for though definitely.

I guess it's a catch-22 because if the economy was great prices on homes would be much higher. All in all in most anything is a gamble and I guess the best we can do is find the safest bet possible.

I've got a bunch of rentals in Toledo ( I live here also). My typical vacancy rate is 3%, but right now I am at 13% (across 38 properties). But, the same was true for this time last year. Around the holidays is tough...you just have to have cash reserves to deal with it.

I can answer your question better if I know where your rentals are and where you are looking to buy. Mine are on the North End and as such are mostly Suction 8.

Kel, 2 of my vacancies are Section 8 move-outs, 1 is an eviction, and the other 2 are normal move-outs. All moved out Dec 31. Just normal business-cycle stuff. I am selling 1 of them retail, the other 4 will be rented Section 8.

I would NOT recommend Section 8 in your situation. Wash Local is a great area and you shouild be able to get good, responsible tenants. The added annual repair costs from the LMHA inspections would not be worth it for you. I can go into excrutiating detail if you like. :)

In the areas where my properties are located, the tenant pickins' are slim and Section 8 is really the only way to go. I've tried renting non-Sec 8 in these areas and usually end up evicting or giving cash-for-keys.

I am very concerned about owning property long-term in Toledo. I stopped buying rentals in early 2007 and have been doing fix-and-flips since then. I've found a great niche and it has been going really well. I did 9 flips in 2008 and am shooting for 20 in 2009. Don't let the media fool you, there are plenty of buyers out there and there is plenty of financing available (FHA).

I'm not sure where Toledo is headed. If you want worse case scenario look at Bethlehem, PA or any other former steel town. Toledo doesn't have much other industry to fall back on. I'd be cautious.

I see no way in which the residential rental market could ever be in a "slump"...for goodness sake especially in this market.

At the end of the day, two facts will always remain:

a) Everybody has to have a place to live

and

b) Not everybody can buy their own home

Does the landlord have to adjust his/her standards by which tenants are selected, maybe. Does the landlord have to adjust his/her rent levels in some cases to get a tenant, maybe. But that's business baby! Adapt or die.

I agree with what you are saying Nationwidepi.

Here in my area I've heard of people "doubling up". In fact a friend of mine lost their job and is hoping to find a room mate to help off set costs. So I know it's happening and possibly effecting the rental market.

Another thing is people moving out of the area seeking better jobs. Here we have the Big 3 automakers that are pretty volnerable right now and I'm consistently reading in our paper about businesses that are laying off, cutting back or just plain closing their doors for good. So the signs are there. I just have to be cautious in investing I suppose. I think that's why I choose to narrow my area to only certain parts of town where the values stand a better chance of longer term survival. And hoping that things turn around for this area sometime over the next 5 years.