I'm wondering if anyone has experienced an area where the rental price is pretty stagnant or grows slower than 2% per year based on comps?
Share your experiences and thoughts!
@John Ma I think you'll get more of a response if you re-phrase your question and be more specific. What do you want to achieve/learn?
I've asked questions that have flopped. I'm just sharing lesson's learned.
It's so tied into an economy of an area. Here in CA, there are areas that are still in financial trouble with few jobs. Rents aren't moving much there. Now, in San Francisco, the rents are insane! Same state, completely different rent markets. The economy in the SF Bay Area has come back with a vengeance, and so have the rents.
So, if the job market is stagnant, the rents will be, too. If the job market is booming, and growth is happening, people will come for the jobs, and there will be competition for the available rentals.
It's all about supply and demand.
I just had another thought. One market that is growing, even in a stagnant rent market (and maybe especially in a stagnant market) is subsidized housing for seniors.
There are a lot of low income seniors who are on long waiting lists to get into subsidized housing, and many of those waiting lists are closed. So, they look farther and farther away from their ideal market - just to find a place they can afford, and get into soon.
I know, because I moved from the SF Bay Area for this exact reason. I looked at one really nice complex in the middle of an orange grove, about 40 minutes from anything - not kidding. Plopped down in a very tiny Mexican town outside Fresno, CA, is a beautiful subsidized senior apartment complex. And even they have a waiting list, but it's only a few month's long. I went to look at it, and decided it was just too far of a drive to do any shopping, etc. The seniors that I spoke to who lived there, though, really liked it.
So, I moved 4 hours away from the SF Bay Area to Redding, CA, which also has waiting lists. Great shopping, though :-) But, the economy there is based mainly on retail, and some healthcare facilitites. It was too hot for me there (hottest place in CA, I swear!), so I found another affordable small town on the coast where it's nice and cool, wayyyyy up north at the Oregon border. I love it here. But, again, it's just a small tourist town with seasonal tourist market, and there's a large prison outside of town. But, the main economy here is also retail. Again, the subsidized housing here also had a waiting list, but the wait was just a few months.
So, if you build subsidized senior housing, they will come. Even if it's in the boonies. If it's near shopping and medical facilities, even better.
There's money available to revitalize old downtown areas - both the Redding and Crescent City facilities I've lived in (and currently live in) were refurbished old hotels in the old downtown areas. Done with city/county/state/federal money with tax incentives, too.
So, if your question had anything to do with how to make money with rentals in a stagnant rental market - I say subsidized senior housing is the ticket.
I'm in a market where market rents are not increasing. Even with a current tight rental market (only 3 properties on Craigslist in my 40 block target area this week), rents are not going up. It is disappointing, but we purchased with current rents making a solid return and costs have not inflated (other than utilities, which we pass along to the tenants), so it is still financially feasible.
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