Is your rental market on fire?

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Is your rental market on fire?

Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

I have hardly been on BiggerPockets all summer because our market is on fire! I was busier than the proverbial one-legged man during COVID, had about two weeks of normalcy, and then the market exploded.

I manage 400 rentals and don't have any vacancies. I have to force vacancies to allow me time to inspect and clean/repair between renters. When I list a house for rent, I typically have it rented within a week and 3-6 weeks before it's even available. We're also experiencing a strong sales market with quick sales, all-cash purchases, and even competitive bidding. A large percentage of this is due to people moving from coastal cities to escape the craziness of 2020, high taxes, etc.

What are you seeing in your market?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y

Nathan,

Can one assume there was not a major employer move in to create a bunch of jobs and that many of these folks may be retired to semi retired or able to work from home??

there usually is a reason for in migration.  

@JD Martin  in your market same question..   

One thing I have been thinking is that these moratoriums on evictions we are facing on the west coast and other rent controls etc.. are really going to hurt the renter that is NOT fully qualified to rent.. I think you will see a gap get wider and wider.. the landlords with the decent rentals are going to be uber cautious going forward the tenant that cant check all the box's is going to get forced to look as less quality housing were the landlords might be more lenient given the quality of their product. And or like in Portland you can just take virtually any SFR out of the rental pool and sell to a owner occ .

Thereby reducing the rental stock even further .. 

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  • Manzell Blakeley
    Member since 2020 · 6 posts · 2 votes
    6y
    Originally posted by @Nathan Gesner:
    Originally posted by @Jay Hinrichs:

    Nathan,

    Can one assume there was not a major employer move in to create a bunch of jobs and that many of these folks may be retired to semi retired or able to work from home??

    there usually is a reason for in migration.  

    The vast majority of renters/buyers are moving from larger cities, generally in coastal states, and they are moving here to escape taxes and the crazy protests/riots/shutdowns and other general 2020 craziness that is prevalent in larger cities. These things have existed for many, many years but it looks like 2020 has finally broke the camel's back for many people.

    I just spoke with the broker of our busiest brokerage and he said 95% of his clients have been out-of-state buyers this year. I see vacant land that has sat on the market for 10+ years and now it's under contract. Homes are listed for 20% higher than they would have listed last year and they're getting cash offers for above asking price in two weeks. Appraisers can't keep up.

    What's happened is that all the amenities of the big coastal cities - events, restaurants, bars, etc - are no longer accessible. If you're going to be stuck in your house all day, people are realizing that it's better to pay $500-$1,000 for rent for 1,000 sqft in the Midwest rather than $2,500 in the Bay Area for 600 square feet, especially if work-from-home is going to be extended. Where I work (SF) they told us that WFH could be in place for the rest of the fiscal year (July 2021).

    1Reply
  • Marci Stein
    Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
    6y

    I live and rent in Manhattan,
    and for the first time in 20 years there are a few vacancies in my building . 
    however , in upstate New York , where I invest , homes are flying off the shelf - people are bidding above asking. People are finally catching on that Safer and  quieter Is better , especially since more are working from home so jobs are no longer an obstacle to living in the country . 

    2Reply
  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Marci Stein:

    I live and rent in Manhattan,
    and for the first time in 20 years there are a few vacancies in my building . 
    however , in upstate New York , where I invest , homes are flying off the shelf - people are bidding above asking. People are finally catching on that Safer and  quieter Is better , especially since more are working from home so jobs are no longer an obstacle to living in the country . 

    Governor Cuomo is begging them to come back! New York and other major cities are going to be in a shock if this migration continues and the tax revenue dries up.

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  • Marci Stein
    Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
    6y

    @Nathan Gesnereveryone is in shock -
    NY will never be the same , it just won’t. I always thought my landlord would have to drag me out by my feet from my rent stabilized apartment when I’m 100 , but now I think I’ll walk out on my own soon and not return. Upstate here I come - easier to live near where I invest anyway.  

    6Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    6y

    From what I read on this thread, people seem to be moving out of big cities and coastal cities, but these cities that they are moving into, do they have the wherewithal to offer jobs and career opportunities to those who are moving in.

    I am guessing the crowd either falls into two parts. First is, workers who can’t work remotely and lost jobs in big cities. They are likely moving in for lower costs. But will they find jobs or can they afford to live without jobs.

    Then I am assuming the other section is remote white collar workers who may sadly have to return once the pandemic washes away. But to be seen.

    Third is retirees!

    So it comes down to who are these people and what’s causing the fire!

    1Reply
  • J. Mitchell Bernier
    Lender · Southwest Georgia · Member since 2017 · 312 posts · 278 votes
    6y

    Yes even small markets in rural South Georgia it’s crazy. Valdosta, GA is where we have majority of our rentals and we had one who is moving out and it got rented the same day for a new tenant. My property manager is begging me to buy more.

    And even the sales are crazy. Most houses in the markets I’m in would take 20 days to get under contract average. Now houses are getting under contract in 5 days or less. That’s in markets like Albany, Valdosta, and Bainbridge Ga. and those markets are combined less than 200k populations

    1Reply
  • Wes M.Pro Member
    Rental Property Investor · Southeastern, NC · Member since 2018 · 163 posts · 146 votes
    6y

    I think it depends on the size of the coastal city. We had to list a unit for rent back in April (peak COVID scare) and got more out of state responses than I would have ever imagined. In fact, we had close to a dozen inquries from NY -- two from NYC proper. Now, this is Wilmington, NC and our metro area population across three counties is just under 300k. From what I can tell, people have decided if they have to work from home somewhere, it better have access to some type of natural amenity. 

    Going to be really interesting to see how this all shakes out over the next few years. I have noticed small increases in the year-round population of our beach towns from folks that could work remotely, but now it seems to be on hyper-drive. 

    1Reply
  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Justin Thorpe:

    I am guessing the crowd either falls into two parts. First is, workers who can’t work remotely and lost jobs in big cities. They are likely moving in for lower costs. But will they find jobs or can they afford to live without jobs.

    Then I am assuming the other section is remote white collar workers who may sadly have to return once the pandemic washes away. But to be seen.

    Third is retirees!

    So it comes down to who are these people and what’s causing the fire!

    Our market has always been a strong retiree location. Between that and the summer tourist season, we get a lot of money flowing in. We're still seeing a lot of retirees, but I'm also seeing a lot of work-from-home employees. If they can work from anywhere, why not work in a beautiful location with views, rich wildlife, no traffic, low cost of living, high quality of life, low taxes, highspeed internet, and more? 

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  • Bob Lett
    Rockford, MI · Member since 2018 · 97 posts · 26 votes
    6y

    @JD Martin small world. We didn’t like playing you guys in football come playoff time. I went to allentown central catholic and grew up in the Lehigh valley. I would imagine Slatington/Palmerton area could see some growth as well.

    1Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    6y

    @Nathan G.

    Thanks. I am curious if you are seeing more retirees. I ask because year on year the number of retirees is either flat to falling.

    Same for tourism, are you seeing more tourists year on year or just relative to what you saw in the early days of the pandemic. Fewer people are traveling but there are fewer spots to travel to and almost all of them have to be within driving distance given the fear of air travel!

    Also a couple of points on remote workers. From our own eco system here in SF we are seeing some temp migration to near suburbia (Marin, Sonoma) or Lake Tahoe or nearby beach towns like Monterey. So the movement to WY is interesting.

    Also you mention tax savings, my understanding was that they cannot claim tax savings if they are “officially” working in a different state and not in WY. So how does working remotely in WY help them save on taxes?

    Overall between tourists and remote workers, it seems like a very transient population vs a sizable n

    and sustainable migration.

    0Reply
  • Jerrad Shepherd
    Rental Property Investor · Gothenburg, NE · Member since 2015 · 74 posts · 111 votes
    6y

    @Nathan G.

    I invest in somewhat similar areas in central Nebraska and have had a COVID boom as well. Our RV park has been crazy busy too, we are seeing 13% higher gross than last year at this time!

    3Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y

    @Jay Hinrichs I agree. Im torn about what to do with my Silicon Valley townhouse when my current tenants leave. Cant take a chance on any marginal candidates for sure. Id rather leave it empty until sanity returns to the laws than take a risky tenant.

    0Reply
  • Polo VazquezPro Member
    Real Estate Agent · McAllen, TX · Member since 2017 · 382 posts · 281 votes
    6y

    I live in Texas and the San Antonio and Rio Grande valley market is absolut nuts. Any decently priced home is getting bought in a single day. I had two vancies both of which people were fighting to get into them. (I wish I would had asked for higher rent haha). Almost makes me want to sell some of my houses since for someone who used used to paying 400k plus for a house would have no problem overpaying for a 200k house that is the same size here.

    0Reply
  • Ben Blecker
    Member since 2018 · 7 posts · 5 votes
    6y

    @Nathan G.

    Yeah man, western slope of Colorado literally🔥🔥🔥 pine gulch fire!

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    6y

    Speaking of fires! That's one of the contributing factors as to why our market in Redding CA has been so hot. The fires 2 summers ago destroyed homes, and put a huge demand on the housing market. Many of the homes have been rebuilt. However due to the location, and all the natural beauty we've always been a popular area for people retiring. We have lakes, rivers, water falls, caverns, volcanoes .. you name it, it's here! 

    Now with Covid, we are seeing a steady stream of people moving up here from the bay area, which is about 4 hours south of us. Our inventory is extremely low. Prices are going up. Lots are  impossible to find, though there are a few parcels available should one like to develop, etc. There's also opportunity for commercial development (light industrial)  

    Here's some pics of my morning walk. Now you see why it's hot!! 

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Justin Thorpe:

    Also you mention tax savings, my understanding was that they cannot claim tax savings if they are “officially” working in a different state and not in WY. So how does working remotely in WY help them save on taxes?

    Overall between tourists and remote workers, it seems like a very transient population vs a sizable n

    and sustainable migration.

    I'm not a tax expert but it's my understanding that most states tax income earned while working in the state. It requires a physical presence. New York is one of the few states that apparently taxes people even if they work outside the state for the entire year, but even that appears questionable. Even if they charged a state income tax, the individual would still save on sales tax, property tax, cost of living, commute time, and via other tangible benefits.

    We can't predict how sustainable anything is but we've been seeing migration for many years. It seems to be accelerating this year so that indicates it's not just a temporary glitch.

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Justin Thorpe:

    @Nathan G.

    Thanks. I am curious if you are seeing more retirees. I ask because year on year the number of retirees is either flat to falling.

    Same for tourism, are you seeing more tourists year on year or just relative to what you saw in the early days of the pandemic. Fewer people are traveling but there are fewer spots to travel to and almost all of them have to be within driving distance given the fear of air travel!

    I failed to respond to your first two questions. We see an increasing number of tourists every year, but I'm 100% certain this year will be lower. We started later, some of the hotels never bothered to open, restaurants have been a little slower, our July 4th celebration didn't appear to have half the usual people and none of the vendors, etc. But tourists are always transient.

    Retirees are a different story. It's always been a pretty steady stream but this year it is significantly higher. It's too early to tell but I wouldn't be surprised if we're seeing 4x the usual number moving to the area. Every REALTOR is saying the same thing because it is a tangible difference.

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  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Nathan Gesner:
    Originally posted by @Justin Thorpe:

    Also you mention tax savings, my understanding was that they cannot claim tax savings if they are “officially” working in a different state and not in WY. So how does working remotely in WY help them save on taxes?

    Overall between tourists and remote workers, it seems like a very transient population vs a sizable n

    and sustainable migration.

    I'm not a tax expert but it's my understanding that most states tax income earned while working in the state. It requires a physical presence. New York is one of the few states that apparently taxes people even if they work outside the state for the entire year, but even that appears questionable. Even if they charged a state income tax, the individual would still save on sales tax, property tax, cost of living, commute time, and via other tangible benefits.

    We can't predict how sustainable anything is but we've been seeing migration for many years. It seems to be accelerating this year so that indicates it's not just a temporary glitch.

     Georgia taxes you on any income made from the state, whether you are physically there or not. I teach remotely for UGA system and I have to file and pay income tax every year. 

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @JD Martin:

    Contact a CPA. There may be exceptions since many workers are forced to work remotely due to COVID.

    https://taxnews.ey.com/news/2020-1274-georgia-provides-guidance-concerning-the-assertion-of-nexus-and-income-tax-withholding-for-employees-temporarily-working-in-the-state-due-to-covid-19

     This is for employees working IN Georgia due to COVID, which is the opposite of what we're discussing. But there may be rules allowing you to work outside the state and avoid Georgia taxes. It's worth investigating.

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  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y

    ^^^ I did. They said yup, I have to pay :D . C'est la vie!

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  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    We never have vacancies longer than our ability to turn properties over. We purchased a 3/1 sfr two weeks ago and I've already approved a tenant who stopped by and inquired about it while we were working on it. It's still not done but we're going to get a holding fee on Tuesday. First property we've rented without advertising.

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  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    6y

    @Leopoldo Vazquez

    My friend recently did a cross country drive and his feedback was that the San Antonio belt was booming big time. What do you think is causing it? Is it demographics (new households) or new business formation?

    0Reply
  • Polo VazquezPro Member
    Real Estate Agent · McAllen, TX · Member since 2017 · 382 posts · 281 votes
    6y

    @Justin Thorpe I know that they just recently finished widening loop 1604 so now a lot of businesses are being opened on it. It use to be single lane loop. Now is a 2 lane loop almost all the way around with 2 more lanes and ramps to get on and off of it. You also have shopping popular and newer shopping centers such as la cantera and dominion on the north end of the loop. I'm sure this is not the only reason but it's a big contributing factor.

    0Reply
  • Joseph Weisenbloom
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    6y

    I’m going to offer the opposite news in my neck of the woods. I rent bedrooms in Austin, Tx and have been struggling to get stuff rented since June. Usually things are packed but there has been a major uptick in rental inventory making it harder to compete.

    1.ATX was one of the biggest AirBnB/Vrbo markets and since no one is traveling all of the short term rental houses have been converted to longer term leases.

    2. The University of Texas is allowing all students to telecommute so lots of people are studying remote at their parents house instead of being on campus. FYI there are about 50k students enrolled. There has been a huge glut of subletted apartments and rooms hitting the market. I am in a bunch of housing groups on facebook and there are $1200 bedrooms renting for $700 right now. One student posts about seeking housing and they get bombarded with 50 messages from other students desperate to get out of their lease. These are primo downtown apartments too. My stuff is about 3-4 miles from downtown so very hard to compete with. 

    3. Much of my tenants come from people moving from elsewhere because of job opportunities. It doesn’t seem like companies aren’t hiring like they used to over here. 

    4. People on unemployment payments. Lots of people don’t have jobs and are receiving their $600 per week from the gov’t. However Im worried about renting to these people because what happens when their benefits dry up.

    2Reply
  • Roxanna Pifer
    Investor · Mount Bethel, PA · Member since 2013 · 45 posts · 29 votes
    6y

    @Matt M. I had one of my rentals in Bangor, PA (next door to Pen Argyl) listed and within a week had 15 applicants to choose from. We got a deal on a house in a FSBO situation and put our house in Mount Bethel on the market 2 weeks ago. We were stretching the price since the market is insane here and got a full price offer the first day. We showed it for 3 days and got 3 offers. Full price was the LOWEST offer we got. Crazy! As far as tourism, our parks on the Delaware river have been PACKED with NY's and NJ's. Our little towns are struggling to keep up with the garbage that is left behind every weekend.

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