What do you do if rents are declining

Question

Dear all,

What do you do if rents are declining in an area that you own a BRRRR property in? Do you sell the property or do you hold it and ride it out

As a extension to this question what type of strategy would you do if rents in your area are decreasing. Do you search out of area for more rentals or do you wait in cash and how do you determine the right time to go back in?

Thanks

Jeffrey Bower · Answer

That's a good idea, Sam, asking the what-ifs. I agree that sometimes rents can be seasonal, but definitely research the local market. Is industry dying or is there news about future developments. Are there too many for rent/for sales signs around the town? Questions like that can help you start.

Sam Fogelson · Answer

@Tyler Kastelberg

It was a hypothetical question because I was hesitant to get into a buy and hold strategy without knowing what to do if rents drop.

Bryan Devitt · Answer

IMO there are very few times in this economy when I would be OK with rents dropping right now. Unless there is a giant employer being built within 15 minutes, jump ship ASAP. We're at the peak of the economy and it's not going to turn around for you unless there are special circumstances

Tyler Kastelberg · Answer

@Sam Fogelson

Give us a little more context. Where is this property? Are employers moving in or moving out?

Sometimes a drop in rents can be seasonal. Sometimes a drop in rents is a symptom of a much worse economic trend in an area. Your decision whether or not to sell is going to be a function of macro-economic factors.