Current Calgary Rental Market

[jwilbrin]

Hi Everyone,

Wow! are there ever a tonne of rental units available in Calgary this spring. So many first time buyers have left the renters world. Just curious to see how other landlords are making out. Have you had to drop your rent quite a bit?

I`ve recently lost GREAT long term tenants from two of my units and I can not believe what a hard time I am having finding quality tenants. My units are uniquely large and in very desireable areas of Calgary: Marda Loop and Tuxedo. I have to admit I am extremely fussy about who I rent to though as all my units are nicely renovated.

It seems the first question potential applicants are asking on the phone before even coming to look is "Are you negotiable on the rent?" It seems the individuals who got stuck with the condos they bought on spec and hoped to sell upon completion of construction are now finding themselves first time landlords -- and boy are they dropping their asking rent. I guess it`s better for them to at least subsidize a second mortgage they can`t afford than try to pay for the whole thing themselves while waiting for the unit to sell. My one tenant who left was able to negotiate a brand new downtown Calgary 4 bedroom, 4 bath townhouse with double car garage for... are you ready for this... $2000 a month.

I`ve been landlording since 2000 and have found that $1300 plus utilities has been the magic number for my renovated 1100 sq. ft, three bedroom inner city units. I would get multiple applications from quality professional singles and couples who work downtown.


Curious to hear your thoughts and experiences with whats going on in the current rental market. Also where most of you see this going.

I`m debating whether or not to continue searching for the perfect tenant or maybe testing the resale market with one or two of my inner city 4plex buildings (my units are condominiumized). I have to admit I`ve only been advertising for two weeks -- I know I know that`s not long but I`ve been spoiled over the last nine years I guess. I would usually get at least 5 - 6 quality applications within the first few days.

 

[DaveRhydderch]

I`ve found its a little harder, but I haven`t dropped any of my rents. I put up more ads now, not just using rentfaster like I used to. I have slightly less choice, but still enough to find a good quality tenant. No one has asked if I`m negotiable on rent, but I know what I would say if they did.

I always remember Don saying something is going to be hard. Whether prices are too high, rents too low, not enough choice, etc something has to be making it slightly difficult. In this case, its harder to find tenants for the rents I want.

Overall, I`ve compensated by marketing and working harder, and not by dropping my rents.

Thats my two cents,

Dave

 

[cldemott]

QUOTE (jwilbrin @ Jun 3 2009, 12:53 PM) Hi Everyone,

Wow! are there ever a tonne of rental units available in Calgary this spring. So many first time buyers have left the renters world. Just curious to see how other landlords are making out. Have you had to drop your rent quite a bit?

I`ve recently lost GREAT long term tenants from two of my units and I can not believe what a hard time I am having finding quality tenants. My units are uniquely large and in very desireable areas of Calgary: Marda Loop and Tuxedo. I have to admit I am extremely fussy about who I rent to though as all my units are nicely renovated.

It seems the first question potential applicants are asking on the phone before even coming to look is "Are you negotiable on the rent?" It seems the individuals who got stuck with the condos they bought on spec and hoped to sell upon completion of construction are now finding themselves first time landlords -- and boy are they dropping their asking rent. I guess it`s better for them to at least subsidize a second mortgage they can`t afford than try to pay for the whole thing themselves while waiting for the unit to sell. My one tenant who left was able to negotiate a brand new downtown Calgary 4 bedroom, 4 bath townhouse with double car garage for... are you ready for this... $2000 a month.

I`ve been landlording since 2000 and have found that $1300 plus utilities has been the magic number for my renovated 1100 sq. ft, three bedroom inner city units. I would get multiple applications from quality professional singles and couples who work downtown.


Curious to hear your thoughts and experiences with whats going on in the current rental market. Also where most of you see this going.

I`m debating whether or not to continue searching for the perfect tenant or maybe testing the resale market with one or two of my inner city 4plex buildings (my units are condominiumized). I have to admit I`ve only been advertising for two weeks -- I know I know that`s not long but I`ve been spoiled over the last nine years I guess. I would usually get at least 5 - 6 quality applications within the first few days.

We have a couple properties where the lease is coming due and we love these tenants, so in advance, I have offered a rebate (which I negotiated with the tenant) provided they sign a 12 month lease. On one 1bdrm basement suite, we were getting $900 and will now rebate him $100 per month, and the other tiny little one bedroom house, big lot and garage for $1200, I am now paying their water/sewer bill (which amounts to about $60 per month). We are happy and so are they!

Linda

 

[t67]

QUOTE (jwilbrin @ Jun 3 2009, 12:53 PM) Hi Everyone,

Wow! are there ever a tonne of rental units available in Calgary this spring. So many first time buyers have left the renters world. Just curious to see how other landlords are making out. Have you had to drop your rent quite a bit?

I`ve been landlording since 2000 and have found that $1300 plus utilities has been the magic number for my renovated 1100 sq. ft, three bedroom inner city units. I would get multiple applications from quality professional singles and couples who work downtown.

I`m debating whether or not to continue searching for the perfect tenant or maybe testing the resale market with one or two of my inner city 4plex buildings (my units are condominiumized). I have to admit I`ve only been advertising for two weeks -- I know I know that`s not long but I`ve been spoiled over the last nine years I guess. I would usually get at least 5 - 6 quality applications within the first few days.

I`ve seen and heard all that you`re reporting. I`ve been landlording for years and this is the worst I`ve seen it. Some tenants are breaking leases early and moving to cheaper more convienent locations. The migration rate (in any) isn`t lessening the flood of cheap rentals on the market. I recently spoke with my Real Estate agent and he was reporting a spat of rental foreclosures because of job losses.

 

[thoyem]

Yes I have had to drop my rates on renewals just to draw interest from ads .
But of course our variable mortgages have more than compensated for a drop in rent.
I have also allowed pets if I like them ( and their owners of course ) .
A particular strategy is to allow even breeds of dogs that you may not normally consider.
But think of this. In most cases the dogs are a mirror image of their owners.
If you think the person is a quality tenant (after due diligence), and a very responsible pet owner, then consider that
the dog will very likely be all right as well. I have had really good success with this strategy even though I am not
really a dog person myself. Trust me you will find some grateful tenants quality tenants this way.

Todd Hoyem

 

[Thomas Beyer]

QUOTE (jwilbrin @ Jun 3 2009, 12:53 PM) ..

I`ve been landlording since 2000 and have found that $1300 plus utilities has been the magic number for my renovated 1100 sq. ft, three bedroom inner city units. I would get multiple applications from quality professional singles and couples who work downtown.

..

We are in a recession !

yes, we are heading out of it with rising oil prices, less job losses and firmer real estate prices .. but we are still weak due to government deficits, rising taxes, low gas prices and a weak US economy !

Compared to this time last year, house and condo ownership costs have dropped by as much as 20-25% due to slightly lower real estate prices and MUCH lower interest rates !

==> Thus, being more pro-active (more signs, more online ads, ..) AND reducing rents is VITAL in this soft market with this characteristic:

a) many job losses,
b) less in-migration,
c) a flood of new unsold (and thus rented) condos,
d) drastically reduced condo prices, and
e) low interest rates such that paying $1300 + utilities buys you a house or condo in the mid-300`s !!

Look at the bright side, let`s say if you get only $1000 .. you can always raise rents in a year if market picks up unlike your fellow landlords in ON or BC !

What is better in a June 2009 to June 2010 view: 3 months vacancy and then $1250/month or $1000/month for 12 month .. then a potential rent increase depending on market ?

Costs are lower .. competition is higher: thus adjust to the new reality ! Look at the present and the future and not the past !

 

[invst4profit]

Nice sales pitch.
Unfortunately they are not a lucrative as they sound, vacancies are a major issue and giving up 30% is not a realistic option even considering the possible "higher rates" which may or may not materialise..

 

[jwilbrin]

Thank you everyone for your great advice. I took a little of what everyone has said and applied it to my strategy. Received multiple applications, some bad but quite a few excellent ones. Signed leases on both properties -- great tenants.

It turned out to be an awesome weekend for showings. It seems all the great tenants were just really busy checking out ALL the available listings. As potential tenants come in to view my properties I always strike up a friendly conversation with them to 1) get a sense of their character and personality 2) to get as much info on what my competition is doing and what their product is like. I always ask them how their apartment hunting experience is going. Most of them just sigh a say it`s aweful.

Some of their comments have been:

• There`s a lot to choose from but most of the properties that sound like a great deal in the ad are a complete and utter dump.
• Some of the landlords are really sketchy... no official forms to fill out. They just want the deposit and first months rent immediately and that`s it.Some of the landlords are too pushy. One lady commented she felt like some of the landlords were shoving a pen in her face the minute she walked into the unit and were asking her how long she wanted to sign the lease for.

I guess as long as you have a clean property that shows well in the right location and you conduct yourself professionally you should be able to weather any slow downs.

Thanks again for all the great tips.

 

[schoobie]

Very interesting discussion, here is my 2cts:

I am convinced that the strategy of lowering rents just to fill out vacancies destroys property values and creates unnecessary war-prices among landlords.

One occasion a prospective tenant said to me "I get a very similar unit to yours two blocks from here but for $150 less than your asking rent. But I like your unit better, would you consider a discount?" And so I asked him to do me a favor and sign a lease with the other landlord.

What he was doing was removing that other similar property from the rental market, and leaving mine available so that my next prospective tenant had no other similar unit to compare to.

Furthermore, those individuals with jobs, it is not that they cannot afford your asking rent, is just that they have more choices. But really, what choices?

Today, I fetch 1,300/month from a one bedroom, one bath, in a 600sqft unfurnished condo in a 1962 building. But a month ago that tenant told me about the ridiculous rents he was seeing around the neighborhood and asked me if I was thinking in lowering his rent, and told him that I was not, and that he was free to shop around to see what was available.

So he went and checked out some units that caught his attention, and later told me that he did not find one condo in decent living condition, all bargains and "ridiculously" priced units were dirty and forgotten condos that he would never consider living there.