Are you worried about your local rental market cooling off, fearing that you will have a property sit on the market for too long? Well, chances are you are priced too high, and offering rent concessions as a private landlord will not be able to help you speed up the application and leasing process.
Though rent growth is only slightly softer than last year, far more property managers are offering short-term perks. According to a July rental market report by Zillow, one-third of property managers are offering concessions as the rental market cools.
Before BiggerPockets, I worked for two different property managers: one mom-and-pop that served investors like you and me, and one that was an onsite apartment community (200+ units). Working for the mom-and-pop, I have never seen an investor use concessions. On the other hand, when working for the apartment community, almost every single tenant had some sort of move-in special or concession.
The use of rent concessions will be really dependent on the asset class, and I do not believe that private landlords should be exploring them as options. Here’s why.
About Rent Concessions
According to Zillow’s report, rent concessions are up from year-ago levels in 45 of the 50 largest metro areas. U.S. rents were up 3.4% year over year in July, which is a relatively average increase, but zooming out a few more years since the beginning of the pandemic, U.S. rents have increased by 33.4%.
The interesting thing about this 33.4% rental increase is that the non-seasonally adjusted rental vacancy rate was 6.6% in June, according to Zillow’s numbers. The pre-pandemic average vacancy rate for this time of year was also at 6.6%. This…