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Renters Provide the Real Truth About South Florida Rental Real Estate by Michael Letcher
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Renters Provide the Real Truth About South Florida Rental Real Estate |
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Real Estate,Finance & Investment,Investment
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I thought I was ready for the challenges of being a landlord when I purchased a new rental home in Port St. Lucie, Florida in 2005. I thought that I had seen it all after three years of high taxes/insurance and dropping prices. But I was totally unprepared for what I would face when my most recent tenant asked to move out in August, 2008 - just as the financial crisis became worse
I thought I was up to the task when my tenants asked if they could terminate their lease in August of 2008 on my Port St. Lucie rental home. After all, I'd always been able to find new tenants before without the help or expense of a realtor. Worst case I thought I would miss out on two months rent. I couldn't have been more wrong about that.
I was determined to stay positive and to get this home back on the South Florida rental market as soon as possible. Before I met the tenants on August 29th for the handover, I had already purchased two on line advertisements, priced the monthly rent at the average of my competition, and the calls were already starting to come in.
My spirits were even higher when I saw that the tenants were leaving the property in excellent condition. It didn't hurt that I have the best girlfriend on the planet who managed to re-paint this home from end to end in about 3 days. Within only two days of re-taking possession of the home, we were already showing it to prospective new tenants.
My confidence in my own ability to rent this home quickly, faded almost immediately. The South Florida real estate market was already in turmoil suffering from both low home prices and low rents. That was made significantly worse in the fall of 2008 as many financial institutions teetered on the brink of collapse. Although the calls continued to come in from prospective tenants, weeks quickly stretched into months.
There is a happy ending to this story but it is not a quick one. The home finally rented to a great family who started a new lease on February 1, 2009 - It took me five months of continuous daily marketing to finally get this home rented. Those five months without a tenant cost me thousands of dollars in lost rent and in extra utility bills.
As a Florida landlord who continually wants to do things better, I pay very close attention to the marketing methods I use and how effective they are. But instead of talking about what forms of rental advertising work the best, I'd like to share with you statistics that I collected over these five months of trying to rent the home - information that provides the real truth about just how miserable the South Florida real estate market really is.
A total of 106 leads were received either by phone or through email where a prospective tenant expressed interest in renting the home. That's about one lead per day for 3 out of every 4 days. Out of those 106 leads, 59 of them vaporized for no apparent reason, so let's focus on the remaining 47.
About 36% of the remaining prospects didn't want to pay the two months of security deposit I was asking for. Many stated that they had not been required to pay any security where they were currently renting. This was very predominant in St. Lucie County. Tenants from the southern counties of Dade and Broward were comfortable with the two months required security as were those who called in from other states outside of Florida - especially the Northeast. Knowledgeable Florida landlords know that having at least two months of security deposit on hand is a good idea - especially since it is still possible to lose more than that if a tenant is able to delay the eviction process.
A staggering 23% stated that either their own home was in foreclosure, going to short sale, or that they were renting a home that was being foreclosed on. An additional 17% reported either filing for bankruptcy, losing their job, or both. These numbers are shocking and highlight that we are in the worst economy that any of us will ever see in our lifetime. This also led me to question whether the foreclosure rate on homes is a lot higher than the 1% to 2% range that I read about in the Florida media.
The information reported is also not very flattering when it comes to how Florida landlords are treating their tenants as the economy gets worse. About 8% reported that their current landlord was not making necessary repairs on the homes they were renting and several homes were no longer safe to live in due to the presence of mold.
Last but not least, for you big government types out there, I want you to know that two callers asked me to falsify the actual amount of rent that I was charging so that both the tenant and I could overcharge the federal government for Section 8 housing. It is a felony to do this. I immediately ended these conversations without further discussion.
Here is the most shocking information about the poor condition of today's Florida real estate market. Out of those 106 phone calls or emails that came in over the five months, only 13 turned into actual showings. Those are terrible numbers - less than an average of three showings per month. And this means that you should expect that only 1 out of every 10 people that you speak with will want to come see the home in person for a showing.
Last but not least, the competition I faced when trying to rent this home was significant. At any given point of time over the five month period there were at least 100 similar homes competing with me on the Florida MLS and there were another 100 homes competing with me through either newspaper advertising or online.
Now that you have all of this insight regarding what I just went through trying to rent a South Florida home, be very careful if you are considering becoming a landlord during these turbulent times. The crisis in the Florida real estate market is far from over.
Michael Letcher is a Fortune 500 executive and a licensed CPA. His on-line database can help you find affordable homeowners insurance South Florida for your coastal home. Get the secrets to low cost Florida insurance in his free newsletter at => http://www.homeinsurancebuyers.org
Related Articles -
South Florida landlord, South Florida real estate, Port St. Lucie, South Florida rental market,
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