For the past several years as a small-time-novice-landlord I’ve had the luxury of having vacancies in the march/april time frame or the aug/sept timeframe. As such, I found that getting mid 5K/month rent for 2bed (w parking) was a really quick affair — units were on the market no more than 1-3 weeks… this was on the north-eastern part of the city.
This is my first time having vacancies in Nov, Dec, and Jan, and BOY that just felt like one big slog. I had a 3 BR get just around 6K (no parking) — that was on the market for the entire nov/ dec, and half of Jan. That was almost a whole quarter of stress.
What do you guys think? Do you think it is seasonality that’s affecting this, or do you think that there too much supply of new “luxury” apartments coming on to the market — or something else?
Curious as to various folks’ experiences — as I’m not a huge pro at this.
I have the same experience of not able to rent my SV SFH last year that easily.
Bought the rental in 2011 and had been able to rent out without vacancy for each change of tenant, not even 1 day till last year.
No call during the first week of advertising, so I drop the price by 10%, many came to tour but still want to negotiate lower or further start date. I take my time to entertain touring and take the opportunity to repaint the house, fixing many stuffs that I want to do but can’t because of tenanted. Finally rented out 1 month (exactly ) after the last date of previous tenant. Previous tenant end date is Sep 30. Start date of new tenant Nov 1.
Previously I rent to out-of-state family who are always accompanied by location specialists. They need the housing quickly so don’t negotiate and sign the contract the next day. Last year, I recall only 2 out-of-state family came and the rest are trying to find cheaper and bigger rental.
So my speculation is there are a lot less out-of-state guys coming in,
I use Craigslist to determine market rents. Just put a house on today. No calls yet. Well at least I didn’t under ask.
It is $500 less than the Zillow estimate
Maybe it will attract Zillow viewers. On trulia hot pads too
I find zillow to be accurate within 20 pc for rent prices but no more. To arrive at pricing, I look at all the ads across hotpads, zillow, CL, etc. I might visit a few as well —- and then get to a price.
Is it possible that your pricing is stretching to the high side? There are quite a range of rent for similar housing. Some poeple charge a very low rent and some charge a very high rent, both can be rented with different speed
I think Zillow prices are high. Price it low watch it go. Price high watch it die. Lose a months rent and your yearly gain is down 8%. Better just to drop the price to 8% below market
Thanks - nice Strategy. If you are pricing units 8 pc below market in the1st year, what is your approach to rent increases, assuming you like the tenants?
That is possible —- I dropped price after the first week but then got caught in the doldrums of tgiving, xmas, and New Years. I guess I was surprised it took so long bc in years past, high pricing didnt seem deter super fast rent-outs, at least in NE SF. This dec/jan seemed to me to be slower. Maybe I am the only one.
The rental market is fairly competitive now… really have to price below “market” (oxymoron term). Refer to this house which is on the market since Aug 3, 2017. $4795 is a very good even for 2014. In today market condition, I would try $4400, yes that low.
I had 30-40 inquiries for a studio. Took two weeks this month to get someone in … Studio tenants are the worst prospects. No money bad credit and issues. I hate studios only have one and It is the hardest unit to rent. Have seriously thought of combining it with the adjacent 2bd.
I now have a three bedroom at the worst time of year in the worst ski season ever. Should be interesting. Priced $500 below Zillow estimate but $200 over what is was…
if it isn’t rented by Mar 1 I will go in and do remodeling. It needs a new kitchen and bathroom, flooring … $10k plus two weeks lost rent. Will take 5 years to recover costs and rent but will add to resale.
Oh interesting. You start low and then do yearly (high) rent increases.
I have a two 2-bedroom where I start the rent high (and they were easy to rent out – really fast) but then I like the renters a lot so I did no increase the first year, 3.0% the second year, and now I’m thinking to not increase it for the 3rd year.
Yup, I think @BAGB kind of hit it on the head. Now, I will add that the timing is also perhaps playing a factor being it is the holiday season and all. As a native, I notice that the city empties out pretty much after Thanksgiving and doesn’t recover until say mid January. Also, I tend to think that this is actual the middle of the school year so not as good a renting time as say July-Aug before school starts. Now, I tend to rent a tad lower in general but gosh, rents like 5-6K for apartments is ridiculous!!! Yes, great if you can get it but that is not the norm.
Start low and yearly rent increases works may be in cheaper neighborhood. That is how my PM does in Austin. For example, for one house, it started at $1950, then $2000, $2050, $2100… pretty close to market now… probably no rent increase this year
For SV, tenants change often because they would buy a house or change jobs. So I try to charge about $100-$200 below market. Btw, my SV rental is in the range rent range as yours 2 bedroom apt.
Yeah, this has been my first experience here in SF renting in the “Dead months” as you observed — Nov/Dec/Jan. Now I am wiser. On hotpads you can see how many people viewed your listing in the past 7 days. At the top of November I was getting like 30+ views per week. The low point was right around Christmastime — that was 9 views per week. Then, about a week after New Year’s, the number rocketed up with 65+ view per week and late Jan is when the apartment got leased.
I dunno — I feel like 5K-6K for a nice 2 bedroom in NE San Francisco (Telegraph Hill, Nob Hill, North Beach, Russian Hill), w/ garage parking and with quartz, laundry 2 bathrooms, nice appliances — that’s about the going rate in NE SF. Definitely not the “going rate” perhaps in SV, but in my experience, that’s the rate in NE SF when you are trying to target professional DINKs (either about to get married or already married) that pull in several hundred K per year in pay.
Note though — I suspect the school year has nothing to do with it though — these kinds of renters don’t have kids.
Maybe others feel differently. Now, I will say, that is certainly not the rate in more “modest” sections of SF, like the Richmond, Sunset, etc.
Forgive me for asking but I have two questions about your sample (thanks for sharing) -
When you say “in today’s market condition I would try $4400, yes that low.” What may I ask are you trying to accomplish? Are you trying to list it at a low price such that you have multiple offers and it gets bid up? Or are you suggesting that in Silicon Valley there is more supply of housing that there was in 2014?
Why would the landlord remove the house from the rental market on Nov 6 and then return to the rental market on Dec 22? I can understand removing a house from the MLS if it hasn’t sold so that prospective buyers don’t think “What’s wrong with so many days on market” but I thought rental are different ---- the laws of stale houses don’t apply so much to rental units? Or am I mistaken?
) after the last date of previous tenant. Previous tenant end date is Sep 30. Start date of new tenant Nov 1.
