After years of high demand and rising rents, the Pensacola rental market has changed, and activity is slowing down. We’ve been getting calls every day from real estate investors and homeowners who are thinking about renting their house, some who have their homes listed for rent by owner and they don’t understand why their properties are not renting. At Realty Masters, we are working much harder to get our investor's properties rented. We wanted to share with you 5 things that we are doing to help get our homes leased that will help you as a Pensacola area investor. For our current owner clients, we want to know that we are doing everything we can to combat the changing market.
# 1 Understand the Pensacola rental market.
Whether you own one property or a whole portfolio, understanding these market changes is essential to maximizing your investment as vacancy costs can easily be your largest expense each year. I want to give you some data on what’s happening in the Pensacola rental market to show you what’s happening in the Pensacola rental market. Both Realtor.com and Zillow classify the market as “cooling.” We’re still seeing year-over-year decreases in single-family rental housing, and while it’s marginal, reported between $50 and $100 year-over-year rental decreases, properties are not renting for what they have in the past.
These rent declines do not factor in a returning trend of move-in incentives! We’re seeing move-in incentives, with a large percentage of apartments and build-to-rent neighborhoods, offering incentives including free rent ranging from one month to two months and either waived or significantly reduced deposits. Keep in mind, that these moves in incentives were not present a year or two ago, so when you consider real year-over-year rent declines, they are higher than they seem. The figures are also skewed because of the large number of new construction and luxury properties that came on board in the last year that have a higher average rent.
Vacancy rates are up. We’ve seen a huge drop off in demand for rental properties, and combined with increased supply, this will lead to further declines in year-over-year rent decreases. The average days on the market on Pensacola MLS is currently 43 days on the market, with nearly 10% of the active listings on the market more than 90 days! This is staggering and something we’ve not seen in years. We used to say it would just be a matter of time before it was rented, but we must now consider the possibility with so much excess inventory that some properties will not rent, as some do not sell. We’re also seeing declines in certain types of properties in the Pensacola area including new construction townhomes and homes in the Beulah and Pace area as an abundance of new construction communities has increased supply.
We forgot this in our video but another important factor in getting your home rented is being pet friendly. Nearly 70% of renters have pets, so restricting your home to no pets will cut out 3 out of every 4 renters.
# 2- Your property must be in good condition.
With an abundance of supply and low demand, your home must clean and updated to stand out above others. Your home must be in good condition, with fresh paint and nice flooring, or it will not rent. With more competition in the market, renters are being choosier, and homes with modern finishes, fresh paint, and updated appliances are more likely to rent faster.
#3- Your marketing must be professional and comprehensive!
Now that’s where a professional property management company can really help you. We’re pulling out all the stops to get properties rented right now. We’ve got professional photography, video tours, 360 virtual tours on Zillow. We’re pushing properties on social media and in Facebook groups. We’re working with community partners like the Whiting Field Navy Housing office and paying realtors who are showing rentals because the market is slow. We’re boosting posts and sponsoring paid ads.
Don’t forget the basics of marketing either. Yard signs are still a vital piece of marketing. You can no longer just post your property on Zillow and expect to find a renter. If you just post your property on Zillow, you’re one of 2,027 properties available in Escambia and Santa Rosa counties, and this strategy is no longer effective for renting your home.
#4- Consider offering move-in incentives.
We’re seeing estimates from Zillow saying nearly 1/3 of all properties have some type of move-in incentive. This is something we’ve seen come back after years of being absent from the market and can set your property apart from others and compete the with the multifamily and build-to-rent markets.
#5- Be aggressive in pricing.
While this is all stressful news, a slowing rental market doesn’t mean that you’re out of options. It means that now, more than ever, it’s time to be strategic about how you price your property.
The market decides what market rent is and unfortunately, investors, we cannot use the price you had it leased at previously, and homeowners we cannot use your mortgage and expenses to price the home.
We also see investors sending us active listings to show us how they substantiated their rental prices. There’s a reason that we don’t price properties based on active listings, many of which have several price drops or extended days on the market.
Think of vacancy like this- say your monthly rent is $1,500. Your daily rent loss is $50 per day. If your home is vacant for 2 weeks, you’ve lost $700 and could have dropped you rent $50 per month and still made a higher return for the year.
If you want to try a higher rent, be prepared to closely monitor market activity and make weekly price drops until the home is rented.
We know the changing market is frustrating, especially with increased maintenance expenses and insurance renewals. For our current owner clients, we want you to know that our goal is to maximize your rental while keeping vacancy costs low and that we are working day and night to find qualified tenants for your home.
If you’re a Pensacola property owner and want to stay competitive in this changing market, now is the time to re-evaluate your rental strategy. Contact us at Realty Masters for a free rental analysis. We’ll help you understand what’s happening in your neighborhood and how you can make the most of your rental property in today’s market. At Realty Masters, we help landlords market their properties effectively, find quality tenants, and handle all day-to-day management so you don’t have to. With the right strategy, you can still achieve steady occupancy, even in a slower market.
