vacant rental property

[pedsmd]

My wife and I bought our first rental property right before COVID. We're in the NE in a high COL area. Unfortunately due to covid, higher rates of vacancy overall, us probably charging rent that's a little too high (which we've lowered), we do not have a tenant. We've had some bites and have come close to finding a renter but they've fallen through. I think some of it is because there are other vacant units in the building. We're working with a real estate agent who has been finding potential tenants.

Thankfully we have enough free cash to keep paying the mortgage and condo fees. Also, the property has appreciated and is in a gentrifying neighborhood. In terms of my overall net worth the condo is a few percentage points.

To those of you more seasoned in real estate is this something that happens? I don't want to sell the place since I can pay the mortgage and I see the appreciation potential.

[Larry Ragman]

Sure it happens, and it sounds like just bad luck on the timing, but keep the pressure on the agent to find a good tenant. Last thing you need is to get a deadbeat in there that won't pay rent, and then not have recourse to eviction.

[Molar Mechanic]

My guess here is that your wrong choice was in your decision to purchase. You need to invest some time learning how to landlord, then make a decision if this property is one you still want to own. Condos are a property I’ve avoided, but some people make money on them.

[Random1]

What is your expected rate of return per year from owning the condo ?

[dennis]

What type of rental? Apartment, office etc...? If it's an apartment an agent is a poor way to rent. Use Zillow or Turbotenant

[pedsmd]

It's a condo. I was aiming for 3% CoC and 5% cap rate. I think from a immediate cash flow standpoint I overestimated. However, there's long term potential for appreciation which is why I bought the property. I'm not so concerned about not making immediate CoC return but was hoping that I'd at least have a tenant to break even.

[CordMcNally]

Are the other vacant units comparable and what are they asking for rent compared to you? It sounds like there’s a current supply/demand mismatch there. Who knows how long that’ll last?

[Tenesmus83]

vacancy for your first investment is a bit of a nightmare. Hope you get a renter soon.

[StateOfMyHead]

Condos can be tough because there is generally similar offerings and the condo fees can put a significant damper on profits. If I were you and things were selling in that area like they are around here I'd consider selling it. Each month it sits vacant really eats up any return and speculating on potential appreciation is just that...speculation.

[DollaBill$]

My wife and I bought our first rental property right before COVID. We're in the NE in a high COL area. Unfortunately due to covid, higher rates of vacancy overall, us probably charging rent that's a little too high (which we've lowered), we do not have a tenant. We've had some bites and have come close to finding a renter but they've fallen through. I think some of it is because there are other vacant units in the building. We're working with a real estate agent who has been finding potential tenants.

Thankfully we have enough free cash to keep paying the mortgage and condo fees. Also, the property has appreciated and is in a gentrifying neighborhood. In terms of my overall net worth the condo is a few percentage points.

To those of you more seasoned in real estate is this something that happens? I don't want to sell the place since I can pay the mortgage and I see the appreciation potential.

unfortunately this is a large problem with single door ownership. if you have 1 door and 1 tenant and they pay, times are great, but if they leave and you can't rent it asap, unfortunately there goes all of your income and profit and will take a long time to recover just to break back to even. you might consider updating a bit (if needed) such that it will sell quicker and a greater appreciated value and then selling it and buying something with more doors such that if 1 renter leaves it will be a smaller percentage of your income and you wont be 100% dependent on only 1 renter. for instance you have 10 doors and lose 1 renter, that is only 10% of your rental income rather than the 100% of 1 door with 1 renter. probably not what you wanted to hear. best of luck

[burritos]

Property manager?

[FIREman]

Would you consider trying for short-term rentals through Airbnb/VRBO?

[Savvysaver]

I wouldn't stress on it too much since this is a time when things aren't exactly ideal for renting property. Hopefully things even out soon and it will be a better market, but I wouldn't worry too much anyway since you see it as a property that will appreciate over time anyway.

[artemis]

Would you consider trying for short-term rentals through Airbnb/VRBO?

Best check first to make sure the condo allows that. Mine does not.

[White.Beard.Doc]

Vacancy is a great barometer for quality of management, whether self management or through a property manager. Is your property priced correctly for the market? Is the marketing optimal? Ad placement? Photos? Ad copy? Targeting the appropriate tenants?

I am an experienced landlord. I use quality professional management for out of state holdings and my team does “self management” of local properties with our guidance. Our portfolio vacancy rate has been running at an incredibly low level of less than 1%. 3 to 5 % vacancy is typical for reasonably well managed properties. We have mastered the magic of a zero vacancy tenant turnover on multiple occasions.

Is your condo in a downtown area hard hit by COVID? The Wall Street Journal reports that landlords in NYC are offering 2 months free rent to get tenants placed. In the nearby suburbs, rentals are going very fast, at times to multiple bids. As always, real estate markets are hyper local.

Tell us some more about the specifics of your predicament and perhaps we can offer some advice.