The Landlord Lens - Rents Prices are Dropping! Should Landlords Panic?

Episode Date: May 30, 2025

Rent prices are dropping and fast. According to Redfin and Census Bureau data, asking rents are declining in many U.S. cities, and vacancy rates are climbing. Landlords are offering incentives like free rent or move-in bonuses to attract tenants in this increasingly competitive market. 

The tide has kind of come out on the rental market. Redfin recently published some data that showed year over year, we're about 1% down in rent. Yeah, so if rent prices are dropping, the first thing you've got to do is... Hey, everybody. Welcome to another episode of Landlord Lens. I'm joined by my co-host, Shamus Nally.

Howdy, Seamus? How's your Wednesday going? John, things are going well. Things are going well. I'm glad to hear it. We're going to be talking this week about how the tide has kind of come out on the rental market. There's a lot of videos out there that are kind of weather reports for the real estate market about where markets you should put money, where markets you shouldn't put money. This is going to be a video about what's going on in your market and what you should do about your landlord business.

So since 2020, buying a rental property virtually anywhere in America, you could probably guess your rent's going to go up next year and the year after and the year after. Yes, we hit peaks in some markets in about 2022. And since then, we're experiencing drops. Redfin recently published some data that showed year over year, about 1% down in rent. Now, 1% if you're like me, you see that. You're like 1%, big who cares? But that's nationwide.

And the reality is some markets are getting hit a lot harder than other markets. So, John, what are some of the markets that are especially seeing a decrease in rent prices? The first on the list, one that's been in the headlines a lot related to housing, is Austin, Texas, which is down 16% year over year and 23% before below that all time high. Jacksonville, Florida, rents fell 12% year over year, and Tampa, Florida, rent decreased by 6%. And so it's really market specific where we're seeing these drops, especially after maybe an artificial spike in COVID as people were enjoying remote work that might be being clawed back today. Yeah, if we went back just a couple years, right, where Florida, Texas, right, had a combined advantage of not having to look like Bain as you walked around in the streets with those masks during COVID, no state income tax, those are the markets that were really taking off, right?

And now there's definitely a settling that looks to be happening in those areas. But what's also happening in other areas is we're seeing rent prices actually spike or to continue to grow year over year. What are a couple of markets for our audience to look to where run prices are actually still going up? Sure. So Providence, Rhode Island made the list. Virginia Beach made the list. And Louisville, Kentucky made the list. I'm also aware that Fresno and the Central Valley in California, rents are still going up in some places in the Northeast, Ohio, and that area, rents are still going up. So these are areas that maybe had limited new construction or the municipal zoning laws were slow to catch up with the increased demand, unlike Texas and Florida.

And so they're also historically known as more affordable markets. So renters that were maybe seeking out a lower portion of their budget going to housing probably had these on their list of places to move to. Yeah. And so as a landlord, you're both a landlord and a real estate investor kind of at all times, right? Let's dive into what do you do if you see conditions changing and where you own your rentals, right, whether those conditions are rent dropping. And for me, I actually always like to look at, I go to Zillow a lot. I look at not just the for rent prices around me and how they compare it to my existing properties, but I also look at the home sales, right?

I love the fact that Zillow shows how many times a price on a home has decreased. And traditionally, if housing prices are dropping, rent prices are dropping as well. And so I always try to take note as to how many price decrease. or happening around properties to give me an idea as to whether or not the local market's changing. So let's say you do that and recognizing that rent prices are dropping, what are some things I can do? Yeah, so if rent prices are dropping, the first thing you've got to do is keep the tenant paying the previous market rent. Amen, John. As much as possible, right?

Make them feel special. I know you do a lot of things for your tenants to make them feel understood and that you're a human being. and, you know, they'd prefer renting from you maybe at a premium versus going to the apartment building managed by someone in L.A. That's the first thing you should do. The second thing you should do is keep lines of communication open, especially as you near your lease end date. You should know what your tenant is planning to do as soon as possible. There are some laws about notice. Forget those laws. 90 days. 180 days. Keep your, keep the conversation open. You want to understand what factors are going into their decision about housing so that you can tailor an offer to them that keeps them in place.

I mean, I think, have you, you've done one of these before, right? Yeah, absolutely. And it's super important. If you want to renew them, state that out front, right? Like you said, get ahead of it. So 90 days out, hey, we'd really like to renew the lease with you. We'd like to do another 12-month lease, right? as opposed to letting a lease go month to month,

I think it's really important to get a new 12-month lease in there and have that conversation, right? See, are there any lingering maintenance requests, right? I always try to tell landlords, seek out maintenance requests to do. That only is good for the long-term sustainability of your property, but it's also good for you to build that relationship with your tenant. See if there's anything that they've wanted to happen

that you can do that maybe makes them happy and get ahead of the lease signing, right? They can sign that renewal at any time in the current term. Right. Right. So get that renewal signed. And like you said, if they say they're thinking of moving or they're going to move, it's okay to ask why, right?

It's okay to say, is there anything I could do to make this property a better fit for you, right, if they're thinking about moving? Because a lot of times people don't see the option to negotiate. Yeah. Renters don't realize that they have that option. They think they have to go somewhere else. And it may be well worth it for you to drop rent 3%, 5% in a given market to keep a great tenant. Absolutely.

So I have a story about this, actually. And when I moved from San Diego out to Colorado, I was part of the COVID exodus. Sorry, all the Coloradoans. But I was part of that exodus, and I was moving out of the apartment because my roommate wanted to move. And I was thinking, do I move? Do I not move? Those landlords, they lived above me. They came down and said, hey, we will give you a full month of half-remonet.

rent for you to find another roommate. And talk about a tailored offer to keep me, right? Yeah. They didn't. But that was the extent they were willing to go to avoid vacancy on the property. And so there are a lot of different creative ways you can probably come up with as a landlord to keep that tenant. Yeah. And if you just do the math, half a month of rent is an absolute no-brainer to keep a good tenant that's paying on time because you're probably going to have 15 days of vacancy. Right? So there's that half month of rent right there. So let's flip things over, though, the take the TLDR, right? If rent prices are going down, make your current tenant happy, keep them,

employee tactics in order to keep them. Let's say you're not happy with your current tenant or you have a vacancy coming up, right? It's going to happen no matter what. I would also suggest that you consider being patient, right? And you list and then drop rent $50 or so dollars at a time. and leads come in fast enough when you're marketing your property typically that you can drop that price I would say every five days or so if you're not getting the leads you want you can also

consider different things like allowing pets right um you can add a pet deposit but no additional pet rent right and just say pets are included that may make your property more attractive to to renters the reason I say be patient is because you know if you end up dropping rent $150 a year right, that is going to cost you more than likely a 20 days or a month worth of vacancy. Now, let's say you're in a market, though, that is still enjoying rent increases like you have probably for the last five years. Yeah. What's your approach there?

We'll celebrate. It's a good position to be in, right? I'm a big fan. If you have a tenant that is paying, keep that tenant. Once again, when renewal comes around, I would consider. consider a small rent adjustment, right? Anything from two to five percent just to make sure that you're keeping up with market rate. If you're in Virginia Beach and you know market's gone up 10 percent, you can share that market's gone up 10 percent with them and then just do a 5 percent

rent adjustment. I don't think there, there isn't usually value in jumping all the way to that 10 percent mark all at once if you have a great tenant right that's respecting your property and that's paying on time if you are going on the market start high right look in your area other places for rent find the highest list price and list at $45 more yeah list at $50 more right and then and then drop it down over time similar to what I said if rent's dropping right within five days bring it down a little bit lower bring it down a little bit lower but I think it's super important to start high if you're in a place where rent just keeps on increasing. Makes a lot of sense to me and definitely a lot less tactics to avoid downside in that case, right? Yeah, absolutely. What you will

see when rent goes up and as you increase the rent, right, the number of people that may actually qualify based on your rental criteria for your property may, you know, may drop. So it's important to understand what your options are for cosigners and guaranturers in case you have a prospective tenant, that would be a great fit, but doesn't quite meet your income requirements. Gotcha. Make sense. So as the rent on your property goes up, you might get fewer tenants that qualify and make sure you understand the tools you have to make the great tenant qualify and also protect your downside. Absolutely. Cool. All righty. So it's a little frothy out there, but what's that Warren Buffett quote about the tide going out? Be greedy when others are scared and

scared when others are greedy? Only when the tide goes out do you discover who's been swimming naked? Well, John, I'm glad neither of us are naked right now. But if you've enjoyed this video, please like and subscribe and sound off in the comments if your rent is dropping or if you're fortunate enough to see rent going up in your area. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry. industry leading tools and expert advice.

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