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     Vacancy for rental housing units in the Denver metro area increased to 4.9% for the 4th quarter of 2008, according to a report conducted by the Colorado Division of Housing. Of the counties used for the measure, Boulder/Broomfield boasted the highest average rent ($1,453.82) and Douglas the lowest vacancy rate (3.7%), while Denver posted the lowest rental rate ($920.97) and Adams the highest vacancy (7.4%). The average monthly rental rate for the period also increased from the $998.37 average in the 3rd quarter of 2008 and $966.01 in the 4th quarter of 2007 to post $995.24 for the 4th quarter of 2008. Here’s a link to the complete article http://www.denverpost.com/ci_11953955.

     In our office, we are seeing these trends play out in real life. It is taking a longer time to rent out our vacant houses and in some cases up to 60 days. We’ve actually lowered rent in some cases. A single family rental home that I personally own in Aurora, Colorado which had been rented for $1,175 per month was rented for $1,050 and took a full 60 days to rent out. We are also getting calls from tenants asking for a reduction in their monthly rates because of job loss. In some cases they are giving notice to move out at the end of their lease term and telling us that they have to downsize or move in with family or friends. Our call volume for available rentals are down according to our leasing agent Valarie Kraus valarie@jdunnrealty.com. As well as no shows for appointments that have been set.

     There’s no doubt that the rental market has gotten more competitive in recent months. Owners are going to have to be more sensitive to this. When units come up for lease renewal you may consider negotiating with the tenants. Offer incentives to stay. Offer upgrades such as new light fixtures, cleaning carpets, painting a room or rooms or perahaps adding a ceiling fan. One consideration might be to offer an early renewal discount, i.e. if the tenant will commit to renewing their lease in the 10th month of their term instead of waiting until the expiration, maybe offer them a 2-3% discount from their current rate or no increase from the current rate depending on the situation.

     One thing for sure, as an owner of investment properties and a property manager, we have to be on top of our game today to keep our units filled. Start the renewal process early. It costs a lot more to have a tenant move out and fill it with a new tenant versus negotiating with an existing tenant to get them to stay for another year. Think of the costs for a turnover; advertising, cleaing, painting, upgrades, setting up appointments and having no-shows, vacany periods with no money coming in, etc. Good luck with all your rentals and if we can be of assistance please get in touch.

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Written by: John Dunn
You may contact John at 720-353-0353 or by email at john@jdunnrealty.com. Please visit us online at www.CashFlowProperties.com or www.DenverPropertyManagement.com.

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