Normally May is a great time to be a landlord in Chicago. This season, I wish I could say it is, but it isn?t. Apartment conditions in Chicago have softened because of the rising unemployment rate and overbuilding. The citywide condo boom has ended, and a lot of recently completed and under-way projects are now being put on the market as rentals. Job cuts in the financial sector have slowed interest of high-end rental units across the board. These two factors are what are hurting landlords the most. The fact of the matter is there is a ton of inventory out there and fewer people are moving. Those who are moving seem to be more cautious and choosy than ever before.
What Can a Landlord Do in This Market?
What should a landlord do in order to protect him or herself? The number one action landlords can take is to make sure all rental property is priced competitively. Do your research, but if you are not sure about price, seek out advice from a professional rental agent. There is a tremendous amount of competition in the market place for every rental unit type. Renters have more tools at their fingertips than ever before and are a lot savvier than most landlords give them credit. They will look at everything on the market before making a decision and there is no fear of loss like there has been in the past. Renters know that if they take too long to decide on a unit and they loose it, another great deal is right around the corner.
How About an Example?
Here is a scenario that should help put things into perspective. Say a landlord has a rental that is coming available in a month. It is a 2 bed/2 bath that normally rents for $2,000. If after the 1st week of marketing the property there is no showing activity, that means either it is being marketed improperly or it is definitely overpriced. If there are showings being generated, but no one is moving forward with negotiations or a lease, then the unit is without question overpriced.
If by the second week there is still no activity, a price reduction is in order. Here is why it will make sense?If the property sits vacant for a month, that is a $2,000 loss. Prorated over 12 months, that is roughly $166 a month. Lower the price to $1,900, beat all of the competition in the neighborhood, and save yourself $66 a month!
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