What the real estate investment books don’t tell you about the rental market
So, this weekend I realized something that I thought was interesting. Of all the books I’ve read on real estate investing, from what I can remember, none of them approach the subject of what to do, as a landlord, when the rental market goes completely to hell (see picture).
In my opinion, the rental market here in Brevard County, FL is exactly there. Due to investor speculation, there is a huge glut of available properties for rent. So much so that properties of ours that were renting for $950/mth are now renting for below $800/mth.
Not only that but in the state of Florida, property taxes are WAY higher than they were two years ago due to appreciation and it is near impossible to get property insurance from a decent insurance company.
The state of Florida owns an insurance company called Citizens Property Insurance Corp that is meant to be the insurer of last resort for Florida residents. Basically, if you have a house on the ocean, for instance and no other company will insure you because of an increased risk of property damage from say, a hurricane, Citizens will. The premium is about 3 times what it would be normally, but you can get insurance if your mortgage company requires it.
Well, what’s happening now is that most large insurers are flat-out not insuring ANY property in the entire state (believe me, I’ve called around). While the Florida legislature tries hard to come up with a solution to the property tax and insurance issues, we landlords are seeing our expenses go up WAY above what we projected for when we bought our rental properties and can’t charge the rent necessary to cover costs.
I have not seen ANYTHING like this situation mentioned in any real estate investment book but I can’t believe it has never happened before. Judging from some of the other real estate blogs I read, other parts of the country seem to be cranking along just fine.
