Does the decline in the Market help Purpose built properties or individual owners more?
Does the decline in the Market help Purpose built properties or individual owners more?
In the recent past the governments have pushed to build purpose built rental properties in the Vancouver Market under the argument we don’t have enough rental properties. Prior to this individual owned product was used as the majority of the rental stock in BC especially the lower mainland. During covid housing prices increased due to many people moving to locations further away from work, which decreased the rental stock in the market.
The sales and rental market have both slowed and we are now experiencing an oversupply of rental properties versus the number of tenants in the market. How is the over supply going to affect the small landlords compared to the rental building landlords. It is declining the prices in the entire rental market.
The newer rental buildings in the market have been built with many amenities similar to condo buildings. Our question is will these buildings be able to sustain the quality of the product when they are experiencing multiple vacancies in the buildings. We are seeing many purpose built rental buildings with multiple listings for vacant units. The market continues to add new rental products to the market increasing the supply during a slow demanding market.
The difference witht the individual owner and the building owners is that the individual owner has the option to sell the unit and remove it from the market. The building owner can’t do that: they must adjust their pricing and or marketing tactics to attract new tenants. We were seeing one month free. We are now seeing multiple months of free rent being offered from buildings who are trying to keep the rent at a higher advertised rate. The individual landlord had more flexibility to reduce the rent to meet the market demanded price. If the building rents a unit this month and then lowers the rent the next month to a newer tenant it often causes those tenants to move, sometimes early.
We anticipate we will see some rental buildings trying to adjust their experience by reducing the services offered to new tenants and maybe close amenities in the building to all due to the revenues being insufficient to upkeep the product. For these reasons we think the rental market of the next few years is going to be harder on the rental buildings than it will be on the indifvidual owner investor.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
