The So-Called Real Estate Experts ... Who Says?

The Dayton Daily News contained an article yesterday - right on the front page - all about how the rental rates continue to fall in the local apartment market. It was such a bleak article full of doom and gloom. I wonder who these so-called experts are? David Dickerson - from Gen Real Estate Group and Peggy Alford of Rent.com have impressive credentials. But so what? What is their role in the Greater Dayton apartment market?

I guess I should not take this type of thing personally, though in some ways, I do. I came back to the Dayton area in February to shore up a declining occupancy at a small apartment community right in the thick of things. There are more than 32 apartment communities that serve as direct competition to this property. In less than 2 months we are back on top at 97% occupied.

The articles describe the glut of the industry - guaranteeing that pricing should decrease: greater the supply, the less of demand. Yes, sometimes you do have to lower the rent. Sometimes you may have to market an enticement of some concessionary source. However, if you know your market and you understand the variables, there is absolutely no reason to panic and take these people's word as law. I think too many Management Companies resort to offering all these concessions (one downtown property this morning posted a freebie of TWO MONTHS of RENT) because they don't train their teams to manage the revenue. They could probably just lower a couple of units' rent and adjust the other pricing accordingly.

On the other hand, too many apartment communities have rental rates that are unrealistic. I don't see how some of these older properties say the rent on a 1 bedroom is $679 but they run a "Special" that reduces the rent on that same apartment to $499!!! Come on - can you really do that? And make any money? I think that is ridiculous!

It would be ideal, if we lived in an ideal world, to have a stablized rental rate system, share it with your competitors, and agree not to offer huge concessions. At least, that is my opinion.