The RENT CRASH Is Here. And Nobody's Talking About It

The rental market is deteriorating very quickly. And in this video, you'll learn every single detail you need to know if you have a rental property, if you're a renter and you're looking to negotiate, or you're even looking to consider buying an investment property in today's market. Here I've got a special guest with us, Blakeley. Blakeley, let's jump into the data real quickly.

What is so different today from what happened, you know, the last goound? Well, we are back into the accidental landlord world. What does that mean? Interest rates have gone up.

The the mass COVID migration, I feel, is over. And we've had several owners who have been called back to work in places like Connecticut, New York, Texas, California, etc. Who, you know, bought their dream home with the idea of working remote and have been called back into uh the office and they're they're forced to rent. The homeowners who can't sell, maybe they bought at the, you know, height of their beginning of and they, you know, overpaid for those homes at the time because of the mass exodus to Florida.

They're now in a position where they're having problems moving them and they're sitting on empty homes for 6 months, 7 months, 8 months, can't sell them. Well, do I lose $3,000 a month for mortgage payment or do I lose, you know, $800 a month and rent it out and take an $800 a month loss? So that that's what I'm seeing right now. So you're seeing a lot of owners unable to sell their house because the markets change drastically and then they turn them into rentals.

Yes, we have well and it's kind of crazy because we even have long-term owners who are like, I just got to get out of this, you know, this real estate while I can. They're kicking good tenants out. They're sitting on an empty property for 6 months because let's let's be honest, you know, realtors are they're salespeople or you realtor and they're promising these owners, you know, uh the moon. Uh owners kick out good tenants and then they've had six months of vacancy turn cost, prep cost, paint cost, you know, and then they come crawling back and my house won't sell.

I need to rerent it. Well, your tenants that were paying $2,400 a month and now the comps are $2,100 a month. Wow. It's dropping that fast.

Yeah, absolutely. I mean, we went up almost 30% during So, you know, it was uh it was all uh all fat, you know, it was all all gravy, all all uh all icing. And now it's uh you know there's a correction. Yeah, absolutely.

So, let's dig into that correction. It sounds like sellers are sort of panicking now. They're panic selling. They're panic get kicking their tenants out to try to get out of the market as fast as possible because we can all see the data, especially here in Florida.

It's pretty clear with the direction we're headed into. So, this is the Northeast Florida Association of Realtors MLS rental market data. This is the number of active listings across our city. There's 1817.

Now, back in the day, you know, during the 2020 through 2022, Blakeley, what did it look like? Were there any rentals available? I mean, very few. I think I think vacancy was 2 or 3%.

Yes. You know, uh, you know, now you're closer to 10%, 8 to 10% vacancies. Now, and also, and I like how your slide here says does not tell the real story. You know, let's be let's be transparent here.

That's MLS data. Yes. Now, I've been in the property management world for 20 years. Half of my friends who own property management companies don't put their rental listings in MLS.

So, all those vacancies and all those available properties are not reflected. And then you factor in the do-it-yourself landlords that are also not in the MLS data. So, that that number is much higher. Yeah.

You know, we were going through some numbers before this call and you know, self-managed is 70 to 75% and professionally managed is 25 to 30%. So the inventory could easily be, you know, double or even triple that. This also doesn't include all the multif family apartment listings that are competing with the single family. And we'll dig into that data.

So hang on here. Now, if you're seeing a rent decline in your market, go ahead and drop a comment and share with us what market you're in and how much rent prices have come down. But here's the thing. The vast majority of single family rentals are owned by individual investors, right?

These are called mom and pop landlords who manage the property themselves to reduce cost, right? They don't want to pay a property manager the 8 to 10% whatever it is for them to go get the uh the tenant for them and manage the day-to-day activities. You know, making sure the lawn is mowed, making sure the repairs are getting done, if the refrigerator breaks down. Now, these larger portfolios, typically 10 plus properties, they're the ones that use the professional property management like very commonly because it makes sense from an economy as a scale perspective.

Now, institutional ownership, these are like the big players. American Homes for Rent, Progress Homes, Invitation Homes, where it's owned, the property management is owned by those large firms themselves, and those are less than 5% of the market. The estimates are actually about 3 to 4% of the market is now owned by institutional investors. So, we saw them gobble up tons of properties, Blakeley, especially here in Jacksonville.

They're buying 40 to 50 homes. Each one of those institutions, you know, between 2012 all the way up to 2022 when they kind of looked at the numbers and said, "This doesn't make any sense anymore." And once rates started going up, the model stopped making sense. But this was a national rent study. Blakeley, I want to dig into this.

Rents are coming down. So, this was we're already down 3 to 4% since August 2022 on a national level. The duration of the decline is 20 to 22 months. The local standout, the one that's getting hit the most is Austin, Texas is overbuilt, multif family, tons of people relocating during the 2022 to 20 2020 to 2022 years.

And the ongoing pressure is multifamily over building with amazing amenities, but the rent amounts are just so high that people can't afford it. A lot of people are complaining about that. Another study showed a 6% decline from since the since 2022. Again, new construction is being a big issue.

The the places like Austin, Tampa, Nashville are seeing the biggest drops and what's interesting is that in the north the rents are actually rising, right? Because people are returning back to where they came from, Baltimore, Buffalo, Providence in the Northeast. What are you seeing on the ground, Blakeley, with your property management division in terms of how fast rents are dropping and how much? So, I would say 95% of our inventory is small mom and pop, one to three, one to three units investors.

I myself own several properties. I just renewed three of mine. You know, they have been renting for close to $2,200 a month each for the last three years. And I just renewed all of them at 1950.

Wow. Because yeah, that's where the market's at. We're getting a lot of um well well first and foremost, there's a handful of really good property management companies in Northeast Florida. I would like to consider us one of them.

You know, that being said, and you run into this, I'm sure, in your world, uh, as well, on sales, there's a lot of property managers that promise these owners the price point they want to hit. They call, they're like, "Hey, John, I need my mortgage and taxes and insurance is $2,800. I need $2,200. I can't lose my property." And they promised them the world, they get them to sign the contract, they lock them in.

But, you know, that same owner called us and we're like, "Yeah, your comps are $2,300. We're not going to like we're not going to, you know, blow smoke or or lie to you to get your business. We're going to be dead honest. This is what it's going to take.

And then sure enough, we track all the lost deals that we don't get, of course. And they're all leasing for our comp what what we've told the people our comps were. So they they trusted these other companies. They list them at their $2,800 a month.

They sit on it for 120 days and then end up leasing it to what, you know, we could have leased it for within 30 days. So we're seeing prices come down. We're we're really educating owners up front. Like, you know, I I feel like it's shortterm paying for long-term gain.

If you have the money for repairs and you have the money for the mortgage payment, you know, uh and you can tough out the next 3 years, four years, uh 10 years from now, you're going to be gold, right? But it's not a short-term play. It's not build to rent, buy a house, and cash flow $200, $300 a month. That those days are right now, those days are gone.

Put your money in tea bills and you know make 4.75% or hard money loan or you know whatever it is. So the ones who are really hurting single family is definitely better than than multi you know we do a lot of condos. Oh, these owners that are just between their condo fees, their insurance, their taxes, let's just say the Villa Medici, the Gardens of Bridgeampton, like all these heck, the peninsula downtown on the river. They're competing with new fancy multif family that's offering two months, three months free rent, no security deposit, no application fees, you know, pretty much move in at $0, get three months free in a big screen TV and call it a day, right?

So those condo owners on the rent side are getting crushed. That is depressing. Yeah. And so the example you gave, you know, even 2400 to 2100, I mean, that's a 300 I mean that's more than 10% decline in rents just in the last year.

And are you seeing them continue to drop or going to stabilize soon? I think we've I actually think we've stabilized on the drop. You know, the thing is is the owners don't understand. And they said, you know, well, 2 years you rented this house for me in 14 days at 2,800 and now you you're telling me it's going to take me 45 days at, you know, 2500 or 2400.

Yeah. Because there's, you know, look at the mass amount of uh sales inventory that can't sell right now. Yes. And those owners again in their minds instead of losing 3,000 a month on a mortgage, they're going to lose five or 600, you know, being upside down and renting it out.

And so for them, it's uh how long will it last? You know, I don't I don't know. I mean, it's uh I don't know how many months you can write $4 and $500 checks on properties bought in the last four years before they just decide to short sale it if they have no equity and things like that. So, here's a question for the audience.

Do you think rent prices in your area will go up or down in the next 12 months? Drop your guess in the comments. I think personally, Blakeley, I'm we're going to continue to see rents drop and I'll share with you why I think that is based on the multif family construction pipeline that we have locally. And so a lot of you in your market, you want to figure out, you know, how many active inventory, how much active inventory is there for sale, and how many of those will actually turn into a rental.

How many are listed for rent but aren't even listed on MLS, which could be two to three times more. And you want to see what it's competing with new construction. So that's the biggest issue that we see here locally is the new construction. The the builders just overbuilt.

They thought that the demand that we were having from the relocations would continue basically forever, I guess, is what their assumption was. So they just completely blew it out of the water with the number of housing starts. And so here and Tony will edit this video and I'll I'll show a video here, but there was a guy dancing on Beach Boulevard for these new apartments. And it's the Prescidium is what it's called.

And they're offering three months free rent. Same exact thing that you were talking about, Blakeley, right? Like just walk in the door, sign a sign a lease, get them in there just to fill bodies into the to these units. And what's worse about it is on Hodgeges and San P and Butler, there's another apartment complex that's coming.

That's another 400 units and it's in construction and it's who do they think they're going to rent to at these crazy $2,800 a month price for a 32 condo basically, you know, type of unit. It's out of control. I mean, the amenities are beautiful. It's in a good location, but people don't make that type of money from wages here to be able to support those type of payments.

So, these are the issues that we're seeing right now. Relocation slowdown 80% since the peak. Overbuilding multif family. We're having an affordability crisis.

Again, the wages here have not kept up with the price growth of the I see your head shaking up and down, right? The price the wages have not kept up at all with the rent amounts, right? And I was a landlord, too. Three times income is typically the stand requirement for approval on a rental.

So, I mean, if it's 3,000 rent, I mean, you're going to have to make $9,000 a month. I mean, there's not many people in Jacksonville who make 9,000. I think the median family income is 6 65,000 for Jacksonville. So, you know, there is an affordability crisis here.

And again, we tal we referenced this the short sales. People aren't able to sell their house. They have no equity in it. You know, they can't pay the transaction fees to the real estate agent.

So, they decide to rent it out instead to try to pray that the market's going to get better, even though we're not seeing any real relief right now on interest rate side. So, overbuilding is the number one factor that I see. Uh Blakeley, I'd love to hear your opinion if you see the same thing, but there were 7,600 multif family units added in the last 12 months in Jacksonville. 11,000 units are under construction.

So these are ones that already broke ground. And once they break ground, they have to finish the job because the bank finances in in place. And due to this, the multif family housing starts have now dropped 61% since the peak because they recognize, hey, we need to slow down. This the the relocations here are not happening.

And the issue is, you know, Florida has a negative birth rate. So there's more people dying than being born in Florida. So the only way our state population grows is from people migrating here. And so the projects are cancelling and they're stalling out.

So I had an owner. We have a a plan a multi-planned community. People here locally, if you're not locally, you understand. It's a it's a it's a beautifully planned community with 1.82 $2 million homes on a crystal clear lagoon here in Florida in Northeast Florida.

It's called Beachwalk. Beachwalk. Yeah. Okay.

Now, I've had owners with homes and Beachwalk and we'll lease them if they're priced right. Like, we we are leasing monsters. We have in-person agents, you know, we're we're very tech driven, but personal we we have actual people show homes, which is rare now. But we had an owner said, "Well, you know, we said, well, there's two brand new complexes in Beachwalk." And like, well, that's not comparison.

We're single family. And I said, "Well, let's just play devil's advocate for a minute. You're a family of three. Let's just say you're a family of three and you want to rent a $3,000 home in Beachwalk and you got to pay first month security deposit.

You're move, you know, moving fees, pet fees, whatever it may be. So, you're out right off the bat, let's just say $7,000, right? Same amenities, same school district, same grocery stores, or you can move to a luxury community with your family for 13 months or 14 months. Save six grand and see how the market shakes out.

Have a state-of-the-art fitness center, have a state-of-the-art pool, all these amenities. You I'm sorry, but as a as a family guy, if I can save my family six to eight grand for a year to live in an apartment complex a block over, that pays for a couple pretty nice vacations uh or other investments for my family. Why I see what happens with the market. So, people when they say, "Oh, multif family is not a competing product." I disagree.

Absolutely it is. Yeah. For that kind of savings, it's a competing product. Absolutely.

It's a competing property. And like you mentioned, the amenities are the same or better, you know, on these new construction communities. So here's the chart to summarize. Each area is definitely different around the country.

So you want to figure out what's going on in your market. So this is the occupancy right now. So it fell from 94.5% nationally down to 90 to 92%. Blakeley almost exactly what you said.

Vacancy 10 is up to 10 to 13%, you know, up from 6 to 7%. So, you know, 10% to 13% of their units are not currently filled and they have to fill them. That's why they're giving those, you know, three months free rent, two months free rent. Hey, walk in.

New deliveries, pipeline change, you know, the start the starts are down and obviously asking rents are starting to decrease because this the owners are finally starting to realize that the market is actually different than it was just a few years ago. One of the things, Blakeley, that we talk about a lot is this affordability crisis and opportunity cost. So, if you're going to go out there and buy a home in 2025, it costs, according to the data, 43% more than renting. Are you seeing an increase in the number of people who want to rent because they can't buy?

Well, I mean, absolutely. Uh I just uh I rented a home in a neighborhood by Palencia, Kensington, and they, you know, they rented the house, and they said, you know, this house would have cost me $800 more a month to buy and to rent. Would the owner be interested in, you know, selling this? I'm the owner of that house, so no.

But yeah, we definitely are seeing that. For us, it's really just an inventory. It's an inventory problem right now. And I I've been here before.

I went through this before. Um because we've been in business 21 years, so I've seen this before. It's like patterns definitely repeat yourself. Although there's different reasons this time, but but we've been we've been here we've been here before.

Yeah. And there's things that are actually worse this time around than last time. So last time, right, you had mentioned the strippers buying three houses and things like that. Now we have occupancy fraud, which the Fed has come out and basically said that 33% of people who purchased properties from 2020 to 2023, 33% of them said that they were going to occupy it as a primary and they didn't.

They turned it into a rental. Do you believe that? That number sounds right to you? Oh yeah, absolutely.

Absolutely. I I mean, even now we get owners who call us upset because they're being notified by the county that they've lost their homestead. Really? How does the county find out about that?

No clue. No clue. Interesting. Reports them or I know that uh some of the some of the counties in Northeast Florida, I know that in St.

John's County at one point in time, like 65% of all Airbnbs were unregistered. Wow. And they they deployed a software that scraped a lot of the you know, vacation rental listing websites to catch people and put them in compliance. But is it wouldn't be hard for the county to implement some type of a software program that literally just scrapes Zillow and if they see it for rent, they're like, "Okay, this owner is not living there anymore, right?" So, they lose their homestead.

Yeah. And and the problem is when people are these are rental properties, they're more likely to walk away from them in the case of a decline than if it was a primary home, right? Because people have to have a place to live, but they don't have to have a rental. So, this is just like the risk is way higher than it's being let on.

And that's on top of all the FHA and VA foreclosures that didn't happen over the last four years. There's a huge backlog over 15% delinquency that are coming to the market by the end of this year starting to trickle into the market. Foreclosures are starting to triple and then triple again from there from the from what we had previously just because we have all of this backlog of foreclosures that need to be processed through. And then you if you think about VA and FHA, you know, it's only 3.5% down for FHA and 0% down for VA.

So, if they're underwater, if they bought in the last 2 to 3 years, and those, you know, that inventory will come onto the market or they'll try to rent these things, right, to to catch up on their payments if they can on the Oh, go ahead, Blake. You got something? If it's bad, if it's bad enough, I mean, I know owners that, you know, their mortgage payment is 3,600 bucks and they can go two doors down on the exact same floor plan and rent it for 29. Yeah.

So, are the are the tenants renegotiating all their leases when they renew? The smart ones are. Yeah, the smart ones are. We literally got an email on Friday of last week.

See, I'm proactive. We try and be proactive with owners and we're like, listen, we're not going to just try and give away owners money. Obviously, we every time a renewal is up, we we run a CMA. We run every single listing is personal.

We don't want to leave money on the table for the owners. We do a new CMA. None of them are coming back at what they rented for, you know, a year or two, a year or two ago. So, our suggestion in that case to the owner is that if you're going to raise it, raise it very incrementally.

We're talking 25 bucks, right? Because some of these comps that are coming back are 2 250 less, correct? Um, but you know, we got an email last week from a from a a tenant who literally just scrolled Zillow and found, you know, two or three homes in like a five block area of her uh Silverleaf community and said, "Hey, all these all these new ones are renting for this price and they're offering these incentives. Y can you guys, you know, keep my rent the same or drop it 100 bucks, whatever it was." So yeah, we're we're definitely seeing that.

Ouch, that definitely hurts. And here's another thing on the opportunity cost is the here's the payment, right? So this is the payment tracker for the period of time. So you can see that the payment went all the way from like 1,500, you know, back in '08.

Like now it's $2,800 a month. This is why I'm saying it's worse. Like the payments are just crazy. I mean, yes, we had in uh inflation and the Fed printed, you know, 30% of plus of the money supply over this period, but it's such an unsustainable amount because the wages haven't kept up and now the population is in debt.

So, I mean, Blakeley, when you're seeing these tenants come through, is the credit quality like perfect, they have tons of cash to put down, or are they cashstrapped and they are loaded up with debt? What does that look like? Uh, no. I mean, we're we're pretty stringent with our qualifications.

I mean, that's one of the keys to our success is, you know, I've always joke with my owners, one of the toughest jobs, just finding a good tenant. But we turned down, we're turning down a lot more applications. Yeah. More denial.

We're not meeting the criteria. We even have, you know, talked to, you know, our council about actually um dropping that income requirement to two and a half times to just to make it work. Try and get more people more which was that was the norm between 2008 and 2012 roughly was two and a half times uh the income but it slowly crept up that there's no set amount through through you know through every company but three times has been you know pretty much industry norm when you factor in their debt service and stuff like that but we we've talked about actually lowering it to to fill units to fill units wow so yeah monthly payments 90% increase in 5 years. So again, you can see even just 2020, 1,500 down to up to 2,800.

So this is just another way of looking at the same data, which is mind-boggling. So there's something called the 28% rule. So the rent the the amount of payment to purchase a property, the the payment that you must pay is going to be 28% of your income. Okay?

So this you can see the formula there. Estimated medium median US house purchase by the median buyer front-end ratio. So, it should be, according to the 28% rule, a payment of $2,19. Now, it's $2,860 because we saw the interest rates move up.

So, we would need to see a drop on the payment side of $841 to match this 28% rule, right? You you don't want to be spending your entire income on your rent or on your payment. And so, this is something that we see out there. This is for payment.

This isn't for rent, but it's a really good indicator that hey, homes are overpriced and rents it's it's cheaper to rent and so a lot of people are going to prefer to rent than to buy at this point in the market cycle. So, what are tenants doing? We just talked about that renegotiating their leases. They're asking for free months rent, which is which is crazy to me.

Are your owners okay with giving up, you know, these mom and pops like one to three months free rent to get I've always I've always viewed free rent as a gimmick. Okay. Okay. People want cheaper rent.

So, if you're going to do a month free, then take it over your 12-month lease or your 13-month lease and just lower the monthly rent payment. That's effectively what we're doing. But, you know, just even I think outside of taxes and insurance, the biggest expense for real estate investors is vacancy. Yeah.

So if you have to, you know, drop your rent, you know, obviously get a good CMA you whether it's your realtor or your property manager or you just do your own stuff on like rental meter, for example, is a free site rental meter to do comps. Just do your own comps. But if it, you know, if it cost you 100 bucks to keep that tenant in place, man, that's a lot cheaper than a turn cost and two months or three months of vacancy. You know, we're doing everything we can to keep tenants in place.

Love it. So the power is with the tenants now and we think that will level off over time. So what are you doing differently to help landlords in this market versus the prior market that was super hot? What is like if you had to think of one thing that you do differently?

We're being brut brutally honest with them first and foremost. Like this is the comp, this is the price. Well, I want $400 more a month. Okay.

Well, there's a house five doors down that's three years newer with new floor and new paint. What makes your house? We're just educating these owners. Okay.

Yeah. And we're also being very aggressive. So, a lot of companies have gone away from Inerson showings. I'm all about AI.

I'm all about technology, but I do think the differentiator moving forward. I think the John and the Blakers are going to get sick of all the AI and all the companies are going to start sounding alike each other. And I think you're going to need that personal h hand touch and personal service. So, we have high technology, but we also have local live inerson agents.

So, what we're doing differently is we're educating owners on the market and let's be aggressive. You know, we have a very se if you're not getting, you know, at least five to six leads a week, you're price too high. It's I mean, it's similar to real estate. It's the common sense, but the sellers just don't seem to capitulate as fast as you would think because is it just like they have a mental block?

They just can't believe it or they don't trust you or what is it? They're just scared. That's part of it. And then you jump on jump on Zillow and look at some of the photos.

I mean, it's your house. When you're renting your house, it's almost like a dating profile, right? First impression. You got to get them to to click.

You got to get them to inquire. You got to get them to tour. You got to, you know, we're doing video tours and 3D tours and in inerson showings. You're being aggressive.

Do the fresh paint. Make sure the carpets are clean. Throw some fresh mulch down. Give it some curb appeal.

You want that house to stand out, but be aggressive on pricing. You know, we I listed a home in in an area by, you know, that we're familiar with called Kensington by Palencia. Yep. And it was my own personal home and I I my my stuff was handled just like all of our investor stuff.

And I told my leasing team, $100 a week reduction until it's leased and at least in 21 days. Per week. Think. Yeah.

Wow. You know, wow. But again, if you do the math on the on the vacancy cost, right, owners, they they they want to pound you over that extra $200 a month. And I understand it's a lot of money, right?

But if you sit empty on the on that property for five weeks, your $200 a month is gone. Yeah. So, let's get it leased. Let's get them in there right away and then, you know, keep them happy.

And and a lot of a lot not to go down a bunny trail, but a lot of uh we have a 72% renewal rate, but there's two reasons for non-renewals, not with us, but with most companies, and that's obviously relocation, either upsizing, downsizing, family, job relocated, whatever. And then the the number two reason for for non-renewal is whether it's an individual owner or or a property manager is lack of repair. Wow. So, while you're trying to get three bids for your AC and your tenants cooking in 90° heat for 10 days with two small kids, right?

Think they're going to renew their lease with you, right? Just fix the AC. So, keep them happy. Keep your existing tenants happy.

Happy. Yeah. Treat them treat them like royalty. And that's been the opposite of the mentality of most people over the last few years.

So, I'm I'm happy to see the tenants get their power back. But, if you own real estate right now, what should you do? Should you if you have a investment property and you're looking at the numbers, what should you do? I'll tell you briefly what I did, you know what I did with my portfolio and so let me actually go back here real quick.

Tony, just cut that part out. So, if you own real estate and you're an investor, what should you do, Blakeley? Are should you try to sell it or should you just keep the tenant in place and ride it out? I mean, at this point, I wouldn't I wouldn't sell it.

I wouldn't sell it. Uh I wouldn't keep the tenant in place. I mean, if you're going to sell the property, I mean, you could be out with your with, you know, with your sales commissions, with your turn cost, prep cost, vacancy. You may be out 20, 30 grand.

It may be more financially advantageous for you to take that $200 or $300 loss for 3 years, you know, and let things calm down and the market kind of clean up a little bit and then sell it. Yeah, absolutely. And I actually have an investment model if you guys want to look at that. And so, what's the issue you run across when trying to sell your rentals if they haven't?

All right. So, we already dealt with that, so I'll uh Tony, take that part out as well. We can skip this one. Okay.

So, Blakeley, this is really interesting, right? Because we've seen taxes go up, right? Non- primary homes, no homestead. Insurance has gone up 70% in the last 5 years.

The repair costs have skyrocketed to get roughly repair cost. 30% on the repair cost. Yeah. Even to get somebody to go to your house, they charge you like $200 just to drive a mile down the street.

It's outrageous. The big misconception here is that so when COVID hit all the vendors and I love our vendors but let's talk about AC, plumbing, electrical, they all use COVID and supply as the reason to raise their rates 25 or 30%. Right? But when everything went back to normal, do you think those rates came back down?

Absolutely not. You know, and we get these owners who are like, well, I want two quotes. I want three quotes. We don't do that.

We have what we consider the best vendors in the market. And if a vendor, an AC vendor, a plumbing vendor, is driving around to seven or eight properties a day just doing quotes, labor, insurance, gas, vehicle lease, etc., they make no money. The days of the free quotes are almost gone. That's right.

Yeah. The service call fees are sometimes more expensive than the actual fix itself, which is wild. And I agree. And I agree with the vendors, by the way.

Yeah. Like because they get quoted to death with no jobs and they're going to be out of business pretty quickly. Yeah. You can't run around without any income coming in.

So this is an interesting thing. So investor purchases are down 62.8% from the peak. So this is tracked by Redfin. So this is from Q2 of 2021 to Q1 2025.

Housing markets with biggest drop in investor purchases. Jacksonville part. I mean so obviously we're seeing rents coming down. The property prices have come up you know more than 50% in just a few years.

So, the numbers no longer make sense on paper, especially when we just talked about, you know, taxes, insurance, repairs, all this stuff. It doesn't make sense to own a property if you didn't lock in your low rate or you bought, you know, in the last two to three years. They're underwater significantly. Blakeley, you're mentioning up to $800 a month in some situations that people are losing, you know, by having it rented out.

And obviously, if they're hiring a professional property manager, too, they're paying paying out there, too. It's it's brutal out there. Actually, I'm surprised it's not down more than 62.8%. Because I'm also seeing issues with Airbnbs, right?

Airbnbs are starting to hit vacant. Everybody thought it was sexy on Instagram to go have an Airbnb and manage it from home. It's something they could do from home and now they're paying the price from buying, you know, at these crazy prices. So, Blakeley, leave us this with with this.

What's the advice for single family rental owners today? What should they do because of the market deteriorating and you know potentially deteriorating a lot more into the future as well as we see this pipeline of multif family come on the market I think that they have to obviously treat the tenants like gold offer some kind of a move incentive be more pet friendly we get so many owners and they're like I don't want more pets in my house why respectfully I'm I'm a dad right and when my son was three he did a lot more damage than a chihuahua would do right so you know be more open to and then we have owner who say, "I don't want roommates." You have to be more open and more flexible. I tell people all the time regarding the pets. 80% of American homes have a pet.

Wow. So, you're literally going to take 80% of the market eyes off of your property by not allowing pets. That that's bonkers to me. Making sure that you follow, you know, whether you're doing it yourself or you're working with a professional company, follow the advice.

If they're telling you it needs fresh paint, if they're telling you some saw needs replaced, if they're telling you it needs new mulch, they're telling you the driveway needs pressure washed, you may think, "Oh, I can't afford the $800." But two weeks or a week and a half of vacancy would would have other than that. Yeah. Would have would have covered that. So, get your property in good shape.

Doesn't need to be brand new or perfect, but some people want to people want to feel proud of what they rent. That's their home. They're going to be raising their kids in there. They're going to be celebrating birthdays and anniversaries.

They're going to have their want to have their in-laws over for barbecues. They want to be proud of where they live. So, make it presentable for them. Make it a make it a home that they're proud of.

And by the way, they'll take better care of it. Amen. That's really good advice. So, I'll tell you Blakeley why I sold my rentals, right?

So, I had over 200 plus units, multif family and single family properties, and I underwrote every individual property. So, I think every property is different. It's unique in terms of its age, its condition, its location, everything like that. But the one thing in common with all of my properties that I sold between 2022 and 2024 once I saw the Fed was raising rates in 20 in March 2022 that spooked me and I knew that when rates go up, prices come down and I saw the amount of building that was going around my community.

So I sold literally everything. The only house I have left is my primary home and you know that was my full business was was having these rentals and having all them and doing flips and stuff like that. My return on equity was guess what my return on equity was on my rentals. Blakeley 30%.

3%. I had built so much equity up in the home and the cash flow was so low because the I mean it was just it was crazy. When I talk about return on equity, it's the equity sitting in the home at the time of market value, not when of purchase. Just to be clear on that.

Yeah, that's why it's different. But 3% is not enough, right? I can go buy a treasury and get 5% no risk. So why in the world would I hold my rental if I didn't think there would be long-term appreciation in my market?

It's definitely not going to come from cash flow and things keep breaking, right? Like one AC unit broken would erase the cash flow for the entire year or one turn for the year would erase all the cash flow. It wasn't worth it. So, I sold them all and I turned it into a private lending fund for agents to do fix and flips.

And that has taken off and been so much more profitable. I actually now get 15 to 20% interest on my fix and flips, which is just a phenomenal return versus doing that. So, I'm a fan of actually selling rentals. Right now you are past the peak as Blakeley said.

It's like it's like at this point you're past the peak. You're kind of locked in or else you're going to be chasing the market down for the next couple months. It might make sense to hold on if it cash flows and it makes sense um and it's in pretty good condition. Estimate the repairs, right?

Going into the future, estimate in the area like how much new construction is around me that's going to compete with this because not every area is going to drop 10 to 15%. Right? It's usually the areas where they're overbuilding like crazy and and the demand is is less, right? Because you look at rentals in like Neptune Beach, there's nowhere left to build.

Those are those rent right away. Those are high demand areas with people who are wealthy that will buy. So each property is completely different. If you want to send your property to either me or Blakeley, we can take a look at it.

Blakeley's got a tremendous team over there. I think you have like what 800 units under management or something like that. We just crossed a thousand. Congrats.

That's awesome. Just crossed a thousand. And uh yeah, I mean, you know, great school districts. I have a property that I'm breaking even on per month, breaking even on per month, but I'm not really.

I mean, if you factor in historical uh appreciation, you know, 3% and then the tenants paying down almost $400 of, you know, principal a month for me as well. So, you know, while I'm not putting cash in my pocket every month, you know, it is it is uh it is definitely uh you know, adding value. Yeah, absolutely. So, if you want to underwrite the deal, I have a underwriting model.

I can send it to you if you comment and you email me. My email's down in the description of the video. Let me know. Subscribe to my Substack and I'll go ahead and send you a an underwriting model that you can take a look at.

I'm happy to take a look at it with you. I know Blakeley is as well. So, Blakeley, this was awesome. Thank you for today.

And and we do no sales here. We're only rental. We're only rentals 247 365. Rentals, rentals, rentals.

We live and breathe it. So, I love it. I love it. So, we do sales over here primarily like 99% of sales.

My company does about 1,800 transactions per year on the sales side. So, if you need help selling your home or if you're around the country looking for a top agent to help you, right, 80% of agents are horrible. They're just they don't know what they're doing. They sell one transaction a year.

Don't get stuck with them. If you need to get in touch with one of the top people around the country, even if you're not in Florida, let me know. I have a huge network across the country because I've been in this industry for quite some time. Blakeley, thank you.

You're a gentleman and a scholar. See you next time.