Tuesday, December 09, 2008


The Shadow Market

The shadow market refers to condos, developments and even houses that were intended to be sold, but because of the depressed real estate market may end up being rentals instead. At this point no one knows how many units are going to get dumped on the rental market or when. That is why it is called the shadow market. It is an unknown.

If you are currently a landlord there is some reason for concern. The competition could end up being steep. Brand new condos with in-unit washer/dryers, central air, and other amenities are going to be hard to compete with. The only silver lining for landlords, not the owners, is that the unit owners need to cover all or most of their expenses to make rental work. Most of the condos that become rental will be more expensive that current rental units are. Still, the next year or two is a good time to hold your rents stable. Only give moderate increases or none at all until you have a better idea of how the economy and the shadow market will affect the rentals. Don't lose good paying tenants just to make a few extra bucks. If you don't like a tenant or they are moving anyway you could try and get a little bit higher rent, but try and keep the people you have. That is the cheapest and easiest way to move forward for the next few years.

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