If you own rental property, you've probably noticed something different this year. Homes are sitting vacant longer, and it's not just happening here in our market in Tulsa, OK. This is a nationwide trend, and understanding what's driving it can help you make better decisions about your investment properties.
Why Vacancy Periods Are Extending
The rental market has shifted significantly from where it was just a few years ago. The primary driver is simple: people aren't moving as much anymore. When everything costs more, including the actual process of relocating, tenants are staying put longer. This might sound like good news at first, but there's a catch. While overall move-outs have declined, when a vacancy does occur, it takes considerably longer to fill.
The competition has also intensified. Remember all those apartment complexes that broke ground during the COVID-era low-interest-rate environment? They're finished now, and they're all competing for the same pool of renters. According to industry data sources, these communities are approaching full occupancy, but they've gotten there by offering aggressive concessions. We're talking about deals like 90 days of free rent. That kind of incentive makes it challenging for single-family landlords to compete on price alone.
The True Cost of Vacancy
Many landlords focus on the monthly rent they're missing when a property sits empty, but that's only part of the equation. Vacancy is expensive in ways that aren't immediately obvious.
Let's look at a real example. Say you have a property listed at $1,600 per month, and it remains vacant for 90 days. You're not just out $4,800 in rent. During those three months, you're still paying utilities, lawn care, and management fees. When you add everything up, that vacancy can easily cost you nearly $6,000.
Now compare that to reducing your asking rent by $100 per month to $1,500. Over an entire year, that reduction costs you $1,200. Put another way, it would take five full years of that lower rent to equal what you lost during just 90 days of vacancy. The math makes the decision fairly clear.
What Smart Landlords Are Doing Right Now
The most successful property owners we know are being realistic about current market conditions. They're prioritizing occupancy and cash flow over trying to achieve peak rental rates. This doesn't mean giving properties away, but it does mean being competitive and responsive to what the market is actually telling you.
Here's an important perspective shift: you can always reassess rent at renewal time. If market conditions improve in twelve months, which many forecasters are predicting, you'll have the opportunity to adjust. But you can't get back the revenue lost to extended vacancy.
Looking Ahead
There is good news on the horizon. The pipeline of new apartment construction has essentially dried up. Higher interest rates and construction costs have made new multifamily development financially unfeasible in most markets. Industry experts are predicting that this will lead to a tighter rental supply over the next year, which should create more favorable conditions for landlords.
Single-family homes continue to be an excellent investment for building long-term wealth. The key is making decisions based on current market realities rather than what worked two or three years ago.
The Biggest Mistake Landlords Make
The most common error we see is anchoring to previous rental rates. If your property last leased in 2022, 2023, or early 2024, you experienced the peak of the rental market. Those rates represented an all-time high. The market has since normalized, and holding out for those same numbers today often means watching your property sit empty month after month.
A Practical Strategy
When your property manager recommends a rent adjustment, take that advice seriously. Property managers see current market activity across dozens or hundreds of properties. They know what's leasing and what's sitting. Their recommendation isn't about lowering your income; it's about maximizing your annual return by minimizing vacancy.
The rental market moves in cycles. Right now, we're in a period where occupancy should be the priority over rent optimization. Properties that are generating income, even at slightly lower rates, are outperforming vacant properties waiting for higher rents that may not materialize.
This isn't the time to push rents higher. It's the time to keep your properties occupied and producing income. The market will give you opportunities to increase rents when conditions improve, but only if you have tenants in place to work with.
Focus on the long game. Rental property wealth is built over years and decades, not by maximizing every single month's rent check. Keep your properties leased, maintain good tenant relationships, and position yourself to benefit when the market tightens again.
We own a significant number of rental properties and we have developed a complex algorithm of what we need to do to combat these current market conditions. This involves higher level complex calculus. Here is the formula. LOWER THE RENT. Yes, it is really that simple. Lower your rents now and fight the battle next time around when the market is more in your favor. At Renters Place we are always happy to help and discuss your current rental strategy. You can find us at www.rentersplace.com
