Posted 12/08/15 (Tue)
By Cecile Krimm
The days of $3,000 a month rent may be over. Landlords and property managers in Crosby last week shared their observations about the apparent bursting of Crosby’s housing bubble.
“It’s a market driven industry,” said Tony Godlewski, and renters are in the driver’s seat for the first time in at least four years.
Godlewski, developer of Crosby Flats and the Northern Lights Apartments placed the occupancy of his Crosby rentals at about 80 percent.
Though Godlewski declined to share his rates for this article, other landlords said rents have dropped 30 percent or more since the height of the boom.
Lucas Schumacher manages about 50 rental units in Crosby. He placed occupancy at about 75 percent. Rents in some of the units he manages have been cut more than half since the start of the boom.
The Crosby Investment properties, three pairs of two-story four-plexes at three locations in town are now renting for $900 per month, down from $2,100.
“There’s a huge change,” Schumacher said. “Everybody’s cut rent.”
Schumacher said even existing contracts at some properties may decline in the future because landlords don’t want to lose long time renters who came in during the higher rents of boom times.
Jeff Schultz, operator of the ASK Apartments, is now back to nearly pre-boom rates -- $600 a month for a three bedroom, including all utilities.
“I had to come way down on the rent,” he said.
Following months of fluctuation in occupancy, he now has 11 of 12 units filled.
“We had a lot of units open,” he said, but because he is trying to sell the buildings, it was better to demonstrate to prospective buyers that the property can generate income, even if it isn’t as much as during the boom.
“It’s better to get something than nothing. If you’re sitting there empty, you’re not getting anything,” he said. “I’m still trying to sell, but I’m not as anxious as I was before.”
Anxiety is understandable for landlords like Neil Benter, who decided in 2012 to open a four-plex rental next door to his home. Samson Resources took a three year contract on the units, but with the company restructuring, they did not renew the lease when it expired on Aug. 31.
“We had to reduce the rent,” he said, but he declined to share his rates except with prospective renters.
Benter will have all but one of the units filled by Jan. 1, one with a new county employee.
“That’s probably a little more long term,” he said, but two of his units remain occupied by people connected to the oil and gas industry.
Benter believes quality construction, garages and a neighborhood setting will help him keep his units filled regardless of oil activity.
Godlewski believes that’s true of his units, too.
“People who have truly invested into their property will do just fine,” he said, because a quality product will attract the traffic that remains.
“People moving in from out of state, there just are not the numbers there used to be,” said Schumacher.
“We all thought it might last a little longer,” said Benter. “Everyone told us this was going to last 20 years.”
By the same token, he won’t mind a little more stability.
“I think things will settle down,” he said.
Regardless of traffic, said Godlewski, there is a limit to how far rents can fall, particularly on new construction. The rents have to be sufficient to pay the mortgage and maintenance.
“People who maintain their prices and do the right thing, their product will drive their occupancy,” he said.
On the flip side are landlords who were looking to make a fast buck without improving or maintaining their properties.
“Those places will wither up and die,” predicts Godlewski.
The situation with rental homes is more difficult to peg. One landlord contacted last week would not speak on the record about dropping rents, fearing it could impact existing contracts with people still paying boom prices.
Another owner of multiple rental homes in Crosby, Jim Holmes, did not return calls seeking comment on the status of his properties.
Driving around Crosby, only six “For Sale” signs and three “For Rent” signs are visible on homes. What’s more noticeable are the number of older, less well-maintained homes with bare windows advertising their vacancy, regardless of any sign.