Rental rates on Long Island may be in free fall mode. How can owners save their investment property and finances?
The Property Market Has Peaked
Barring a stock market collapse or return to subprime lending which could extend the recent bull run in the real estate market, the data seems to show that we’ve already passed the new peak, and a correction is in play.
The average home price in The Hamptons recently fell below $1M. Landlords and owners of businesses in Manhattan have reportedly been struggling, and more vacancies are happening in New York’s commercial property market. Following the lead in San Francisco, Zillow now reports that rental rates have already been declining across Long Island as well.
At the same time inflation and taxes have been going up. Real estate investment may continue to be very important, but if you’ve bought high, you need to act now to protect your financial future. Specifically, that means reducing unnecessary costs, improving cash flow and building in sustainability. So, how do you do that?
With interest rates still low, but expected to rise for the foreseeable future, it’s a smart time to restructure financing on investment properties. Watch out for balloons and higher rates on maturities, adjustable rate loans, and lines of credit that can be cut off in a crunch. Look for long term fixed rates for more flexibility.
Check out smart home technology and energy efficient options for identifying and reducing waste and lowering overall utility bills and maintenance.
When rents are going up landlords like short leases so they can constantly raise the rent. With the market headed the other direction, it may be time to lock in longer leases with good tenants who will stay. Reduced turnover will also reduce expenses and keep up returns and asset value.
Insurance may be a necessary evil, but that doesn’t mean you should just blindly shell out premiums every year. Check your coverage and make sure your equity is fully insured. Then look for discounts. That could be multi-policy discounts, or discounts for installing storm proofing and security systems.
High and rising property taxes are one of the biggest threats to Long Island property owners today. Left unchecked they can quickly eat up any positive cash flow you should be receiving. Beat this by consistently challenging your property tax assessment and bills. This is especially important when rents and property values may be declining and you should be eligible for lower bills.