[quote=livinincali]
I didn’t really say anything about rents. It’s the months of vacancy you might have to endure. Can you immediately undercut the rents of everybody else in the market and get a new tenant? Most likely you probably could. Basically the question is how long can you carry leveraged rental property without collecting the rent and how quickly are you willing to lower the rental price.[/quote]
As I said earlier, if you can’t handle the vacancy, then you shouldn’t be a landlord. If you can’t afford to lower rent, then you probably bought too high and have too low of a return. Bad time comes and go. There’s no such thing as guarantee return every year forever. There will be time when you have to deal with losses. If you take the profit you make during the good years to cover your bad years and if you have a big enough reserve, then you can weather the storm. Strong hands will benefit greatly while weak hands will fold and lose money. Just imagine if you bought a few rentals in the 90s to early 2000s, then instead of being forced to sell in 2006-2008, you buy more, because you have an abundant reserve, then you’d be even better off while renters continue to pay for your mortgage, even if you’re making less profit. Some people prefer to stay vacant waiting for their rent price, but I think most strong hands will not mind lowering the rent 5-10% to get the place rented.
