How the Rental Market Changed Fast and Caught Landlords Off Guard

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Show Summary

In this episode of the Real Estate Pros podcast, host Micah Johnson speaks with Teresa DeMark, a seasoned real estate professional, about the current dynamics of the rental market, challenges in pricing, and the importance of professional guidance in navigating real estate transactions. They discuss the impact of rising rental prices, the need for landlords to adapt to market changes, and the significance of building strong relationships in the industry. Teresa also highlights the risks of fraud in real estate and the necessity for buyers to work with professionals to protect their investments. The conversation concludes with strategies for success in a buyer’s market and the importance of understanding local market trends.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • All Real Estate, Inc’s Website
    • All Real Estate, Inc on Facebook
    • Teresa DeMark’s Phone Number: 321-799-4141

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Teresa DeMark (00:00)
  they could have reduced the rent $200, right? If it was $2,000. So bring the rent down to 18, get your rent right away, and you’re going to be fine. You’re where you need to be, not have a vacant property. And I’ve had troubles with some of my owners with that.

  Micah Johnson (00:03)
  Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I’m joined by Teresa, who’s been making serious moves in the single-family residential rental space for quite some time now. Teresa, welcome in. Glad to have you.

  Teresa DeMark (02:04)
  ⁓ Nice meeting you. Thank you for the invite.

  Micah Johnson (02:08)
  Absolutely. We’re excited to have you here. I think our listeners

  are really going to get some great information today that you have to share about paying attention to markets, how to understand your rentals, and even, you know, maybe having to swallow a hard pill every now and again when it comes to what the market does in that space. So let’s dive in on that. For people who may not know you yet, what’s your main focus right now and what markets are you active in?

  Teresa DeMark (02:33)
  focus right now is in the rental business and getting our rentals rented. We have had zero vacancies for years after years after years after years but now the rental prices have gone up and the tenants need lower rentals prices. So ⁓ the idea is to get that going so then investors will want to buy because they’re making the money that they need to make on their investments.

  Micah Johnson (02:49)
  Mm.

  Absolutely. Where are you focused? Where do you practice real estate at?

  Teresa DeMark (03:06)
  I practice real estate in Brevard County, the Space Coast area, and ⁓ we do Central Florida. I do have a license over in Tampa, at the Greater Tampa Bay Border Realtors. So we are trying to focus across ⁓ Central Florida, but our main focus is here in Brevard.

  Micah Johnson (03:27)
  Awesome, excellent. So based on our pre-call conversation, you’ve been in real estate for quite some time now. Tell us a little about your journey in the business and what brought you to where you are today.

  Teresa DeMark (03:38)
  What brought me here today was at the age 26, I wanted to invest in my first property. And I did. At age 26, I invested in property and then less than a year and a half, I made a ton of money on that investment. And I knew then that real estate was where I was going to make money, but that’s not the career I was in, obviously, at age 26. I was selling. But I got my license in Pennsylvania ⁓ and I had it in escrow as I moved to Florida.

  So I had a license in Pennsylvania for five years and then I came down here and I was trying to figure that out today, but I know it’s over 32 years here in Florida.

  Micah Johnson (04:19)
  Okay. Well, you’re officially a local then. I’m born and raised in Florida, been here my whole life. And when you get over 30 years, you’re a local now. So welcome in. We’re glad you’re here.

  Teresa DeMark (04:27)
  Yes.

  Thank you. Thank you. And I love Florida. I’m not going back to Pennsylvania. ⁓

  Micah Johnson (04:32)
  So, me too, me

  too. You’d have to take me out of this state kicking and screaming, that’s for sure. It’s where I’m gonna be. And my family’s been here, I don’t know, 150, 200 years now. We’re of the state of Florida. So, okay, let’s talk about…

  Teresa DeMark (04:40)
  Yes, exactly.

  Yes.

  Micah Johnson (04:54)
  What you’re noticing in that rental market, you touched on a little bit right there at the intro, but what are you noticing most in the market right now and what challenges are y’all paying attention to?

  Teresa DeMark (05:53)
  That’s a big question. Low income rentals seem to be fine. We can rent them quick and they’re gone almost the day that we list them. The higher and the mid-size with the 2000 and above, they’re just slower. And the owners need to look at really what

  is going on the market. do send out comps comparative market analysis of those rentals but they want to cover their expenses of the new association fees that have gone up. They want to cover their insurance and then they want to cover the new taxes that have gone up. The problem is that those rents those rentals are not turning over as quick as possible. They usually were gone all of the rentals were gone. This is a new market because

  people bought a little bit too high and then they want their rate of return and that’s not happening.

  Micah Johnson (06:49)
  Yeah, I can see that for sure. I’ve noticed that my own market as well, that it’s been a educational phase for sure, especially for landlords. And especially if you got into a deal pretty skinny, because that’s something I don’t think a lot of folks think about is, especially if you buy a house inside an association, those fees go up, those are not fixed. You and you never know when it’s going to happen. It can just it happened in my neighborhood.

  Teresa DeMark (07:12)
  Exactly.

  Micah Johnson (07:16)
  Two years ago, all of a sudden it was just $75 more. Nothing changed, we got nothing extra for it, it was just $75 more. And every dollar goes into your profit margin. Every little piece can pop. And then you mentioned insurance. Insurance gone crazy in Florida.

  Teresa DeMark (07:33)
  Exactly and a lot of people are getting out of the market and trying to sell so we do have a little bit of a flood of houses too and you know supply and demand has always been an issue on your pricing so we have a lot of supply the prices need to come down and that’s not happening so a lot of property is sitting on the market right

  Micah Johnson (07:42)
  you know, which is fine.

  That’s what we’ve noticed here too. it’s, when I was first getting into real estate, they described it as the gap where you’re in a period where we went from 20 to 2022, 2023, everything was on the way up. Prices were rising, rents were rising, appreciation was happening like crazy. And it kind of creates this idea in your mind of what something’s worth and worth is market-based. is completely market-based. So fallen in love with a price or.

  Teresa DeMark (08:19)
  Exactly.

  Micah Johnson (08:24)
  Even worse, you could probably talk to this with the investors you work with, penciling in deals that don’t work and just trying to make it work, right? Getting into something just because I got to buy something is not the move you want to make in a market like this. It can get you upside down quick.

  Teresa DeMark (08:41)
  Yes, yes. And I have been listening to a lot of podcasts here in our area and they said with the interest rates, the interest rates are going to be basically what at 6.25 maybe they might come down but that’s going to be the average next year or this year I should say this year and we’re in the new year. And with that in mind,

  Micah Johnson (09:01)
  Yeah, we got here.

  Teresa DeMark (09:06)
  If nothing’s selling, what do you have to do? You do have to come down on your list price. Unfortunately, that is, or you’re not going to sell because the prices that we had at 2 % and 3 % were actually lower. And that’s what really graduated up us to these high prices. Now we have to come back down a little, but it’s teaching our sellers and our landlords that pricing needs still come down a little.

  for the market to start moving again.

  Micah Johnson (09:37)
  For sure. And it won’t be forever. It’ll get to go back up, right? It’s always worked that way. It’s being adaptable in the market. And I think a lot of people get stuck there where they’ve been doing it a certain way and it’s quote unquote work for so long. And then all of a sudden the market cycle does what it does. And you got to go into this moment thing. Okay, what do I do next? And that’s where having someone like yourself alongside with you

  Teresa DeMark (09:39)
  No. Yep, it always goes back up.

  Micah Johnson (10:38)
  really a key to success in my opinion.

  Teresa DeMark (10:40)
  Yes, yes, yes. ⁓ We service ⁓ our landlords, because we’re not the landlord, we’re the management company. We try to educate them, but sometimes they’ve been in the business so long, they think they know better than us professionals out there. And that’s a little bit of a problem, but we try to overcome that. And right now, like I said, we’ve got probably the highest amount of rentals, but it’s only seven that we want to get done.

  So we can say, okay, they’ve been rented and now that’ll help build the market values up. We need to get these rentals rented.

  Micah Johnson (11:19)
  get them back out there, get them as comps again, and not just as ⁓ days on market ticking away. Cause that’s one of the, that’s one of the number one killers of just perception about a property is you look at that days on market and the higher it gets, there’s only one thing people think what’s wrong with it. What’s why is nobody renting it? And that is, it’s funny. I’ve seen people throughout my career lose more money by waiting than if they would have just went down to begin with.

  Teresa DeMark (11:25)
  I’ll this food.

  Right.

  Micah Johnson (11:48)
  because of that perception where it’s like, I’m going to hold on and hold on. Yeah. And then they

  Teresa DeMark (11:48)
  Right. After a month, After a month,

  they could have reduced the rent $200, right? If it was $2,000. So bring the rent down to 18, get your rent right away, and you’re going to be fine. You’re where you need to be, not have a vacant property. And I’ve had troubles with some of my owners with that.

  Micah Johnson (11:57)
  Right.

  You

  Exactly.

  Teresa DeMark (12:12)
  My owners love me and they do respect me. I’ve had some of my owners for almost 30 years.

  Micah Johnson (12:19)
  ⁓ and that’s everything in this business. Real estate is a relationship business. And if you do it well, people stick. They stick with you. One of the things I love about real estate is it has the oldest written code of ethics in America, the longest one that we have. We’ve been doing this a long time and it shows that if you will show up each day and do the right thing, show up for your customers, show up for your clients, tell them what’s actually happening.

  Teresa DeMark (12:28)
  Yes.

  Micah Johnson (12:49)
  Don’t get commission breath. Don’t worry about the part at the end actually serve. You have way more sales, way more closing. Everything changes for you. And what it really does is create that word of mouth experience.

  Teresa DeMark (13:03)
  Exactly and I mentioned earlier about being the boutique shop we are small but we are thorough and we are full of integrity. We want to tell it the way it is they may not like to hear it the way it is but we know what makes success so ⁓ we’re here to help them guide them on their way from start to finish whether it means you need to paint

  Micah Johnson (13:24)
  Right.

  Teresa DeMark (13:31)
  Whether you need to do this, sometimes you have to spend a little money to make money. We’re here to help them through that. We have lot of vendors to deal with too to help them through a lot of that process.

  Micah Johnson (13:43)
  And that’s key to knowing who to call, who, when whatever you need is needs taken care of. It’s having the right person in your tool belt. I say a lot. If the problem you have can be solved by a phone call, you don’t have a problem, right? What you have is a solution and take action on that. And the better those relationships are by just practicing good business, it makes it where people answer your calls. The work gets done faster. And that’s where folks like you in the business that manage properties for landlords,

  Teresa DeMark (13:55)
  Exactly.

  Micah Johnson (14:12)
  something they need to take account in is not just are they taking this off my plate so I don’t get the phone call in middle of the night but are they actually serving me are they helping my business grow in a way where it’s not just turning the light off you know not I don’t want to worry about it anymore they’re just taking care of it so that’s a powerful way to do it.

  Teresa DeMark (14:28)
  Great.

  Micah Johnson (14:33)
  What else have you noticed in the industry right now? You were mentioning earlier there’s a little bit of fraud issues that you’ve been dealing with. What would you say to folks right now to really pay attention to that are out there looking at properties?

  Teresa DeMark (14:45)
  think those for sale by owners better watch themselves very, very, very carefully. We do this day in and day out and we can almost smell it. ⁓ We got two emails today. One wanted us to link on something, even link it on somebody’s email because they have some questions.

  We want them to come to us. We know what questions to ask and what to look at.

  So we have to take them back. had somebody trying to list their property with us, supposedly, on the waterfront here in Merritt Island on the Banana River. And they wanted it listed right away. They’re out of town. The urgency is kind of there. They said we need ID. We looked up the tax record. The ID seemed to look like it was the property.

  looked a little bit closer, got on the division of licenses and it wasn’t called. We noticed that there was something going on with an agent that had already listed it, put money, advertising signs, had offers, went through everything. But we, being little, we noted slow down and look at everything very closely. And some, when we got a hold of the agent, she said, we got to hold the owners and

  The owners are not selling, they’re gonna be building on that property in a couple weeks.

  Micah Johnson (16:55)
  Wow. So paying attention to someone selling something they don’t even have. It reminds me, I put a contract or property under contract in North Carolina where that turned out to be the case. It was not the owner that was listening it or that was selling it for what we were getting it for. And it’s, I think it’s something everybody needs to take that extra step to look at and not be in a rush, especially in this kind of market. It was always funny to me how

  Even in my early in my career, I felt in a hurry all the time. And then I realized there’s absolutely nothing I can do to speed up a real estate transaction. Nothing like everybody’s got their own little part to do. And me running around freaking out is not helping. Let the professionals do their part. Let it take place. Because again, a bad deal is way worse than no deal. Right. Like don’t put yourself in that situation.

  Teresa DeMark (17:45)
  Yes, exactly.

  And guess who it’s gonna maybe hurt more than the seller is the buyer. The buyer’s gonna have to put a deposit down and then the fraud people will take the deposit. That’s all they want is that deposit. And if they’re dealing with a for sale by owner, is it really the owner? Is it really the person that they’re supposed to be dealing with? That’s what us professionals are there for. To really protect them.

  We have airs and emission insurance. There’s so many things that we can help buyers out with. So to bring it back home, same with investors, like you said, that was with an investor that you had not ⁓ somebody just trying to buy residential. You’re trying to buy residential. That’s your last $5,000 or $10,000 to buy a piece of property. That’s crazy to lose it to not dealing with a professional.

  Micah Johnson (18:26)
  Yeah.

  It is, it is. it’s the issues. You can’t get it back. It’s one of the worst frauds I saw was early in when, whenever people were copying title companies emails and they were sending this extra email with a link that you would deposit money into an account that wasn’t the title companies. think it was 320,000. I watched somebody lose a girl in my office, newer realtor.

  Teresa DeMark (18:43)
  Mm-mm. It’s gone.

  Mm-hmm.

  Micah Johnson (19:05)
  unfortunately didn’t catch it. And it was just like, holy cow, you don’t get this back. And that was a large real estate brokerage. Like you’re mentioning, you can kind of get lost in the shuffle a little bit in those bigger ones. So that that ability to be boutique and control your own destiny more or less to say, okay, this is how we’re going to do it. This is what we’re going to look for. The amount of protection that provides to your buyers, your sellers, your investors. That’s exactly what you’re there

  Teresa DeMark (19:33)
  Exactly, One day at a time, one step at a time, going through the proper steps of doing comprehensive marketing analysis and making sure that you really know what you’re buying. ⁓ Have a closing tomorrow and this is the first time I heard this and maybe you might have heard this. The bank just came back and said

  and it’s a big investment company like the, like I want to say like the Morrow Lynch’s of the world said that market’s going to be going down and I’m saying, what are you talking about? You haven’t even looked at the cops. They’re more worried about their portfolio and they’re looking at the big picture because they’re using a big bank and not a local lender. And I’m sure you could talk about that. We could talk, I would love to come back and talk about sales in general one day over the rentals, but the…

  They don’t have a clue what’s going on. And for them to say that and get more money from the buyer, now we’re talking 650,000. So that’s like, okay, do you really know what you’re talking about? Do you see the townhouses in that area and what they’re really going for? And they’re going, the market’s gonna go down. Yes, the market is gonna go down. That’s in the news, right? I mean, it’s everywhere. It’s gonna go down a little. But does that mean…

  Micah Johnson (20:32)
  And that

  Yeah.

  Teresa DeMark (20:55)
  It’s going to go down and you mentioned this. Is that going to go down in the next two years? Are they going to keep the property for three years? It could be back up again. Right?

  Micah Johnson (21:04)
  Right. And

  that’s where real estate, it’s so segmented. We hear the national real estate statistics. They’re not that useful, in my opinion. They’re not painting a picture. Real estate is a market by market, city by city endeavor. And that’s why you have to study it yourself. Know what you’re getting into. Build teams with people that know what’s going on there. Like you’re talking about, find that local lender. Find the local realtor.

  Teresa DeMark (21:13)
  No.

  Micah Johnson (21:34)
  Find the people that are there and know what’s going on. Even if you’re fixing flipping, find those local workers that know where to get stuff from, how to get it, making sure that every way you can to keep your costs down to be a successful investor, you’re utilizing that tool.

  Teresa DeMark (21:52)
  Exactly,

  Micah Johnson (21:58)
  Let me ask you this, for listeners who are earlier in their career, because who’s primarily listening? We got investors in all stages of the process. What’s made the biggest difference for you when it comes to building relationships and growing your network in the business?

  Teresa DeMark (22:13)
  ⁓ I’m not like the big CalWall bankers and ERA and all the what builds businesses building relationships and that is so important because you want you know the buyer to feel comfortable and know that you’re full of integrity so he could bring his children to you so those children

  can whether they’re investing or buying they know what they’re looking at and what where they’re going to make money and then they’re going to come back and buy from you again because they made money. ⁓ They can get caught up a little bit in the deals like you’re talking about like it’s better over here it’s better over here but you being up in St. Augustine and here in Cocoa Beach we have some of the lowest real estate prices in all of Florida right now.

  Micah Johnson (23:07)
  Okay.

  Teresa DeMark (23:08)
  We always have been lower than most of Florida and that has never changed because we’re so small and boutique-ish. Yes, we’re getting the million dollars and the two million dollar properties that are buying out the little properties and the growth is happening. But we’ll never go down in value. We’ve never gone really down in value. This is just a hiccup right now. But overall, prices go up.

  Micah Johnson (23:16)
  Mm-hmm.

  Teresa DeMark (23:35)
  And people go, I’ll come back next year and I’ll be cheaper. I’m going, no, I’ve never seen that really happen. Maybe, you know, it might come down 20 or 50,000, but a million dollar property is not going to go down in value.

  Micah Johnson (23:49)
  Like how much do you think it’s going to go down? And the biggest difference right now is money’s more expensive. What’s driving up people’s monthly payments on their mortgage is it just costs you way more to have a $200,000 house than it used to. And that’s what knocks that value down is it’s more done by a different mechanism than by the market actually quote unquote shrinking or going down. It’s understanding what’s pushing and pulling on it.

  Teresa DeMark (23:55)
  Yes.

  Micah Johnson (24:16)
  So that excuse me, so that you can pull the right levers in your own life and business, whether that’s buying personally or buying as an investment. Because because you’re right, I can’t. There’s all those we call it that that guy. Nobody wants excuse me. Nobody wants to be that guy. That one that said, well, I’ll come back then and I’ll come back then. And so many people are and they realize, my God, I could have bought the same house. Yeah, yeah, exactly.

  Teresa DeMark (24:21)
  Right.

  I should have bought it last year exactly. It’s a buyer’s

  market. It really is a buyer’s market right now. It really is. And that little thing is going to come and then people are going to go, ⁓ I missed it. I missed it. I mean, where else can you get, and I got an example because I have a listing, where else can you get a canal home with five bedrooms and a lift and a pool and a hot tub and a grill, outside grill with natural gas.

  Micah Johnson (24:46)
  It is. It is. In Notorious City.

  Teresa DeMark (25:07)
  and a generator in all hurricane proof ready in the 600s. Where can you get that? Now.

  Micah Johnson (25:12)
  Right?

  Not many places.

  Not many places. And that’s it. That is one cool thing about Cocoa Beach is that whole area is unique to itself. The space coast is a cool little section of Florida. And most people forget about it because it’s either North Florida or you get down to South Florida or Tampa. Right. that. Right. Crazy. And you’re looking in Tampa right now where so many properties got built over the last couple of years where they’re really in a buyer’s market over there. And.

  Teresa DeMark (25:31)
  Look at the prices in South Florida.

  Micah Johnson (25:45)
  What would you say to someone to take advantage of that buyer’s market? What’s the mindset you would need right now to make sure you’re out there getting good deals?

  Teresa DeMark (25:54)
  again, find somebody that knows the market like you said and get those comprehensive market analysis done and do a thorough investigation of that whole market. Now, if you ask me for a waterfront home, I’m gonna give you all the waterfront homes. Don’t just be steered. The new market, we could get into that another day the way that this… ⁓

  Micah Johnson (26:03)
  And. ⁓

  and

  Teresa DeMark (26:20)
  the sellers don’t have to pay the commission and all that. I actually believe for a fact that steering has almost become more possible now than it was before because of the commission thing. So if the seller’s not gonna give the commission, you could lose that showing by not meeting the commission because that other agent’s still gonna go where the commission is at.

  Micah Johnson (26:31)
  Wow. Wow.

  Exactly. And that’s 100 % true in the realtor world. No one ever liked talking about it. But if you’re going to discount your commission or not give it, your house is not going to get shown. Everybody was upset about the 6 % and how it was quote unquote like the staple. However, it just was the place where people agreed like, okay, this is worth the work. This is worth that. And it kept people going. Like you said, it is one of the unspoken rules and it’s rough.

  Teresa DeMark (26:58)
  No.

  Micah Johnson (27:16)
  because that’s one of the biggest parts of being a realtor in the ethics is not steering, is really truly trying to exactly show them what’s truly available so they can make a decision for themselves. Now, that’s powerful. Okay, before we wrap up here, if someone wanted to reach out to you, and connect with you, talk about business, real estate, and the area that you’re in, what’s the best way for them to find you?

  Teresa DeMark (27:21)
  not steering. Give them all the properties that are out there and their prices.

  Yes.

  www.areproperties.com is our website and you can call our direct number which is 321 the countdown 799-4141

  Micah Johnson (27:54)
  Excellent. Thank you so much. And we’ll make sure that that link and their numbers in the show notes for you, if you want to reach out. Teresa, thanks so much for joining me today. I’ve had a pleasure speaking with you. I think we need more people in the space like yourself that are just doing it the right way, taking that extra time and step to make sure your customers are served. I love that. So for those of you tuning in, if you got value from today’s episode, please like the episode, subscribe to our podcast.

  Teresa DeMark (28:03)
  Thank you.

  Micah Johnson (28:20)
  We have more operators just like Teresa coming up on future episodes that are out there doing it right. Thank you so much. We’ll see you on the next episode.

  Teresa DeMark (28:27)
  Thank you.