Lee County rental market in shambles

1:10 A.M. — Between falling rent rates, the rising cost of insurance and unscrupulous tenants, Bob Wilson is having trouble breaking even on the modest houses he rents out for a living.

“I’ve been in this business for 35 years and I’ve never seen anything like this,” he said. “I’m paying more for taxes and insurance alone than for what I used to pay for principal, interest, taxes and insurance.”

Wilson is not alone. Statistics released today by Novato, Calif.-based RealFacts shows that the average rent for big apartment complexes in the third quarter dropped 7 percent from a year earlier in Cape Coral-Fort Myers — second only to 8.8 percent in Naples-Marco Island.

Meanwhile, occupancy in Cape Coral-Fort Myers also rose sharply: up 8.5 percent to 90.2 percent, the second biggest jump in the state after Ocala.

While it’s good news for those who are looking for an inexpensive place to live, the falling rents are wreaking havoc on the rental industry itself.

“This is pretty much the trend all over the country although it does seem that particular market, Lee County in general, has had a more dramatic hit in terms of rent erosion,” RealFacts CEO Sarah Bridge said. “It was $950 in 2007 and now, two years later, $826. It has definitely sustained a steady decline of rent in this market and it’s pretty much happened every quarter.”

The company tracks rents for apartment complexes of 100 units or more.

Dave Roberts, owner of Dave Roberts Realty in Fort Myers and of the FREE Apartment Finder Service, said the reason for the low rent prices is plain to see:
“You’ve got more people buying investment properties: short sales and foreclosures.”

Those investors typically rent the houses out but they’re often in for a rude surprise, he said. “The problem is you’ve got these landlords who are new to the business. They say, ‘We’re going to rent this for $925 a month, and first and last’” month’s rent required up front, he said.

“Well, God bless you, we’ll try, but it’s not likely,” he said.

The market may eventually make rental rates pick up, but this area is particularly prone to a sustained renter’s market, Bridge said, noting that besides the flood of foreclosures there’s little chance for the economy to rebound because the home-building industry dominated the area so strongly before the market crashed in early 2006.

That rebound will be awhile in coming, Roberts said, in part because this area actually lost population last year and is likely to do so again this year.

He expects rents to get a short-term lift from the tourist/part-time resident season just starting, but that the downward trend will still be in place by the second quarter of 2010.

Wilson said the prognosis is gloomy for small landlords like him.

Renters sometimes agree to rent only to “renegotiate” after a month, knowing that a landlord will have to spend up to $1,000 in court costs and attorney’s fees, he said.

Even after spending the money, Wilson said, “It takes forever to get rid of them.”

Now, he said, it looks like the rental industry will be in bad shape for the foreseeable future and he’s looking for steadier work.

“I’m looking to get a job dealing poker” at the Naples-Fort Myers Greyhound Track, he said.