For the first time in nearly two years, a search for available homes to rent in the Fallon community is yielding more than six possibilities, coming in at 18 available rentals on August 7.
For the past two years, a quick internet search of available rentals would produce a meager menu of either small, rundown possibilities that were nearly affordable or beautiful four-bedroom, two-bathroom homes for up to $2,800 per month.
This week, 17 properties are available in Fallon/Churchill County if someone wants a home to rent. But don’t get too excited if you have multiple family members. Ten of those are two-bedroom-one bathroom, and one is a 1/1; three 3/2, one 4/2, one 3/3, and one 3/1.5 are listed online and with local property managers.
Prices for the 2/1 range from $950 per month to $1,250, the 1/1 is $775, the 3/2 average $1,862, the 4/2 is $1,900, the 3/3 is $2,800, and the 3/1.5 rents for $1,800 per month.
Local landlord Garrett Diegel, who grew up in Fallon and owns several rental properties, explained that making a business case for renting homes in the Fallon market is challenging. “The rent-to-price ratio in this community is broken,” he said.
He said if a landlord can cash-flow $200 to $300 per month, that’s as good as they can do. “The goal in this business is to make $100 per door for an apartment and $200 per home, and if you can make 10% on your money, that would be good.”
As a landlord, there are many different variables to consider, and factoring in all the direct costs is something only some think about. Diegel says a good landlord will consider all possible costs when setting the rent, beginning with the mortgage. In addition to the principal, there is interest, taxes, insurance, repairs, capital expenses, 10% for a management company, and closing costs.
“The same people who are complaining about the cost of rent are the very ones who will complain when the landlord isn’t making the proper repairs,” said Diegel. “To be a good landlord, you have to build those costs into the rent so you can take care of the property, and when something goes wrong, you can fix it immediately.”
With interest rates currently at 7-8%, he said that penciling a rental deal is even more difficult. For example, Diegel said that if he bought a house for $210,000 at 7% interest and charged $1,500 for the rent, he would easily lose $500 per month. “That deal just doesn’t make sense, so we wouldn’t buy that house.”
According to Diegel, the biggest problem with the rental market in Fallon is that rents didn’t keep up over time, and these elevated prices are evidence that the market has corrected. “Rents have finally caught up,” he said, “for 20 years, rents stayed around $700, and that was not sustainable.” He said the same owners held properties for years who never raised rents, but as properties have changed hands in the past few years, that has been when new landlords have increased rents to cover their costs.
Diegel said there are no easy answers, but our community needs affordable housing with less maintenance and less property management. If someone were to build apartment buildings, that would free up inventory.
Sometimes it is frustrating, Diegel said when people are offended at the rental prices throughout the community. “This is the way we make a living,” he said. “You hear people say they won’t pay that amount for a steak, but when the rancher explains it is local beef, then people understand, and they support the local producer. It is the same with us. This isn’t a cash grab. This is the way we support our family.”
He said they take the responsibility to maintain their homes very seriously and rent to people who will do the same. When a home is in disrepair, it lowers the value of that home and the neighborhood's value.