Rentals: More downs than ups
Published: Thursday, June 26th, 2014
“When I am ready to rent, I won’t rent in Custer. It’s worth the extra 30 miles driving to get a more reasonable rate elsewhere,” said Sage Keltner, who works at Jenny’s Floral. “I would like Hermosa prices closer to Custer.” Currently, she is living for free in a house that’s undergoing extensive remodeling. When she moved here in August 2013, she couldn’t find a reasonably priced rental.
George Rankin, owner of Valley Hi apartments in Custer and another complex in Rapid City, believes there are no problems finding an apartment or rental in Custer. Even though his 28-unit complex is full and there is a waiting list to get in, he said there are other places in Custer with vacancies.
Jim Ashmore, who has owned Creekside Apartments for about six years, says his six two-story townhouse apartments, complete with washer, dryer, dishwasher, two bedrooms and a walk-in garage, are never empty. At $750/month, his units are very attractive for a lot of reasons.
His units are vacant for only a couple months at a time, which gives him time to renovate and make upgrades. He’s constantly being asked if he has openings, so he and his apartments must have a pretty good reputation. He said, “You have to have a product that is nice and reasonably priced.” In addition to Creekside, Ashmore also has vacation rentals.
According to Jared Carson of Green Real Estate, the rental market with the most growth the last couple of years is the vacation rental market. In fact, he said, that’s where a lot of the “hidden” commercial business (there just aren’t that many truly commercial properties for sale in Custer) is: investors buy what were once residential properties and turn them into vacation rentals. “A lot of that commercial money over the last five years has been redirected away from brick-and-mortar businesses and into what’s probably the newest investment vehicle for the Custer area, which is vacation rentals,” Carson said.
Carson said a number of long-term rentals have turned their properties into vacation (or short-term) rentals because they can make a lot more money. “You can go from grossing about $12,000 annually (with your long-term rental) to grossing anywhere from $20,000-$30,000 for a vacation rental,” he said. In addition to seasonal/temporary employees snatching up rentals, that switch could help explain the shortage of rentals available in Custer. Carson speculated (and hoped) that would put some pressure on builders to start building rentals again.
This is where Mike Tennyson of Tennyson Investments steps in. He owns Custer Hospitality — which includes Holiday Inn, Comfort Inn, Super 8, Best Western and Econo Lodge — and employs seasonal (international) employees.
He constructed his own building “like a dormitory” purely for his seasonal hotel employees. Its four units can house up to 48 people. He hopes it has relieved some pressure off the traditionally long-term rentals that were being eaten up by seasonal employment.
During the off-season months, his “dorm” sits unoccupied. He’s considered renting them when not in use by his own seasonal employees, but the rentals would be short — eight months tops — and it’s just not worth it, he said.
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