As a real estate strategist, I like to assist my clients in analyzing their properties’ performance and whether there are ways to improve the bottom line. One way to do that is by increasing rents. I have numerous clients questioning if it is time to do that. There is continual risk and exposure if a landlord raises rents too high and has a mass exodus in rents. However, the landlord also needs to keep pace with increasing carrying costs like taxes and insurance in addition to maintenance and repairs. It’s a lot to consider, but our Eugene multifamily experts are here to help you.
Many of the relevant issues are examined in this article:
Raising Rent: The Ultimate Guide
Raising rent can be an important part of staying profitable as a real estate investor. Still, it comes with risks, such as tenant turnover and increased time commitment. While there is no one-size-fits-all answer to the “should I raise my rent” question, you can best inform your actions by assessing your investing priorities, evaluating your relationships with your tenants, studying your local market, and more.
Understanding your own values and priorities is one way to evaluate whether or not to raise the rent. Consider whether your priorities are to maximize profits, minimize personal involvement, or to stabilize cash flow. Is maintaining a low vacancy rate a priority? What is most important to you? You may need to spend some time thinking about your top priorities.
Tenant relationships are usually an important factor:
Another factor to consider is your current relationship with your tenant. Having a great tenant is compelling reason to leave rents at current levels or to minimize rent increases. If the tenant is excellent, is it worth the trouble to raise the rent at the risk of losing the tenant? Finding a good tenant can be a tough proposition in any market. – Bigger Pockets
It’s important to understand the reactions tenants may have based on varying rent increases. Another critical issue is the hidden costs of raising rents, such as advertising, finders’ fees, turnaround costs—and of course lost rental income!
A good commercial broker can share with you market rents as well as what other comparable properties are garnering for rents. The professionals at Pacwest Commercial Real Estate are Eugene multifamily experts. Call us today if you would like to discuss this further at 541-912-6583.
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