The Sullivan Multi Minute Tip: Raise Your Rents!
Are your rents at market value? How do you know?
As we go through many apartments in the Greater Portland area, we often surprised at the great disparity in rents. One day we see an average 3 bedroom for $1000/mo in a marginal area of Portland. The next day we see a 3 bedroom with parking and water views for $950/mo with heat included! What gives?
There are two explanations. First, most experienced landlords rent units just below market value. This enables them to find good tenants and makes it hard for those good tenants to leave. Avoiding turn-over is the gospel of successful landlords!
The second reason for low rents is simply the landlord’s lack of awareness. You do not know what other similar units are renting for if you are not out looking. So get out there. Read the paper, search on craigslist.com, and see what other similar apartments are renting for.
In the short term, low rents result in a significant loss of potential income (obviously). For example, $100 per month under market in three separate units is $3,600 per year of lost pre-tax income. What if you invested that money?
There may be an opportunity to raise your rents even higher! We see all kinds of creative ways that some landlords get higher-than-market rents. How about furnishing your apartment? If your property is in a nice part of town, tenants may pay up to $200 more per month for a furnished apartment. How about finding a business that needs corporate rentals. You are the investor! Find the angle! There is always a way to do a little better than the average landlord and see a significant return over time.
Finally, in today’s buyer’s market, higher rents equal higher prices. Think of it this way – every rental increase is instant equity in your property!
Sullivan Multi Monthly Minutes are sent to you from Bill Sullivan, Brit Vitalius, and John Graham, the ‘Multis in Greater Portland, That’s All We Do’ people. Bill and Brit are principals of Sullivan Multi Family Real Estate, LLC, One India Street in Portland. FMI Call 207-771-5556 or go to http://www.sullivanmulti.com/
Are your rents at market value? How do you know?
As we go through many apartments in the Greater Portland area, we often surprised at the great disparity in rents. One day we see an average 3 bedroom for $1000/mo in a marginal area of Portland. The next day we see a 3 bedroom with parking and water views for $950/mo with heat included! What gives?
There are two explanations. First, most experienced landlords rent units just below market value. This enables them to find good tenants and makes it hard for those good tenants to leave. Avoiding turn-over is the gospel of successful landlords!
The second reason for low rents is simply the landlord’s lack of awareness. You do not know what other similar units are renting for if you are not out looking. So get out there. Read the paper, search on craigslist.com, and see what other similar apartments are renting for.
In the short term, low rents result in a significant loss of potential income (obviously). For example, $100 per month under market in three separate units is $3,600 per year of lost pre-tax income. What if you invested that money?
There may be an opportunity to raise your rents even higher! We see all kinds of creative ways that some landlords get higher-than-market rents. How about furnishing your apartment? If your property is in a nice part of town, tenants may pay up to $200 more per month for a furnished apartment. How about finding a business that needs corporate rentals. You are the investor! Find the angle! There is always a way to do a little better than the average landlord and see a significant return over time.
Finally, in today’s buyer’s market, higher rents equal higher prices. Think of it this way – every rental increase is instant equity in your property!
Sullivan Multi Monthly Minutes are sent to you from Bill Sullivan, Brit Vitalius, and John Graham, the ‘Multis in Greater Portland, That’s All We Do’ people. Bill and Brit are principals of Sullivan Multi Family Real Estate, LLC, One India Street in Portland. FMI Call 207-771-5556 or go to http://www.sullivanmulti.com/
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