3 minute read
Moving Forward By Sonya Loera
Moving Forward
BY SONYA LOERA
Even with students now back in the classroom, there is a growing acknowledgement that COVID is here to stay — at least for a while.
What does this mean for us, as income property owners and managers?
Just as we had to learn how to survive and thrive when confronted with statewide rent control, we again need to apply the best practices of both good property management and informed decision-making.
With college campuses now reopened, we have seen an upswing in rental market activity. There have been more inquiries and interest, and that opens the door to raising rental rates. Remember, the state rent control law only applies to current residents. When an apartment becomes vacant, the rental rate can be reset to whatever you want — at least in theory.
The reality is your rent rate still has to be competitive, and that means doing some homework. After months upon months of everyone existing in hibernation mode, it is time to not only do a rent survey, but actual looking. Just checking a website, although helpful in establishing some baselines, does not provide a complete and true picture. An on-site visit is always the best.
This is the point at which you need to be 100% honest with yourself in both evaluating the condition and appeal of your own property and in judging the competition.
You also need to know and understand what type of renters are going to be attracted to your property and what rents are they willing and able to pay. And, you need to have a sense of what features these prospective residents are seeking and what are their “deal breakers.”
In fact, this is probably an excellent time to seek the help of a knowledgeable and trusted advisor. You want someone who is well versed in your particular property type and location; and who also knows what features and/ or amenities command the best return on investment.
In conducting this type of rental survey, there are three key factors to consider — the rent, the condition of the property and the inclusion of preferred features. You may want to set this up as a comparison grid with your own property listed first. The process is very much like what a real estate agent or an appraiser does for sales comparatives.
The goal is to attain the highest rent possible. During this evaluation process, you may find that by spending just a little money you may be able to achieve higher long-term rents. Perhaps some exterior cosmetic work is needed. Maybe it is replacing kitchen and bathroom countertops. Or it might be something like converting a back lawn area into a dog park, a children’s play area or a community garden.
Once the projects are identified, you need to do a cost/benefit analysis. Basically, the question is what will be the cost to make a given improvement (or set of improvements) versus how much more in rent will that feature or those improvements command?
Even if some level of capital expenditure is required, it might make sense to spend the money now and secure top rents today, so that you are well positioned to maximize your rental income moving forward. This is especially important given California’s statewide rent control mandate that places an annual percentage cap on increases
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