Setting rental rates for Condo #1
February 18th, 2008 by KenricThe rental rates for this condo have dramatically increased every year. In January 2005 on the day I closed, I rented it for $1225/mo. In 2006 I rented the condo for $1700/mo. Then in 2007, I rented the condo for $1750/mo.
Also like clockwork, the HOA has been increasing every year. In 2005 it began at $158. It went from $158 to $161 to $223 to $261 in January 2007. Now it has increased again to $281. It’s a 800 square foot one bedroom condo! What sucks is that these increases are to meet budget, meaning that this building has no reserves. I expect to see a special assessment when something major goes wrong in the building.
Pushing Rents
I did a quick search and did not find any rentals in my building available for the fall 2008 semester. I know that I can get $1800/mo for my condo this year, but since there are no other condos on the market I am going to set my price at $2000/mo. What I am hoping for is that other landlords will see my ad before they price their units and that they will follow my lead. Just like me, the other landlords have experienced the same tax and HOA increases. They should be asking for higher rents. If we all price our units at $2000, then it will force tenants to pay that rate for this building.
One thing about student buildings is that most rents are paid for by parents. They generally pay for whatever condo the student wants. As a student, they don’t care about whether the rent is $1750 or $2000. After all, what’s another $250 a month vs. $40,000 for tuition?
I’ll let you know how this turns out.
Posted in Real Estate | 4 Comments »
Stumble it!
My best Tempe renters have always been graduate students and post-docs. Two to four years of quiet, studious, on-time tenants.
However, I have not found that they would pay more than other tenants. Most of the graduate students and post-docs were employed, not living off mom and dad. Since the employment was usually with the university, these folks tend to be very frugal.
If you have no competing buildings in the vicinity of your condo, you may succeed. Otherwise, you may just help the landlords down the street rent their units faster.
By Another Investor on Feb 18, 2008
Well, you may not end up with students for tenants again–but, a professional might be looking, too! You can always just give it a shot. It will become readily obvious to you if you’ve priced it too high.
By Trisha on Feb 18, 2008
AI, so far all my tenants have had paying parents. A couple had no credit so I ran their parents credit who also co-signed.
There are competing buildings, but this building is 3 years old and closer to campus. Distance to campus is a huge factor since they have to walk to class in the Chicago cold.
I have 4 months to rent out the condo. It will be an interesting experiment.
By Kenric on Feb 18, 2008
That’s ambitious stuff trying to raise the value the market gives to rents in your building, rather than following the price dictated by the market. I’ll be interested to see how it turns out. (Based in the UK, we’re constantly told the US property market is in meltdown right now…)
By Monevator on Feb 20, 2008