I’m going to try a new strategy this year on one of my rentals. I have a rental in Chicago that is perfectly suited for graduate students. Graduate students rent this condo like clockwork. I have not had one day of vacancy since I bought this place. In fact, my first tenant moved in on my closing date.
The 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.
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.