This Month’s Question comes from Sheri in Los Angeles:
“Hi Kari, how do I know if I’m getting current market rents at my building?”
Hi Sheri! This is one of the most important questions in our industry because all of your cash flow, as well as the value of your building, is based on your collected rents. Here are 4 steps to get you going:
Step 1: Know the state of the marketplace by clearly understanding your competition. We know your customers are certainly familiar with your competition when they walk onto your property. To better understand you customer, it’s best to know what they know and there’s no better way to familiarize yourself with your competition than by putting on a pair of tennis shoes and walking to nearby buildings of similar size, style and amenities as yours. It’s okay to look online at Craigslist and Zillow ads to get an initial idea, but there’s nothing better than walking by other buildings. Look at the building condition, pricing, specials, etc. I recommend looking at a minimum of five buildings to get a solid comparison.
Step 2: Don’t be the cheapest price amongst your five comparative buildings! Know what makes your buildings the best. The market understands they get what they pay for. Stay confident in your asking price, and don’t run crazy specials. Answer all emails and calls personally if you can.
Step 3: Consider making small improvements, such as upgraded fixtures, better ceiling fan, or two-tone paint. If you do major improvements like laminate flooring or granite countertops, make sure it is justified by higher rents and stand out from your competition.
Step 4: Make sure to review and serve rent increases annually to keep your building at market. If you don’t stay current with market rents, you are cheating yourself and your tenants. If taken care of, they expect rent increases as well as a great place to live. Remember, your building’s value is based on actual collected rent. Stay current.
Lastly, if an apartment rents for the price you’re asking, that is your new market rent. Just make sure it’s as high as the market will allow. Please submit your questions and comments to me via commenting on my : Ask Kari YouTube Channel
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