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Home Insider Blogs Trevor Henson's Blog Raise rents in a recession...?

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Aug 12
2010

Raise rents in a recession...?

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Posted by: Trevor Henson on Aug 12, 2010 21:24

Property ManagementIncrease apartment rental rates in a recession? Preposterous, you say! Yes, it is - IF you have not been keeping up with the maintenance needs of your tenants and over all customer service. If your property management company has not been responding to the everyday ebb and flow of maintenance and upkeep of your investment property, than you can rest assured that when you post that 30 or 60 day "Change of Rental Terms" notice, that a series of "30 Day Notices" from your tenants will soon follow.

What is the answer to raising rents in a tough apartment market such as Los Angeles? Responding to maintenance requests. The residents of your investment properties will always appreciate quick turn around of their maintenance requests and will remember such service when the it comes time to keep rents up to market. I am not talking about a super significant raise here folks - just a gentle increase to help you, the landlord, keep your NOI through these trying time. In my experience here at First Light Property Light Property Management, Los Angeles, a resident seldom moves out of a building for a subtle increase of 3% to 5%. Early on we did, however, find that if we as a property management team happened to have overlooked a resident's maintenance request, that this overlooked request was the FIRST thing they brought up when the rate increase letters went out. The outstanding issue was promptly resolved, but it would have been much easier on to have handled it within the first 24 hours and exceeded the expectations of the renter.

Is it good business practice to raise rents in a bad economy? My opinion is yes, but only if your property management has kept a very tight ship with customer service to tenants and have kept up with their maintenance needs. If your investment is providing superior service to your tenants then it deserves to be compensated. What do you guys think: raise or sustain? What are you doing in your communities?

-TH

 

Trevor Henson is a managing partner of First Light Property Management, Inc - a Los Angeles based property management company


Comments (2)Add Comment
62
written by Brent Williams, August 16, 2010
Interesting idea, Trevor, and I think that you and Doug Miller of SatisFacts would be great friends. I'm curious what you do to train your teams to successful sell the increase, and maybe more importantly believe in the increase. In other words, I'm sure your teams hear/read/experience the trying times in the economy, and it would be hard to truly "buy into" the idea of a rent increase. So beyond just telling the teams to increase, what did you do to get everybody on board with the idea?
1691
written by Trevor Henson, August 17, 2010
Thanks Brent! You hit the nail on the head with your comment: The key is to make sure our team truly believes that the increase is valid and fair. In general, it is one of our hard working Resident Manager Rock Stars that are issuing the increase notices and they are fully aware if we have been keeping up on our customer service. Each community is approached individually when it comes time to consider a rental raise and we ask for the RM's input. If the the RM does not feel that the raise is substantiated, then we ask for their suggestions as to where we can improve on our service, maintenance, etc. Adjustments are generally made over the next 3 months and we revisit the conversation. The result is that we - as a team - can make a join decision as to why we can, or why we can't, increase rates. The most important part - like you said Brent - it to get full team buy in for whatever decision is made. And that buy in is produced by join decision making. Thanks for taking the time to stop in! -Trevor
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