Rents have risen more than 5 percent in my area during the last eighteen months.
That’s music to my ears here in Music City. In fact, most [tag-tec]landlords[/tag-tec] throughout Davidson County (Nashville) can celebrate- for now.
Crunching the numbers we find that rents are up around $30 a month over last summer.
So what does it really mean?
1. Occupancy is up
In fact, it’s approaching 95 percent.
That tells us [tag-ice]tenants[/tag-ice] will be much humbler as they look mainly because there won’t be that many choices.
I’d rather deal with a kinder, gentler tenant than an arrogant one any day.
2. Some parts of the area are exploding even more
Location is still very, very important.
Some apartments are up as much as $60 per month. That’s because more tenants want to be there in those sections of town and are willing to pay more to meet the demands of those markets.
3. More condominiums will be built within the next year or two
Developers can make faster bucks with them than they can with apartments. As developers compete for scarce land condos usually win out because the turn around on the money happens sooner rather than later.
Beware- there is a downside
Actually the news is not all bad. You simply need to be cautious. Never get the big head when things are going rosy because markets do change.
There are lots of people involved and lots of different things can happen.
Out-of-town developers will probably move in and start building apartments just as soon as the condo market subsides.
That will mean more competition for those of us who are buy and hold investors.
We’ve been down that road before, and I’ll write about it in detail later, but suffice to say there are several tips for staying ahead.
1. Keep your rents a little below market
If your new competition is getting $735 per month, charge your tenants $695 or $720 -depending upon demand.
Yes, you’ll get attention fast. Your phone will ring, believe me.
2. Your location is your greatest asset
As the land is developed, there will be fewer and fewer options for new developments- unless they tear down the old stuff.
That means they’ll have to pay more for the land. Their costs will be much higher than yours and they’ll have to charge their [tag-self]tenants[/tag-self] more to compensate.
I love tight markets. We thrive on them. This is the market we’ve been waiting for.
We’ll enjoy it while we’re riding the wave and when it comes to an end, we’ll be ready.