Squeezing Profits from Rent Controlled Rental Units
Just as The Joker is to Batman and Dr. Evil is to Austin Powers, rent control is the landlord's enemy. Supporters of rent control claim that without it many people couldn't afford housing. But what happened to the basics of economics? The law of supply and demand should determine what your rental unit is worth, not the government.
Because of the handcuffs it puts on landlords, rent control creates rundown properties. Utilities, taxes, and insurance keep going up, but landlords of rent-controlled properties are unable to recover those costs through rent increases. This means they have less money for maintenance and improvements.
In areas where rent control is prominent you will notice very little construction of new apartment buildings, since developers have a better chance at profit by building condos than renting apartments. Former apartment buildings are also being converted to condominiums in order to make a profit.
The loss of good quality rental units hurts the very subset of the population that rent controls were intended to protect! And it makes life pretty challenging for those of us who are real estate investors.
So what can you do if you're a landlord in one of the U.S. cities or Canadian provinces with rent controls? Here's how my husband and I make it work with our investments, which are all in rent-controlled provinces in Canada:
1. Raise rent annually by the maximum percentage permitted. This number could differ depending on which city/province you are in and is known to change every year.
2. When a tenant leaves, in most cases, you can raise the rent of that unit to the market rate.
3. Verify whether or not the person listed as the lessee is actually residing in property. A friend of mine spent years living in a rent controlled apartment in NYC. She didn't even directly know the person whose name was actually on the lease. My point is that if the owner was paying closer attention they'd realize they were being taken advantage of. By not being aware, this landlord was losing a ton of money every month.
4. Update/renovate the unit. A landlord, in many cases, can ask a tenant to vacate premises while improvements are being made. When renovations are complete you can begin charging higher rents based on the improvements you've recently completed. For example: if you spend $2000 to make the property better and could possibly charge an additional $500 in rent per month, your renovation will be paid off in no time and you will be able to earn a nice profit each month moving forward.
Keep track of what is happening with the real estate market as well as with your specific investments. By simply being aware and being proactive with your thinking, you can find a way to make money with rent controlled properties. - 23210
Because of the handcuffs it puts on landlords, rent control creates rundown properties. Utilities, taxes, and insurance keep going up, but landlords of rent-controlled properties are unable to recover those costs through rent increases. This means they have less money for maintenance and improvements.
In areas where rent control is prominent you will notice very little construction of new apartment buildings, since developers have a better chance at profit by building condos than renting apartments. Former apartment buildings are also being converted to condominiums in order to make a profit.
The loss of good quality rental units hurts the very subset of the population that rent controls were intended to protect! And it makes life pretty challenging for those of us who are real estate investors.
So what can you do if you're a landlord in one of the U.S. cities or Canadian provinces with rent controls? Here's how my husband and I make it work with our investments, which are all in rent-controlled provinces in Canada:
1. Raise rent annually by the maximum percentage permitted. This number could differ depending on which city/province you are in and is known to change every year.
2. When a tenant leaves, in most cases, you can raise the rent of that unit to the market rate.
3. Verify whether or not the person listed as the lessee is actually residing in property. A friend of mine spent years living in a rent controlled apartment in NYC. She didn't even directly know the person whose name was actually on the lease. My point is that if the owner was paying closer attention they'd realize they were being taken advantage of. By not being aware, this landlord was losing a ton of money every month.
4. Update/renovate the unit. A landlord, in many cases, can ask a tenant to vacate premises while improvements are being made. When renovations are complete you can begin charging higher rents based on the improvements you've recently completed. For example: if you spend $2000 to make the property better and could possibly charge an additional $500 in rent per month, your renovation will be paid off in no time and you will be able to earn a nice profit each month moving forward.
Keep track of what is happening with the real estate market as well as with your specific investments. By simply being aware and being proactive with your thinking, you can find a way to make money with rent controlled properties. - 23210
About the Author:
How to find money for investment property deals, create financial freedom, positive cashflow and massive wealth with Julie's free investment property Investing Starter Tips Guide. Retire a rich investment property investor with tips like: How to find quality investment properties, finding and keeping great tenants, and easy ways to make more money with investment property.
posted by X - Men @ 1:35 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home