Today I thought I’d talk about a hot topic: the tight rental market and the fact that rents are really skyrocketing. As a Santa Cruz property owner, you may be wondering how much you should raise the rent.
My advice to owners first is to look at the market you are in. Our area in Santa Cruz is a service industry market. The jobs haven’t changed and the demographic hasn’t changed, so you can’t drive up the rent overnight or people won’t be able to afford it.
The other thing to consider is whether you’ve been able to raise rent pretty regularly. In Santa Cruz, we have been a stagnant market, so we are taking advantage of the opportunity to raise rents now. It’s hard to say what percentage is correct because real estate is all about location. If you have a property that’s a block to the beach or right on the ocean, you can absolutely raise it by a lot. However, if the property is in the mountains, you might want to raise it only a little bit right now.
Always test the market. Don’t go on Craigslist. Those properties on there are on the rental market but in reality, people are listing them at any price they want. Instead, go see what property management companies are pricing their properties at in your area. We aren’t going to want to list a property for rent and then let it sit vacant for 60 days. Our prices are reliable.
Finally, if you jack up the rent, tenants will start looking at legislation for rent control. You don’t want that. If you raise your rent too high, your tenant will continue looking for a better deal elsewhere. As soon as they find it, they will move and you’ll be left with a vacancy. Always list your price a little bit below what the market rent is going for. You’ll keep your long term tenant that way.
If you’re trying to decide whether to raise your rent in 2015, please contact us at Portola Property Managment, and we’d be happy to help you.
