03/23/2024
Columbus, Ohio takes the 4th spot for average market rent increases just behind NY City and Chicago. Average rates climbed 17% year over....2-3% is average in a growing market. While this may or may not impact your rental properties directly, it does have an impact on some very critical items like tenant retention and turnover rates. Most of our clients operate in the C-class asset market and steep increases have a detrimental impact to long-term profitability. While this may sound counterintuitive, it's a difficult equation to balance.
As a property manager, one of the most important things we can do is promote long-term stability and balance. When rents climb too quickly, we ultimately force solid tenants out of units in the hopes of increased profitability. More times than not, this is not the best option, given the average apartment turnover costs are around $7,000. If you are a small multifamily owner, this could kill your entire profit for the year.
We approach rent increases on an individual level and work directly with tenants to determine if they are maxed out before we implement increases. This means that we look at payment history, life circumstances, employment, income and overall stability. We speak directly with tenants to reach the best possible outcome to keep them housed and owners profitable. We offer multiple options for annual and at-will terms and consider things like household size when making adjustments to water/sewer rates.
Where owners see the most detrimental impact when seeking "market rents" is vacancy. Most property management firms run around 20% vacancy...this is extremely high, but can be tied to one of two things; condition or price. Although being the 4th fastest growing city in America for market rents may seem like a good thing, it is not without impact to the folks with fragile housing situations living paycheck to paycheck. And it is the nail in the coffin for folks that are facing housing insecurity or worse, not housed at all.
Columbus has a 3-year waitlist for a Section 8 Voucher. If we had a crystal ball, we could look to the future and Austin, Texas is the best example city...Columbus is becoming Austin more rapidly than Austin became Austin. The problem in Columbus is that policy makers and local governments have been asleep at the wheel for far too long and have only recently brought the city's homeless problem to the forefront as a serious topic of discussion.
Unfortunately, the efforts are too little too late and the fallout will be significant. Our homeless situation will worsen year over year until it's as ugly as Honolulu or Los Angeles...San Francisco, or Denver. I’m not sure the last time you visited any of these cities but a casual drive around will speak volumes to where these cities are with preventing homelessness and housing insecurity.
So, while most of us get excited at the thought of 17% year over rent increases, the reality is this is not great news, especially for folks that operate in the C-class asset market. I would encourage anyone that is not renting new build high-end apartments to consider a balanced approach to rent increases that promotes stability. One thing we often forget as C-class investors is that our clientele is largely living paycheck to paycheck and small changes to their living circumstances can have a detrimental impact on your long-term profitability.
COLUMBUS, Ohio (WCMH) – Recently published data shows Columbus experienced one of the highest increases in rent costs in the country over the past year. The data was compiled by rental platfo…
