2012: Could the Mayans Have Predicted Economic Apocalypse? Part IV

2012: Could the Mayans Have Predicted Economic Apocalypse? Part IV
By: Nicholas A. Dunlap, CPM

The following is an excerpt from my 2012 Outlook on Investing that appeared in this month’s Apartment News & Apartment Management Magazines. I will be publishing it in segments here on my blog. Here is Part IV.

The Rent Raise: A Landlord’s Best Exercise

Perhaps the best thing about the economy being in the toilet is that in spite of the low interest rates and low SFR market values, many prospective buyers are still priced out. That said, Orange and Los Angeles counties boast some of the highest barriers to entry, meaning that it is more difficult here than in most places in the nation to make the jump from renting to owning. Thus, renting is the true value. Plan on increasing your rents at least 3 to 5% or perhaps more depending on the specific circumstances of property locale and current (existing) versus market rents.

With the combination of increased income and low interest rates, we will continue to see the market values of multifamily housing on the rise. And thus, another year of low capitalization rates, high costs per square foot and increasing GRMs, which of course is great for sellers but not the best for buyers. Further reason to diversify.