Our industry has been enjoying high rental rates and relatively low vacancies for the past few years, with approximately 40% of Americans choosing to rent, while inventory has been somewhat slow to catch up with the demand. This trend is expected to continue through 2017, with predictions that rents in larger metro areas will continue to increase, but at a slower rate of 1.7% (Source: thefiscaltimes.com)
However, as it is with most trends, there does exist the potential for a backlash or downturn — so it’s important to have a plan in place for if and when that happens.
The problem that a number of major cities with the highest rental rates are now experiencing, is many renters are being priced out of the market — especially younger professionals who have recently completed their education and may have large student loan debts to pay off in addition to paying their monthly rent and utilities.
And while there may still be many established and affluent renters available who are willing and able to pay the going rate, the reality is that healthy, vibrant and sustainable communities are built on a blending of demographics. This means that “fresh young blood” if you will, must continually be given the opportunity to integrate with the maturing mix.
A highly effective way to make renting in high-demand markets accessible to those with more modest incomes, is to offer leases by the bed as opposed to the entire unit. Yes, we mean getting a roommate(s). We’re currently living in what’s known as the sharing economy after all, and many young professionals are recent graduates who are already accustomed to sharing their space.
Although it may sound like a lot of extra work and the potential for a severe migraine to do so, the right property management software can make it easy to set up leases by bed, including automated calculations and monthly ACH/EFT payments. Plus contact management and ongoing communications are a breeze with a fully integrated end-to-end solution.
Also quite important to note, leasing by bed offers the opportunity to turn an even higher profit. Let’s say you have a 3 bedroom unit to rent in a sizzling market. You could divide the market rate for that unit into three equal parts and likely get away with charging 20% more per person, while still offering an affordable option to renters. It’s an obvious win win.
Is your market included in the following list of highest rents in the nation? If so, your property management organization just might benefit from offering the option to lease by bed.
10 Cities with the Highest Rents
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