BiggerPockets

http://www.marketwatch.com/story/double-digit-rent-hikes-are-on-the-way-2011-01-13

A perfect storm is brewing for rents to rise.

Some highlights:

"Multifamily developers broke ground on just 114,000 units in the United States in 2010, a figure so low that it wouldn't account for all the multifamily units lost last year to the wrecking ball or natural disasters."

"I've never seen so much pent-up demand"

"Why the demand? It's impossible to buy a home because it's darn near impossible to get a mortgage," Jacobson said. "And we have this huge population in the biggest renter cohort" about to hit the market."

"When we open a 100-unit project, with three- and four-bedroom units, we will have 800 applicants every single time, wherever we are building across the country," he said. "Without more investors to provide equity and more capital financing it is going to be very difficult to meet that demand."

This is obviously good news for investors and landlords, but is it true in your market? Personally, I have 100% occupancy, and it doesn't tale long to lease when one comes open.

What are you seeing in your market? Have you increased your rents? Do you buy in to double digit increases coming soon?

Time to pick up some more cash-flowing units...

We raised the rent a modest amount on one unit (not double digits) and will probably raise another property next month.

More of the same:

Dallas area expected to build on 2010's decade-high apartment demand

http://www.dallasnews.com/sharedcontent/dws/bus/stories/011410dnbusapartmentoutlook.22bc7f.html

There is a difference between core urban centers and suburban to rural areas.

In core markets is where recovery starts to happen first.It takes a much longer time for suburban to rural areas to recover.

Most purchasers are not including rent increases for B or C product for the next 2 to 3 years in their cash flow analysis for purchase.

What most apartment players I talk to are concerned about is increasing utility costs for commodities and upcoming inflation in the market.

There are not many deals to be had in my core market but more in the suburban to rural areas.

For class A core market product most definitely CAPS have gone lower and demand is higher.

Developers for class A space aren't stupid.The ones I have had meetings with are in a holding pattern to time the market just right to build the ground up development.

They are waiting for more liquidity and better terms to build and more pent up demand to lease up phases of their project faster.If they started building too much product right now it would impede their balance sheets too much as a company.

Typical developers build 250 to 300 units at a time in my area and map out 2 to 3 sites in the area for phases 1,2,and 3 built over a 5 year horizon.

So I wouldn't get to overexcited. Most of us are in the B and C sector and not the A and those are different assets.

Multifamily is definitely posed to top out for acquisition over the next few years.

Many investors feel retail has a few years to go before it hits bottom.

SFR's are harder to control as they are more spread out.

Taxes and maintenance tend to be higher on a per unit basis compared to multifamily 5 units or more.

The Dallas market is healthier than many other parts of the country.With SFR's the renter usually gets more space for the money.Also the SFR will usually appreciate at a higher clip per unit once the economy turns around versus multifamily 5 or more.

If there is low housing supply and permits for new builds versus more demand for housing then rents will go up.

I believe many potential tenants don't see purchasing a house as a smart move in some markets so they just want to rent and let someone else handle the upkeep.

I would just make sure that as inflation and commodity cost rises that your SFR are not to far away from the core.

There will be in the future a wave of more intown living to reduce waste and cost of living since wages have pretty much remained stagnant.

Careful what you purchase there, make sure you see it first. I used to work in that area and I wouldn't touch some of those houses for free, or even if I get payed for it. Much like Detroit's warzones. And I don't see those bouncing back soon either. Just my $0.02

Ben,
West side is somewhat better. East Cleveland is what rivals Detroit. As far as A ranked homes... careful what you wish for, everyone knows they don't cash flow :).
Best of luck!

I was thinking of increasing the rent 2-3% when the tenant's lease renews. I honestly still don't know if that's too much or too little, in this environment with high unemployment.

What Gene said. You have to look at the surrounding market and determine if your rent is on track, above or below market, and then adjust accordingly.

Some landlords simply jack up the rent a fixed amount every lease renewal, and in a declining market, wonder why their tenants move out and none move in.

I use a combination of:
www.rentometer.com
www.rentjungle.com
and
www.craigslist.com

to get a handle on what I should be charging for rent. The process is practically identical to the analysis you may have done when you first acquired the property.