Rent/Expense Increase Percentages

1 Reply

When using the BP calculators, how do you decide on your Annual Income Growth % (rent) and Annual Expense Growth % inputs?  Do you set them as the same % or different?  I'm skeptical of steady rental increases for 30 years.  For example, a 2/1 apartment in a small multifamily may rent for $750 in 2018.  At a 3%/yr increase, that will go to about $1,800 by 2048.  Is that a realistic expectation on future rents?  I'm using 3% based on inflation percentage which is usually between 2-4% I believe.  My assumption is that you would need your rental income to at least keep pace with the inflation as this will likely drive your expense percentage increase.  Thank you in advance for any insights provided!

It is an educated guess at best, so if you want to be conservative you could assume zero growth or the average which is 3%.  Food for thought is that if you owned a property in Venezuela or Zimbabwe the inflation would have been far higher than 3%.  Even in the US inflation during the 70s was pretty high

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