What occupancy rate before rent increase is needed?

[Rich Weese]

As many of you know, I bought 154 units in Garland TX. We've changed the marketing and now are down from 19 to 3 vacancies, or 2%. Any one have stats as to occupancy levels in Dallas area, and rates per square foot?
It seems like at 98% , I'm missing a rent increase opportunity. I have no move out notices for 11-1, so expect to reach 100% in Nov. I plan on increasing rent, but curious as to what others are finding.
Any good info is appreciated. Thanks. Rich

[Steve Babiak]

Rich,

Sorry, I don't have any hard figures to give you; just some random thoughts that might get you thinking harder about this.

Try to look at it from the tenant perspective, to see how much they might be willing to pay.

For example, there is cost of moving. The cheapest is self-moved, basically the cost of the rental truck for most (could be free to those who own a van or pickup, or have a friend who will allow use of same). Price the cheapest truck rental in that area, and divide by 12 months; that should give you an amount at which very few will move, because cost of staying vs moving is on a par.

Then, you have to know the rents at the nearest competition; so long as you are below those, and comparable in conditions, very few would move, even for the near-free cost of moving.

When you send the increase letter out, you emphasize some of that in the letter.
We really want you to stay, but have to make some rent increases in order to cover our increased expenses.
Your increase is intended to be kept at or below what rents are in other nearby buildings/complexes.
Your cost of moving is probably more than the increase totals for the year.

Condition their thinking to be along the lines of staying, and you will have fewer moving out.

I think that your $10 to $15 times 12 might fit the truck rental cost, so you will probably have few moving unless you are far more expensive than competition.