Inflation Rent Increases

Grow Property Management owner Joe White answers the question on how much should a property owner landlord increase the rents because of inflation.

Read full transcript here:

0:00 this question is from Terry Terry asked 0:03

how much are you racing your rent

0:05

because of inflation

0:07

um

0:08

that’s not really the way it works so we

0:10

charge as property management company in

0:13

a pretty efficient property management

0:14

company uh we charge what the market

0:17

well there so the we charge as much rent

0:20

as a tenant is going to pay within a

0:24

reasonable amount of time vacancy gets

0:26

extremely expensive so we don’t want the

0:27

property sitting vacant because it’s

0:28

costing the property owners a fortune

0:31

and thousands of dollars a month in rent

0:33

but we basically

0:36

put the property on on within asking

0:38

price and we very religiously uh check

0:43

the metrics on it so we want to see what

0:44

kind of traffic we’re getting we need to

0:46

get X number of inquiries a day uh and X

0:49

number of those inquiries uh that folks

0:52

who actually asked to see the property

0:54

and at that point we know the property

0:55

is likely Priced Right and

0:58

will rent within a reasonable amount of

1:00

time so what we’re not basing it on

1:02

would be things such as inflation or our

1:05

expenses and it’s kind of a common

1:07

question owners will ask us well tell us

1:10

what their mortgage payment is and

1:11

that’s just not something that comes

1:13

into the equation so your expenses as a

1:17

property owner

1:18

or not something that actually uh

1:21

really matters uh relative to what a

1:24

tennis is going to play for your

1:26

property whether they’re going to pay

1:27

more or less so if you have a very

1:29

expensive air conditioning repair that

1:30

costs you seven thousand dollars if your

1:32

mortgage payment somehow went up uh

1:35

whatever it would be your expenses do

1:37

not matter to a tenant that’s looking

1:39

for a place to live so we charge the

1:42

absolute most money that we can get from

1:44

a tenant and that is uh not relating to

1:47

any outside factors

1:49

um now I mean as far as inflation goes I

1:51

mean

1:52

rents do tend to go up and and up Market

1:55

when the real estate is doing well and

1:58

unfortunately for tenants rents tend to

1:59

go up in a down Market as well so 10

2:02

rents generally speaking rarely ever go

2:05

down now as far as inflation affecting

2:08

you the landlord the property owner and

2:10

things are getting more expensive for

2:11

you and thus they should be getting more

2:13

expensive at the tenant well if you have

2:14

any debt on the property you actually

2:16

are kind of hitting the jackpot so uh

2:18

inflation is an Investor’s best friend

2:21

so yes when I go and get gas yes when I

2:24

go and buy things uh that help me have a

2:27

rental property much more expensive but

2:30

all the debt that I have on the property

2:32

is actually getting devalued so you are

2:34

getting that benefit so even if you’re

2:36

getting a hit with inflation and things

2:38

are more expensive at owning a rental

2:40

property you can take comfort in the

2:43

fact that you’re actually just making a

2:44

huge huge killing just with any debt

2:47

that you know I have so every dollar you

2:49

owe this time next year because of

2:51

inflation is devaluating so you’re

2:52

actually getting a massive return right

2:54

now I mean if inflation is going to hit

2:55

around eight percent you’re giving it

2:57

eight percent additional return on your

2:59

on your money so uh so yeah we can’t

3:02

really so what you should be sure right

3:04

on is how much you rent you can get uh

3:07

you know from a tenant and that’s how

3:09

much you should rent your your rent time

3:11

all right good luck

Author:

Joe White

Joe White is a Philadelphia Property Manager and Real Estate Broker. He is the owner of Grow Property Management and has been involved in the management, sales and purchases of Philadelphia area rental investment properties since 2008. He is an author and works as a real estate investment consultant and construction manager.

View all posts by Joe White