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Property Management Blog

Published on Sunday, October 18, 2009

Rental Property Rates Increase

The rental properties market seems to be going through an all time low in the present time. As the prices of assets have risen high, the tenancy charges have also escalated steeply due to which many accommodations that are let out for hire are lying vacant. The owners of assets are also trying to take advantage of the situation by creating an artificial scarcity of accommodations and pricing the assets high. This kind of a low in the tenancy market has not been observed for years now, at least for the last twenty to twenty five years.

The rental properties in the suburban areas of cities and townships seem to be the worst affected. They are lying vacant for months. The condition in the city areas is better. The houses in the city areas are being hired by a lot of people at high monthly charges. The rates in fact seem to be the highest in a span of three years. They have gone up by thirty percent. As more and more people are opting for accommodation in urban areas, the owners have hiked up the hire charges drastically for their accommodations that are located in the urban areas. The demand for accommodations on hire is much higher than the supply of accommodations owing to which the prices have been raised up steeply.

The demand and supply ratio for rental properties in the urban areas is reverse from that for rented accommodations in the suburban and rural areas. The supply increases the demand in the suburban and rural areas and in the urban areas the demand is greater than the supply. The demand for good accommodations on hire is the greatest in well connected and posh areas of a city and it is very rare to get an accommodation of choice at a reasonable price in posh areas. The tenancy population of some areas has put a petition to the housing boards and housing authorities to build more accommodations as it has been understood that the problem of hired accommodations can only be solved when more of them are available.

Availability of more rental properties in the urban areas will bring down the hire charges of these accommodations individually. At present in these areas, the owners of accommodations are not following any rules set by the legal authorities with respect to the hire charges. They are setting their own rates which are being two or three times the normal rates. The rates have been steeply hiked in the past one year. The situation is really bad. The owners have increased the hiring charges so much that a lot of tenants are finding it hard to pay the new chargers. 

Many tenants feel that the governmental bodies are not doing much to control the menace of the owners. They feel that the government should involve themselves more actively in the issue and should stop the owners of rental properties from hiking up the hiring charges further. They should intervene and penalize the owners who are meting out unfair treatment to their tenants and forcing them onto the streets. The tenants suggest to their governments that there should not be a hike of more than ten percent in the hire charges per annum on the rented accommodations. They also feel that biddings on hire charges by tenants should be banned.

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Author: Web Master

Categories: Property Management




Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.


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