How I Managed to Get 29% Rent Increases During a Pandemic

Question

I posted about this a month or so ago, but we've continued to have results that have surprised even me. If you're struggling with adapting a value-add strategy to your properties, I highly recommend you take a new approach that has been very successful for us.

There are many challenges to getting rent increases during a pandemic, but with some hard work and an innovative value-add strategy it’s quite possible. Pre-COVID-19, sponsors were able to increase rents as new tenants come on board by renovating the units. Don’t assume that due to COVID-19 people won’t want to pay a premium for an upgraded unit. We developed a “renovate on demand” strategy that gave our tenants a choice between renting an upgraded unit at a premium or a “classic unit,” and almost 70% opted for the renovated one at a higher rent. Analyze the data to be sure you’re in a strong market, because tenants in a strong market are more willing to pay for a nicer apartment. Finally, remember that by renovating units you’re not only increasing your monthly income, you’re also increasing the value of the property when it comes time to sell.

Be bold, be strong, and thrive!

Anthony Wick · Answer

@Ellie Perlman. Great job! We did the same thing on three units that had vacancies in May and June. Some cosmetic upgrades, and higher rents. I even raised rent on an existing tenant. I know, I'm terrible and it can't be done! Ha ha. The existing tenant did ask why rents were going up, which is a reasonable question. I explained the market, the higher costs I have absorbed, and how my identical units were being rented at an even higher rate to new tenants. They appreciated the explanation, and signed the lease addendum.

Charles Seaman · Answer

@Ellie Perlman Thanks for sharing this.  For clarification, did you survey current tenants about upgrading the units that they were living in or prospective tenants who were considering renting a unit from you?