Rising rents are a concern and there are many reasons behind increasing prices – even a landlord must make a living, too. And therein lies a big reason for rental increases: just as tenants are experiencing inflation, so are landlords and their companies’ bottom lines impacted.
Rising Rents are a Concern: Reasons Behind Rent Increases
As individual living costs are mounting, from shelter to food to taxes across the board, so are the costs of owning and managing property.
Rising Interest Rates: Rising rents are a concern due to interest rates increasing, increasing financing costs, and are a cost of doing business, so they must be built into the income to be recouped.
Property Taxes: Property taxes are rising, which are a burden, and landlords must also cover those costs.
Housing Shortages: there aren’t enough available apartment and rental homes because of a lack of inventory, vacancy, and homeownership rates. Many people who want to own a home can’t afford it, so these homeowners are renting, too, making an already stretched inventory an even tighter market. It’s the rule of “Supply and Demand” and squeezing affordability out of the rental market entirely.
Other Rising Landlord Costs
Employee and contract labor is a continuing challenge in park management. As living costs go up for all, so do wages and benefits paid out. Landlords must be competitive to attract and retain the best talent.
It takes a lot of routine upkeep for a safe and comfortable living environment to be maintained, and materials for regular maintenance and repair costs have increased.
Utility Costs Increasing
And as our tenants know first-hand, the costs of utilities such as electricity and water at our parks have risen. We pay top dollar for security lights and irrigation to keep our park grounds looking top-notch and ensure a safe living environment. We continuously look for sustainable ways to be more eco-friendly in using these resources while maintaining our parks and tenants’ safety.
One of the most significant margins of cost increase has been the cost of insuring them. Insurance has been on a rising trend, significantly surpassing all other rising inflationary costs.
We can attribute some of the rising trends in insurance to the increased damage from natural disasters that have occurred nationwide, from hurricanes, floods, fires, and tornadoes. Most nationwide carriers charge more for the same coverage or even dropping options entirely in some parts of the nation. These increases are related to the losses the companies are seeing at an increased rate.
Lenders are also adding insurance requirements to their packages, providing extra protection against increased risk as the costs to rebuild or repair have risen by over 50%.
We know it can be easy to judge when the rental increases come out, and it is hard to take when the cost of groceries, fuel, utilities, school fees, etc, are all increasing too. But rest assured, much thought goes into these increases, and we do not do this lightly. We keep the rent affordable for our residents and do all we can to provide value and keep your trust.
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