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Rent Climbs in SoCal

If your client is renting and they are thinking about “stepping up” to a better apartment; that may not be a good idea. This post below is bad news for renters relocating to new digs, as vacant units are in short supply. The only relief is that more vacant units become available after the eviction moratorium ends. SoCal Rents 17% Higher in 1st Quarter 2022 Landlords sought 17-18% increases for vacant units in O.C. and I.E. during the year’s first quarter.  New SoCal apartment figures show few “vacant” units available, and rent hikes for those units have skyrocketed into double digits across the region. During the first quarter of 2022, vacancy rates in the region lingered near two-decade lows, allowing landlords to boost their asking rents. Orange County’s average rent for a vacant unit jumped 18.2% from the year before, hitting a record-high average of $2,476 per month, The Southern California News Group composite of three leading apartment indexes shows: That’s up to $381 a month from the first three months of 2021 — and it’s $988 a month higher than in 2010. Inland Empire rents rose almost as fast, climbing 17.4% year over year from early 2021 to a record-high average of $1,941. After seeing rent drops during the pandemic, Los Angeles County landlords asked 12.8% more for a vacant unit in the first quarter, with a record-high average of $2,332. The reason is more tenants are moving out on their own. “It’s young adults moving out of a parent’s home or moving out of a roommate situation.” Meanwhile, vacancy rates averaged 2.4% in Orange County and the Inland Empire and 3.1% in L.A. County, the SCNG composite shows. “We’ve never seen occupancy this high,” said Chris Porter, chief Irvine-based John Burns Real Estate Consulting chief demographer. Porter noted rising employment, increased wages, and stimulus checks put money in people’s pockets, incentivizing them to move out. The composite figures are average first-quarter numbers from CoStar,Moody’s Analytics-Reis, and RealPage. Since their landlord surveys tend to focus on larger, professionally managed apartment complexes, their averages tend to be higher than smaller buildings operated by mom-and-pop landlords. SoCal isn’t alone in seeing such rent hikes amid a national housing shortage, a recent report by Yardi Matrix said. But the region’s pace of rent hikes is a tad faster than the national average of 14.3%, according to Yardi. Yardi’s data showed O.C.’s average rent was 19.7% in April, the sixth-highest percentage gain among the nation’s top 30 metro areas. The Inland Empire’s rent hikes ranked 13th in April at 16.8%, and L.A. County’s ranked 19th at 12.7%. “Explosive rent growth over the past year was driven by pent-up demand, growing household formations, and a large undersupply of new units,” Yardi’s April multifamily housing report said. Meanwhile, the demand for housing is evolving High-income and older households increasingly rent more compared to previous decades. Rising prices are squeezing out homebuyers, competition from investors for rentals, and people buying second homes.” ‘Increase Like No Other.’ Apartment tracker surveys tend to be higher than the overall market because they’re based on rents for newly available units and don’t include rent hikes for existing tenants who renew their leases. Porter said. Last quarter, SoCal rent hikes for new leases were two or three times greater than lease renewals. However, some existing tenants complained that they also see hefty rent hikes when renewing their leases. A new state law capping rent hikes at 5% plus inflation doesn’t apply to buildings built within the past 15 years. Smaller Hikes Ahead Porter said that the long-term outlook is for rent hikes to ease over the next few years, but rent drops aren’t expected. Yardi’s latest report forecasts O.C. rent hikes will moderate to 6.2% by next April, with hikes of 9.1% in the Inland Empire and 7% in L.A. County. During the pandemic, more people moved out of denser, urban areas of L.A. County to the Inland Empire, where they could rent larger homes for less while working remotely. Rents decreased year over year in L.A. County from the spring of 2020 through the winter of 2021. But they started rising last summer as the pandemic eased and more employees returned to their worksites. Rents were up 6.7% last summer, 10.2% last fall, and 12.9% this past winter. Meanwhile, rents are rising even faster in Orange County and the Inland Empire, with the biggest gains over the past year than in the previous 20 years, according to CoStar figures. Demographics may explain why rents are rising faster in the suburban counties rather than in L.A., with millennial tenants aging into their 30s and 40s, Porter said.  “Now, as they get into their 30s, they tend to go more suburban,” he said. I think Covid just accelerated that already occurring …

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Predicting Profits From Your Investment Property

An investment is a risk; there’s no guarantee of profit. Some investments are riskier than others. For better or worse, profits from your investment property are one of the more difficult ones to predict. While predicting the market is incredibly difficult, there are a few things you can do to manage better and predict profits from your investment property. 3 actions you can take to manage better and secure profits from your investment property Research Your Neighborhood Even if two neighborhoods are right next to each other, it’s important to know that each neighborhood has its own real estate market – its own values, its own turnover rates, its own desirability. If you’re looking to invest in property in your current neighborhood, you might be at a slight advantage for predicting the real estate market. At the very least, you should have at least general understanding of the market you’re looking to invest in. Make sure you take the time to calculate rent prices, use neighborhood search tools, analyze property reports, visit online listing sites, and talk to a local real estate agent. Know Your Property Knowing your neighborhood is important, but knowing as much as you can about your investment property maybe even more so. Knowing as much as possible about your property makes it easier to calculate rent prices that will maximize your earning potential.  Rental properties in different neighborhoods will command different rent rates, even if the units are the same size. Take your amenities into consideration, along with property updates. The more amenities a property has and the more remodeled it is, the more you can charge for rent.  Estimate Potential Earnings Finally, once you have as much information as possible about your property, you can start estimating your potential earnings. Calculate rent prices at current market rent and figure out how much your rental property would be able to bring you in a given month. Don’t forget to subtract expenses, like maintenance and taxes. You’ll also want to account for times when your property may be vacant between tenants. Estimated earnings can also help you understand if updating the property is worth the cost. Knowing just how much you can earn through your rental property can be complicated. These three steps can help you start. For more information on real estate investment; or to see what your rental may be worth with a rental rate calculator, contact True Property Management today – 866-957-6677. Source: …

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