Article submitted by Danny Watts, Sales and Leasing Agent at Saurage Rotenberg Commercial Real Estate
Written by Bendix Anderson October 12, 2012 National Real Estate Investor Online
It seems like such good news—apartment rents are rising faster than inflation. That means more profits for real estate investors.
But there’s also a risk. When rents rise faster than the paychecks of your residents, then that puts pressure on their budgets. Eventually they may look for other options. If you’ve carefully marketed your apartment community to a certain set of residents—say retirees or workers at the local hospital—it’s bad news for you if those people can no longer afford to live there.
“Landlords need to be careful,” says Brad Doremus, senior analyst for data firm Reis, Inc., based in New York City. “They can’t raise rents forever or they come up against that budget constraint.” Property managers should worry about competition from new rental housing, cheaper rental housing and even for-sale housing. Eventually it will become clear to everyone that the for-sale housing market has bottomed and prices are rising, and residents paying sky-high rents will start looking seriously at homes or condominiums.
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Danny Watts, a commercial real estate sales and leasing specialist with Saurage Rotenberg Commercial Real Estate, is a graduate of Louisiana State University (LSU). He has over 20 years experience in commercial real estate brokerage and appraisal. His areas of expertise include commercial and industrial brokerage and leasing; multi-family brokerage; lease negotiations; tenant build outs; market analysis and insight; and feasibility and valuation analysis. Danny is a member of the Commercial Investment Division (CID) of the Greater Baton Rouge Association of REALTORS®, a board member of the Perkins Road Historic Merchants District Association, and has served as a vice president for Literacy Works of Baton Rouge.
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).
