I acknowledge that some readers will have the belief that residential rents should not be maximized, even during a tenant turn-over.
Perhaps rents should be kept as affordable as possible to help the overall tenant pool in our otherwise expensive pocket of the world.
Here’s how I think about it:
Because of my moderated increases for existing, longer-term tenants, all but the two most recently rented apartments are technically under-market in their rent amounts.
(I still have two 2-bedroom apartments in the $1125 to $1225 range).
The operating expenses associated with owning these rental buildings have gone up a heck of a lot more than the 5 to 10% annual increases in the rent amounts.
As importantly, I wholeheartedly expect for another version of People First to appear on the November ballot, with some version of rent controls proposed for the City of Bellingham, where my apartments are located.
If that passes, and I believe one of these years some version of it will, then landlords with less-than-market rents are going to be backed into a corner.
As long as a tenant chooses to stay in an apartment, the landlord will be prevented from jumping the rent to market value, and will have to incrementally keep increasing in small raises that hopefully come close to inflation.
In cities with rent controls, natural turnover of tenants slowwwwws wayyyy dowwwwnnnn because, why leave if you’ll be faced with paying materially more somewhere else?
If you’ve been reading this blog post since last year, you’ve endured plenty of my rants about rent controls’ economic effects, so I’m going to skip a recap of those for now.
Since all my leases renew on September 1st, whatever I have in place now is what I’ll be living with for the next year.
But in two cases I am going to deliver a “One-Year Advance Notice” that this will be the final year of the respective tenant’s lease.
Beginning September 1, 2023, those newly vacated apartments will be substantially updated and their rents adjusted to market value.
The existing tenants will have right of first refusal to re-rent, or they can simply move on.
I hope with a full 12-month notice (and occasional reminders every quarter or so) they will figure out their next move in a non-emergency fashion.