Given the higher inflation numbers at the end of this year, are you planning a higher than normal rent raise in 2022?
One park I’ve averaged 2.5-3% over the last few years. No new capex or actual bump in op ex (yet). Roughly at market. Thinking maybe I’ll do more like 4% there.
Second park same situation but had some upgrades this year and slightly under market, so definitely going to push it a bit this year.
With inflation, at 6.8% you will be losing money unless you raise the rent to match.
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At a minimum rent increase needs to match the annual cost of living index otherwise you end up supplementing your tenants rent. Housing is a major part of the cost of living so it makes scenes that any rent increase should reflect that fact.
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Yes, we already announced increases which took effect over the past 30 days, but those did not reflect the new inflation. In late fall 2022 rents will be going up aggressively to account for the newly released numbers. Some decisions by the government and by certain tenants through eviction moratoriums have caused increased expenses that now have to be paid. Those thinking eviction moratoriums help people will learn they have hurt everyone and those directly evicted will be shut out of housing options for years to come.
I am not sure how 6.8% inflation directly correlates, but I have found that legal expenses have doubled per case. It used to be that evictions were almost guaranteed to be judged in favor of the landlord, but now, most cases are contested against the government restrictions causing continuances and additional hearings. Our attorneys have said they will not do cases for a flat $350 anymore, but instead will charge hourly rates. I would expect some of those expenses to double. Again, this is unfortunate for those who manage their affairs well, but rents will go up for all to pay the legal expenses of the irresponsible.
Also, we have not yet seen the effect of wages. Although I have not seen hard numbers on this, wage rates seems to be jumping by more than 6.8%. Fast food and major internet retailers are starting some entry level jobs at $17 versus $12 in prior years. This is pushing the costs of everything up by huge amounts.
Lastly, we are seeing that brand new mobile homes are priced about 20 to 30% higher than last year and somebody has to pay for that too, and it won’t be us.
Westewart, I do not know your specifics, but I can assure you if you limit your increases to 4%, you are going backwards.
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Thank you all three for the inputs. Everyone knows there’s inflation happening (and even still, it’s at a lower clip than housing/rent inflation) and likely expects this to be coming anyways.