Author: Alex Delaney
We understand the frustration tenants experience with rising rent costs. But there is another side to the story. With property values increasing dramatically, owners are facing a shortfall and must compensate for that by raising the rent.
When property values rise, so do property taxes. Many properties in DeKalb and Fulton counties have experienced a 25% to 50% increase in taxes within the last three years. For example, one of the properties we manage in DeKalb County was assessed in 2016 at $30,400. This year, 2019, it was assessed at $80,000. That is over a 160% increase in taxes in just 3 years!
As home values rise, so do insurance costs. In addition, the costs of labor and repair supplies are also rising.
While some of our owners have large portfolios, the majority own one or two properties that they invested in to help cover living expenses once they reach retirement (and once the property is paid for). They struggle to make the monthly mortgage, taxes and insurance, not to mention repair costs. These rising costs, and the risks of vacancies and unpaid rent, can be enough to make them lose their investment.
At Compass, we have tried to find a way to help our owners keep their investments, while not creating havoc with renters’ budgets. We have instituted a standard 3% increase in our lease that, while it takes a couple of years to cover the increased costs for the owners, doesn’t damage a tenant’s budget too much at once. This step can make the difference between an owner continuing to provide housing to a tenant, or losing the home, which usually means the tenant also must move.