One of the advantages we have in this business is that our units tend to command top-of-the-market rents.
The reason is pretty simple: We spend a ton of time and money making each unit we renovate into the kind of place that we, ourselves, would want to live in.
But I’ve been doing a lot of research on Craigslist for Silver Lake, Hollywood, Miracle Mile, etc. and I’ve come to the following conclusion: We’re not charging enough.
If you go online right now and start looking at two beds under $2500 in the aforementioned neighborhoods, your eyes will bleed. The units themselves are uniformly horrible – bad flooring, cabinets, window treatments, you name it. And, on top of that, the marketing is horrific… the pictures mostly look like the owners are actively trying to avoid leasing their apartments (bad lighting, no staging, weird angles, etc.)
I understand that not everyone is capitalized to do gut renovations of apartments. But I can’t, for the life of me, understand why anyone who is undertaking a renovation right now would use, for example, granite countertops or generic Home Depot cabinets. The cost difference to use good stuff is negligible (particularly when amortized over 10+ years) and the difference from the tenants’ perspective is massive.
So, given how terrible the competition is, I’m going to need to take a close look at our asking rents and see if there’s room to increase them.