Being kind could impact property value, investor warns

Landlords may think a “nice” approach is good for tenant retention but you could be devaluing your property, according to a leading property manager and investor.

Investors may want to keep long-term tenants happy by offering a break on rental increases but they should start thinking of the long-term implications from their act of kindness.

Kathy Berner, owner of Regency Property Management and Real Estate in Regina, says landlords need to keep rents in line with current market values.

“As well as allowing the tenants to run the show, this low rent is also de-valuing the building,” says Berner.

“In such cases, a savvy investor scoops the building for a low price since the value of multi-family buildings is directly related to the income, and so the tenant’s low rent.”

These landlords, she adds, then raise the rents drastically after buying, causing further unrest among renters in the building.

“Smaller and fair rental increments are far more effective and acceptable in keeping rental rates in line,” she says.

This should be one of the 10 rules that landlords adhere to when renting properties, says Berner.
***Do you want to learn more about Kathy Berner’s 10 landlord rules? She outlines each in the September issue of Canadian Real Estate Wealth which is currently on the newsstands. You can also subscribe here today to avail of a special offer.

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