The Bay Area has many charms. Beautiful landscapes, rich cultural opportunities and a plethora of job opportunities make it appealing to people of all backgrounds. Unfortunately, though, the Bay Area isn't without its drawbacks. While tech companies have added tremendous value to the region, they've had a serious impact on the local rental markets. When Facebook moved into east Menlo Park, one tenant saw her rent jump $800 over a one-month period.
Cal Bay Property Management's Scott Safadi was consulted for the story. When companies like Facebook come to town, property values increase, causing owners to sell multi-family apartment buildings based on full occupancy at market rates. New owners will be quick to raise rent in order to pay off the loan they used to purchase the property.
“The guy who sells the building wants as much as possible from the sale. And so the buyer says, ‘I need to get as much rent as possible to make up for this purchase,’” Safadi shared in the Palo Alto Daily Post.
While this strategy makes sense for the property owner, it can cause financial hardship for tenants. If you're hoping to implement a rent hike, it's best to roll out the changes gradually. Above all, keep tenants in the loop about your plans. By increasing rent over several months, renters will be able to plan accordingly. This leads to less turnover and less work on the part of the landlord.
As with most things in life, the golden rule comes into play. By treating tenants with the same respect you'd expect in return, you can maintain a cordial relationship no matter what you're charging per month.
- Scott Safadi, Cal Bay Property Management
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