What Is Gentrification?
Gentrification is a complicated issue and one that carries with it a fair amount of controversy. Simply put, gentrification is the gradual change from an area being considered a “poor” area one that is more of a “wealthy” area. It generally starts when young middle-class people start to move into an area that is traditionally less affluent in the search for history, interesting architecture, or just a more affordable way of life in a “fixer-upper” neighborhood. More follow, and gradually the area begins to change to swing more towards a younger more affluent crowd.
Longtime residents often resent this change. It is seen as outsiders are pushing the locals out. The statistics show that this isn’t always the case, but perceptions can be difficult to overcome.
How Does This Affect Me as a Landlord?
This can affect rental property owners in a number of ways, most obviously in increased property values. The potential for profit can be great, but there are other financial concerns and social issues that must be considered if you own rental properties in a gentrifying neighborhood.
To go hand in hand with the increase in property values, there is also an increase in property taxes. Because of this, and the fact that everyone around you is raising their rental rates you will eventually want to do the same. You will want to make sure you wait until your current tenants are getting ready to either move out or resign their lease.
There are also the social issues to think about. With gentrification comes younger people who may end up clashing with older members of the community. If you own a property with many different units there could be conflicts, and it is up to you to make sure everyone is able to live there in peace or you may end up with constant struggles and costly vacancies.
How Can a Property Management Firm Help?
Changing neighborhoods can be great for potential profits, but can oftentimes be a huge headache especially if you don’t live near the property. Working with a property management company can help navigate this complicated situation in a lot of different ways.
Setting rent: The company can help you set the rent low enough that you attract tenants, but not so low that you are leaving money on the table.
Resolving disputes: Sometimes there can be conflict between the different groups of people living in gentrifying communities. Having someone to mediate them can help.
Renovations: With the new group of potential tenants, some updating must be done. A property management company will have their own maintenance staff as well as a group of contractors that they work with to help update your properties to suit the new residents.