Stop Chasing Rental Growth in Other Markets. Stabilize Your Rent Growth with Elauwit's Managed Wifi
Multi-family real estate investors are shifting their capital around the country in an attempt to maximize return. As rents dip in one market and increase in another, you can see the amount of investment being shifted in that way as well.
A recent report issued by CoStar Group revealed that real estate investors are moving their money from the Sun Belt to other markets in the Midwest in hopes of capturing the rental growth that the Sun Belt experienced not long ago.
Moving money to where the best returns are is certainly a wise investment strategy, but it also has many drawbacks. From an investor's perspective, there is plenty of risk involved with shifting money from one real estate property to the next.
Not only that, but as investors flee a particular market, MDU property owners aren't able to attract the consistent influx of capital they might need for their operations.
There's a better way to make a profit than chasing rental growth. By working with Elauwit to offer residents Managed Wifi, investors and MDU property owners alike can stabilize their rent growth.
Goodbye Sun Belt, Hello Midwest
The Sun Belt has been the leading region in the U.S. for rent growth over the last few years.
According to the data from CoStar, the Sun Belt had the highest average annual rent growth of any region in the U.S. In 2018, that number for the Sun Belt was 3.3%, while it was only 2.4% in the Midwest.
Rent growth surged in the Sun Belt during the early parts of the pandemic and even into Q2 of 2021. With millions of people moving south during the pandemic -- as they could work from anywhere -- rent growth surged in the region to 16.1%.
To match all of that demand, homebuilders started digging. Investors piled on the money, too, looking to take advantage of the extreme rent growth caused in large part by the fact that demand far outweighed supply.
During those times, the returns were fantastic. Now, though, with hundreds of thousands of new units hitting the market, rent growth has slowed considerably in the Sun Belt, with major markets such as Atlanta and Austin affected significantly.
In response, investors have shifted their focus to Midwestern markets such as Milwaukee, Detroit and Cleveland. All of these markets, as well as many more, have seen a huge bump in interest from investors over the last three years.
Parcl Labs, a data company focused on the real estate industry, reported recently that some Midwestern markets have experienced an increase of multi-family unit sales that has reached the double digits, percentage wise.
Investors are hoping that the Midwest can prove to be as rewarding for rent growth for the next few years as the Sun Belt was for the last few.
How to Stabilize Rent Growth with Managed Wifi
Is all this shifting from one market to the next really the best real estate investment strategy? Why not do something to stabilize your own rent growth so that you're not as tied to local market fluctuations?
As rent growth is cooling from the highs that it reached during the pandemic, MDU property owners need to find ways to ensure that their profit margins remain solid. The best way to do that is to invest in a service that tenants not only desire but are willing to pay more for -- excellent internet connectivity.
By partnering with Elauwit, a boutique national telecom services company, MDU property owners can increase their rents by as much as $25 to $35 per month. This can be a significant boost to the bottom line that will last well into the future. In other words, this isn't a one-time increase in profit, but rather an enduring increase.
Offering Managed Wifi to your residents could increase your annual net operating income by as much as $60,000. Not only does that make your operations more profitable and sustainable, but it makes it more attractive to investors and even future buyers.
After all, Managed Wifi alone can substantially increase your property value.
Don’t Chase Profit; Create It
Real estate is an ever-changing industry. A market that's hot today could be cold tomorrow.
In just three short years, the Sun Belt experienced that changing dynamic to an extreme. Now, investors who once flocked to the south are looking elsewhere for positive returns in the MDU market.
Instead of hopping around chasing rental growth, investors and MDU property owners can create their own rental stability by offering residents Managed Wifi with Elauwit.
Contact us today to find out more about how our top-notch customer experience and best-in-class service can help support your property and investments for the long run.