With 89 Cents of Every Rent Dollar Already Spent, Apartment Margins Come Down to the Line Items

New research from the National Apartment Association puts a number on what many apartment owners have been feeling: operating costs are rising nearly twice as fast as revenue, and 89 cents of every rent dollar now goes to expenses and financing. That leaves about 11 cents of margin, and that figure assumes every dollar of rent actually gets collected.

Ron Kutas, Chief Executive Officer of OneWall Communities, says the figure matches what he sees across his portfolio. The main exceptions are properties that locked in long-term fixed-rate financing while interest rates were low. He adds that the squeeze is sharper in workforce housing, where residents can’t absorb large rent increases, so owners can’t raise revenue to cover rising costs.

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As originally published on streetinsider.com