New research by RealPage Inc., a Dallas-area real estate analysis firm, finds that the 5.3 percent average increase in rents in the Reno area in the past 12 months ranked 10th highest among small metro areas in the country. Wilmington, N.C., topped the small-metro list with 7.4 percent growth in rents. Among big cities, Las Vegas posted the biggest increase, with rents going up an average of 8.8 percent in the past year.
Investors appear to think rents in Reno will continue to rise, and they are basing their profit-and-loss calculations on the likelihood of higher rents, says Benjamin Nelson, a specialist in real estate investment with NAI Alliance in Reno.
Lenders are fueling the fire. Some lenders who previously based their decisions on the proven historic financial performance of apartment complexes now are willing to make more speculative loans to investors who expect future rent increases, Nelson says.
And the expectations of rising rents aren’t limited just to top-tier new complexes.
Nelson says investors now look at older apartment complexes and try to figure out what improvements — updated interiors, maybe, or new washers and dryers — would be needed to support higher rents.
The completion of big new apartment complexes probably won’t reduce much of the pressure on rents in older buildings, Nelson says.
Most of the newer projects are targeted toward higher-income renters, while older buildings typically provide housing for working families who can’t afford to move into one of the new complexes, he explains.
