For the past year I have had the privilege of serving on the city of Salem’s Housing Advisory Committee. Every year the Housing Authority in Salem brings us their recommendation for rent increases or decreases for the voucher program so that we can discuss their proposed changes and vote on whether we feel the City Council should adopt the changes or not.
We discussed this at our October 13th meeting and I am happy to announce that they proposed an increase in the housing voucher rent payments. We unanimously voted to recommend that the city council adopts the increased rent schedule. This will take effect January 1st, 2015. The increase is being made to their Fair Market Rent (FMR) standard. They break the FMR down by unit category based on the number of bedrooms. The FMR represents rent plus tenant-paid utilities (not including phone, cable, & internet) and is the amount that they start with to figure out what the landlord will get paid and what the tenant’s share of the FMR will be.
They come up with the FMR amounts is that by surveying local property managers to see what the average rents are for each unit category. According to the voucher program regulations, they must then set their FMRs to be between 90% and 110% of the average rents for the area. They must also consult their upcoming annual budget to determine where in that range the new FMRs can be set. In order to stay within their budget so that they don’t have to decrease the number of vouchers available, they set rents between 90.2% and 101.5% of the area’s average rent amounts.
Another great statistic to come from their study is the vacancy rate within the urban growth boundary of Salem. They conducted the study at the beginning of October and established that the overall vacancy rate in the Salem/Keizer area is at an amazingly low 1.65%. I’m sure this is no surprise to most landlords that have been experiencing extremely low vacancy rates for the last couple of years. Based on your basic supply and demand curve it is time to raise those rents if you haven’t already.
If you are looking at having a vacancy I would highly suggest that you go online and look at what other companies are charging to make sure that you are maximizing the income produced by your property. The main place to check is craigslist as most managers post their units there.
If you have tenants with housing vouchers, be sure to request your rent increase when their annual inspection and renewal comes up. Most of the time you will have no trouble getting at least $25 per month increase, but you have to actually request it at the yearly renewal or you will miss out. Below is a table that shows the FMRs as of October 1st, 2014, the current payment standard, the new payment standard, and the amount of increase for each unit category. This serves as a good guide as to what you should ask for rent if you have units that typically attract tenants using the city of Salem’s housing voucher program.
Unit Category FMRs October 1, 2014 Current Payment Standard (% of FMR) New Payment Standard (% of FMR)
Studio $538 $536 (99.6%) 536 (99.6%)
1-Bedroom $569 $584 (102.6%) 626 (110%)
2-Bedroom $768 $709 (92.3%) $745 (97%)
3-Bedroom $1,132 $1,038 (91.7%) $1,100 (97.2%)
4-Bedroom $1,360 $1,282 (94.3%) $1,325 (97.4%)
5-Bedroom $1,564 $1,474 (94.2%) $1,550 (99.1%)
6-Bedroom $1,768 $1,658 (93.8%) $1,725 (97.6%)
Pad Space* $523 $472 (90.2%) $506 (96.7%)
*Pad Space is considered to be mobile home pad space rentals
President of IRC Enterprises