U.S. Apartment Rents Continue Rise

Apartment landlords in the U.S. continued to push through hefty rent hikes in the second quarter, squeezing households that already are struggling financially after four years of steady increases.

The average monthly rent for an apartment rose to $1,099 in the second quarter, up 0.8% from the first quarter, according to data to be released Wednesday by real-estate research firm Reis Inc. That was the 18th consecutive quarter of rent increases. For the 12-month period ended in June, rents rose 3.4%.

Effective rents—which tend to be lower than asking rents—were up in all 79 U.S. metro areas tracked in the Reis report. West Coast cities that have been the model of recovery continued to top the list of highest rent growth for the quarter and over the past 12 months.

Rent growth exceeded 6% over the past year in San Francisco, San Jose and Seattle.

Even cities that aren't normally associated with fast rent growth, such as Charleston, S.C., and Nashville, Tenn., posted strong growth over the year, up about 5% or more for the year.

Income Producing Property

Income producing investment property includes single family, vacation rentals, multi-family, mixed use, office, retail, industrial and land.

Multi Family Homes

A Multi-Family property is a type of home or building with multiple units owned by one or more parties. 

Condo buildings and duplexes can be considered multi-family residences; but with a duplex, both the property and the land are recorded on one deed. Whereas with a condo, the owners only own their individual units, not the common space or land, and each have their own deed.

Capitalization Rate (Cap Rate)

Capitalization Rate (Cap Rate)
A ratio used to estimate the return on investment of a real estate investment property, like an apartment building. It is calculated by dividing the income a property will generate in a given year (after fixed and variable costs) by the purchase price or current value of the property. For example, an apartment building that recently sold for $1,000,000 and generates $100,000 in income after expenses has a capitalization rate of 10%.