Nate Armstrong of Home Invest on How to Raise the Rent with a Conscience

Nate Armstrong

Nate Armstrong is the co-founder and Chair for Investor Relations at Home Invest. The Chicago-based company helps real estate investors coordinate their portfolios and takes the legwork out of investing. Armstrong has a bachelor’s degree from Saint John University. Armstrong began his professional career as the co-founder of Premium Painting, an award-winning business he started while he was still in college.

Nate Armstrong has coached hundreds of real estate investors and professionals. He has been a guest speaker at real estate seminars, sharing his knowledge with his peers.

As an investor, Armstrong owns several properties. His experience as a landlord helped him to understand this important aspect of real estate investment.

Outside of work, Nate Armstrong spends time with his wife Jenifer. He believes that relationships involve teamwork and mutual support.

1. Tell our readers why you are passionate about real estate.

I first entered the real estate market as an investor. I purchased a home hoping that its value would increase. I was able to enter the market during the recession of 2008, and I benefited from the resurgence of the economy. I realized that real estate could be a fruitful investment and resolved to learn everything I could. I founded Home Invest as a response to the market needs for a company to handle real estate investment.

2. What are some of the key problems affecting landlords in today’s market?

First, today’s market is beneficial to landlords. There is a shortage of affordable rental properties in many markets, driving rents higher. Even though it looks easy on the surface, being a landlord is a difficult proposition. High turnover is a killer for landlords. Late payment is another problem most landlords have dealt with. If the property is mortgaged, your mortgage company doesn’t care whether the tenants’ rents are late. Evictions are another serious problem, causing legal difficulties and a great deal of stress.

3. One way for landlords to increase their cash flow is by raising rent. How would a landlord go about raising the rent in a way that doesn’t cause excess turnover?

This is a tricky proposition. Obviously, tenants are unhappy when the rent is raised. If the rent is raised too high, they will look for somewhere else to live. When you are working with a rent increase, it’s best to take it slow, no more than 10 percent per year. Let your tenants see some improvements as a result of their greater investment. Talk to them about the upgrades they would like to see and work on making them happen, within reason. For example, your tenants may want you to work on weatherizing the building, keeping utility costs down. This is a no-brainer when you are paying for the heat, but it is great for properties where tenants pay the heating bills as well.

4. How should a landlord conduct himself or herself in relation to the tenants?

First, you have to be transparent and honest with your tenants. Make sure that you communicate with them frequently. Keep it professional, though; you don’t want to get involved in their personal lives. Be cordial but don’t push it too far. It is a business transaction and your tenants are there to help you make money on your investment, but you need to treat them like human beings.

I can’t overemphasize the importance of communication. If you are planning upgrades to the building, let them know as far in advance as possible. It’s true that most states allow landlords in the home given a 24-hour notice, but this can be a burden on your tenants. It’s common courtesy to give them at least a few weeks’ notice except in case of a maintenance emergency.

5. Do you have any other wisdom to share with landlords?

When you buy a property, don’t move tenants in until you have made any necessary repairs or upgrades. Tenants will be more likely to choose your apartment and having all of the repairs done before they move in will keep them happy.