Are rents going up?

[Stevied]

For those that are in the business, or follow closely - wondering if rents (in pesos) are going up or staying about the same? Logically, it would seem that there are 2 drivers to push up rents - inflation (and expectation of more given peso issues), and higher demand (more people selling apartments and moving to rentals, or less people being able to afford to buy and therefore rent). I’m more than curious - we own an apartment that is coming off a lease; we gave the current renter an additional 3 months extension at prices consistent with 3 months ago - and now wondering whether to raise rent for the listing.

 

[earlyretirement]

Rents in pesos are definitely going up. I haven't raised my rates in US dollars in a while but I typically always adjust it if priced in pesos. A few of my rental tenants are corporations and they have to pay in pesos so I had put in a clause that said they have to pay a 25% inflation adjustment each year (raised each quarter).

Now I won't rent at a peso rate and will only rent in US dollars. I had one tenant that was doing a long term rent in US dollars and she argued that it was too expensive for her and wanted a discount. I argued to her that if it shifted the other way I certainly would have still respected our contract and wouldn't (and couldn't by law) raise her rate. That it was the entire purpose of having a contract to respect it and abide by it.

I offered to end the contract early so she could leave and told her I wouldn't penalize her. She could just leave. But in the end she didn't. Funny how locals want to change things when it advantages them but not when it goes against them.

Yes, rental rates will all start to go up as they expire due to the exchange rate devaluations. Properties are priced in US dollars so the rental yields need to be consistent to keep your ROI.

 

[Stevied]

Thanks. We have one apartment that we rent in US $ - it's in Las Canitas and our focus was to rent to expat community and price it in USD. This apartment is in Belgrano, near Colegiales area, a duplex where we aren't necessarily targeting expats, so we rent it in pesos. The peso devaluation has occurred so fast that I'm not sure rents have caught up - so it's tough for me to see what the market is. The current tenant probably made a mistake - we raised the rent substantially 3 months ago when she was coming off of a 2 year lease - she balked at the increase, and asked for a 3 month extension (at the raised price) so that she could have time to find another place - and we agreed. I suspect that she will come back in a few weeks and agree to pay the price we raised it to 3 months ago - but unfortunately for her, that ship has sailed given the peso devaluation; she would have been better off agreeing to the rent 3 months ago and locking in another 2 year term (which we were willing to do), and we would have been worse off. Timing is everything, as people say.

 

[earlyretirement]

Thanks. We have one apartment that we rent in US $ - it's in Las Canitas and our focus was to rent to expat community and price it in USD. This apartment is in Belgrano, near Colegiales area, a duplex where we aren't necessarily targeting expats, so we rent it in pesos. The peso devaluation has occurred so fast that I'm not sure rents have caught up - so it's tough for me to see what the market is. The current tenant probably made a mistake - we raised the rent substantially 3 months ago when she was coming off of a 2 year lease - she balked at the increase, and asked for a 3 month extension (at the raised price) so that she could have time to find another place - and we agreed. I suspect that she will come back in a few weeks and agree to pay the price we raised it to 3 months ago - but unfortunately for her, that ship has sailed given the peso devaluation; she would have been better off agreeing to the rent 3 months ago and locking in another 2 year term (which we were willing to do), and we would have been worse off. Timing is everything, as people say.

Hi Steve. Yes, I had a client in a similar situation where I had offered him a set rent in pesos as his year lease was coming to a close. He was getting a great deal and I told him I had to raise the rent (in pesos as his company would only let him deal with pesos). He said he wanted to renew for 3 months and I offered to rent it for 3 months and he balked at it saying it was too expensive. It's funny after this devaluation he tried to come back and rent but like you the ship has sailed.

Timing is everything but it's funny how many locals want to win at both ends. When the exchange rate goes in their favor they are happy and they expect you to honor the contract. But when it shifts against them they demand that you change the terms/price.

 

[perry]

Hi Steve. Yes, I had a client in a similar situation where I had offered him a set rent in pesos as his year lease was coming to a close. He was getting a great deal and I told him I had to raise the rent (in pesos as his company would only let him deal with pesos). He said he wanted to renew for 3 months and I offered to rent it for 3 months and he balked at it saying it was too expensive. It's funny after this devaluation he tried to come back and rent but like you the ship has sailed.

Timing is everything but it's funny how many locals want to win at both ends. When the exchange rate goes in their favor they are happy and they expect you to honor the contract. But when it shifts against them they demand that you change the terms/price.

Argentinians are wheelers and dealers and speculate with every detail . In business some came be very difficult to deal with with their twisting and turning . In this aspect I do miss Australia who are direct and concise in business dealings .

In regards to rents they are going up but not to the level of the devaluation in dollars . There is a lot of apartments for rental now with high expenses and the demand for these are low . In many cases if you bargain you can get good offers atm .

 

[Rich One]

Rentals in CABA went up 17 % on the first half of 2018 whilst the dollar went up 100 %

https://www.infobae.com/economia/20...carecieron-un-17-en-la-primera-mitad-del-ano/

 

[earlyretirement]

Yep, I agree that rentals won't go up as always but not to the level of devaluation in dollars. Honestly, in dollar terms I've really not raised my rentals much year to year even though the expenses keep going up each year. The doormen have one of the strongest unions in all of Argentina and their salaries go up each year (just like everyone else). Utilities all are going up, HOA fees keep going up. But there is a law of supply and demand like Perry mentioned so like everything in Argentina things keep getting more expensive but there is a limit to how high they can go with supply and demand.