Landlord Blog: Rent Increase
Rent Increase (by Lew [NC]) Posted on: Jul 28, 2021 2:51 PM
I have a couple of nice duplexes in the Raleigh, NC area which is booming. I have a resident that has been in one unit for a dozen years and I never raised the rent for many reasons, the main ones being retention and to leave sleeping dogs alone (prevent turnover). The units all get increases when they go vacant but this one is an exception. But now that it is over a decade I have to raise it due to recent tax and insurance increases. Anyway I was wondering what experiences people had when jumping the rent and what a logical amount would be (after 10 years+) to prevent a move even though everything else around is high. I rent the units around it for $1200 per month but this one has been $750 since 2009. Thank you. –24.123.xxx.xxx
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Rent Increase (by bet [MA] ) Posted on: Jul 28, 2021 3:14 PM
This is a perfect argument for the very bad practice of not raising the rent every year. You have put your tenant IN A REALLY BAD spot. How do you expect them to come up with almost double the rent? We have learned over the years that yearly rent increases is the way to go. If the tenant can not afford the increase, they leave. Every tenant that we have ever keep their rent low and then raise, hated us. It never pays. If I were you, just tell them you need to bring the rent up to market rent and $1200 it is and they can stay or go. We just did that, they hate us and are vacating. We had to raise their rent or sell the house because we were losing money. –73.227.xxx.xxx
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Rent Increase (by Rosie [VA]) Posted on: Jul 28, 2021 3:33 PM
Yikes! $750 vs. $1,200 Market! How much is this tenant worth? Obviously, you’re potentially losing $450 a month — is that resident worth that much? Like bet (MA) pointed out, that’s why we usually raise our rents a little bit most years. With a long-term resident you’ll still (probably?) be under market after 12 years, but not nearly as much. But that’s water under the bridge now. Check around and see what they’ll have to pay if they start looking around to move. I’d probably raise it at least $100 a month — and that’s IF you really don’t want them to move and absolutely do not want to get a turnover. However, more than likely, I’d go to them (with LOTS of notice prior to the renewal) and explain the situation (ex: property taxes, insurance, other expenses have increased a lot in 12 years and you’ve been absorbing it. But you just can’t afford to do that anymore. (Try to help them understand how you’ve subsidized the property for a long time). Raise it at least $200+ a month (should be more). They are probably going to be upset one way or the other — just resign yourself to that. Even though you’ve done them a favor for 12 years, they’re not going to see it that way. (Good deeds don’t go unpunished). But it’s probably time to let them leave, fix the house up, and rent for the higher money. That’s a lot of dollars to lose over the years. No good answer. Good luck. –108.4.xxx.x
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Rent Increase (by Sisco [MO] ) Posted on: Jul 28, 2021 3:36 PM
Raise rents to top of market, continue to raise rents to top of market at every opportunity. –149.76.xxx.xxx
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Rent Increase (by 6×6 [TN] ) Posted on: Jul 28, 2021 3:45 PM
Are you keeping the house in tip top shape?
This will also come into play when raising the rent.
–73.120.xx.xxx
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Rent Increase (by Lynn [MA] ) Posted on: Jul 28, 2021 4:10 PM
I was like that in the past. So in order to catch up I would raise the rent $100 per month per year while other tenants would go up by $25 to $50 per month. If they are good and you want to keep them, they’ll get up to market in a few years. –71.184.xxx.xx
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Rent Increase (by MC [PA] ) Posted on: Jul 28, 2021 4:20 PM
We tend to keep good tenants where they are for a few years. 10 is a really long time but I get it. Consistent, low maintenance goes a long way. I would give the tenant 60 days notice and raise it $50 to $75. –73.230.xxx.xx
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Rent Increase (by BRAD 20,000 [IN] ) Posted on: Jul 28, 2021 4:22 PM
Lew,
Straight truth, not trying to beat you up. The truth will hit hard.
Yes, this is a perfect example of why LLs MUST raise the rents, at least a little, EVERY year.
Right now you are supporting the res by $5400 per year. You are running a charity out of fear.
If someone OWED you that money you would be having a fit.
I did a quick estimate and determined you have LOST $24,566 since 2009.
NO RES is worth that much.
Don’t operate out of fear. It takes courage to manage your business for a profit.
Me? Raise the rent to current market, without apologies, right now. If they cannot pay that shows they are not the right res for your rental.
Just keep remembering…you gave away $24,000…
At the very least this is a $5400 decision.
BRAD