Rent increase

[Johnrogers790]

I'm looking to increase the rent in or of my properties from 1300 to 1400 per month. I feel like that number is just a little to high as the tenant has been fantastic and worry free. I'm trying to decide if I need to keep a professional business minded approach and increase it the amount I believe it should be, or if I should keep the personal touch and only do a moderate increase to keep the renter happy.

Any input from anyone?

 

[Wahta]

How hard would it be to re-rent if he gets angry and moves out?



Cal White

 

[Sherilynn]

Whenever possible, increase to full market rent (or close to it). I have long-term worry-free tenants that pay full market rent and they don't think twice about it because they know that if they got a new place they would be paying full market rent and may end up with a place or landlord that they don't like. Basically, the tenants don't want to mess with a good thing either.

 

[Sherilynn]

BTW, my dad and brother used to truck with a John Rogers. Wouldn't happen to be you, would it?

 

[invst4profit]

I am not sure how rent increases work out west but in Ontario it is regulated by the government. I have found that applying a annual rent increase is generally expected by tenants and rarely causes any issues. If you get into the habit of annual increase it no longer becomes an issue of making a decision, it's automatic. As a minimum it should reflect the annual cost of living increase.



Having said that it is my strict policy to operate as a business and make decisions based strictly on business practices. Tenants change on a regular bases and is simply part of operating the business. Moving out is a opportunity to refresh the property and test the rent at a higher rate so I do not concern myself with the effect rent increases have on a tenant. It's always business first so if you are prepared a move out may not result in any vacancy.

 

[therenoguy]

I would probably never be accused of being the most savvy or professional investor on the block, but this has served me well: I increase 5-8% per year. I accompany it with a letter saying that "some landlords will do nothing in bad times, and then jack their rent through the moon as soon as they smell a downturn in the vacancy rate, which is very shocking as a tenant, where a small increase each year is predictable and easily absorbed." I got those increases even during the downturn with this letter, no one has left, and they appreciate the consistency. I've slowly upped my cash flow, and they never get a huge shock that makes me look like the bad guy. Everybody wins. Don't skip a year though, even if things are in the toilet. When times get tough you can look like the hero by only increasing by 5-6% instead of 7-8%.

My two bits, worth exactly that.
Keith.

 

[Thomas Beyer]

[quote user=Johnrogers790]input from anyone?
What city is this ? What do comparable places rent for ?



Look at 4-6 other places for rent, say online, to find out if your rent is in line.



You usually get less if you pay less, say a 2BR vs. 3BR or a smaller unit or an uglier one or no yard or worse locations.



So you sell the location (with amenities nearby like parks, schools, bus stops, shopping, ..) and the quality of the home.



Some cars sell for $50,000 .. some for $15,000. Similar with condos,
townhouses, apartments or houses: you get what you pay for .. more or
less.



So, you send them a letter with the rent increase (see REIN Solid Oak Marketing System) that highlights all those amenities and proves to tenant that $1400 is a good deal, or that if they moved you could re-rent it for $1500.



The risk is, of course, they move out, and you have a month or 2 vacancy depending on city, upgrade requirements (new pant job ?) and vacancy situation. Some people rather pay $1200 in a smaller or uglier place, whereas other do not mind paying $1400 if this is indeed the market. Is it ?

 

[augustynr1]

REIN Solid Oak Marketing System?

Where can I have a look at it?

Thank you.

 

[Anonymous]

Nice thinking you have. I will approach you to go with personal touch and do an agreement that you would increase the rent every year but slight increment. This will solve your both purpose little increment in rent and agreement as a professional.

 

[Kjeck]

If you want to keep your current tenants you need to increase rent very carefully. I think that $100 is not a small amount for rent increase. It’s actually better to gradually raise rent rather than increasing it by a significant amount- that will be a lot more difficult for your tenants to accept. Before you decide to give your tenants a notice concerning rent raise you should be sure that that raise is necessary for business. That article https://rentberry.com/blog/tenant-turnover has tips that helps landlords to find it out.