Totally agree with bobby and flu. I wouldn’t raise the rent at all. Especially since it’s a good tenant. Why run the risk of vacancy and bad tenant for $100/month? Like flu stated, one month vacancy will take you 1.5 years to recoup with the $100/month rent increase AND you’re also running the risk of getting bad tenants that might cost you even more. Also, you might have to deal with 2 months of vacancy over that 1.5 years.
My rental is ~$100-150/month below market. I don’t mind it, because I have a great tenant who’s on a 5 year lease. I rather take less headache and no vacancy than slightly more profit and have to deal with those two things. When the 5 year lease is up, I would keep the rent the same as well until they leave. Maybe my decision, similar to flu’s, is due to the fact that even with below rent, we’re still making a profit. So we might be less driven to squeeze every last $ from the tenant vs find a great tenant and keeping them happy so the stay for a long long time.
I would only raise to market rent in between tenant.
