- This topic has 35 replies, 12 voices, and was last updated 8 years, 5 months ago by Coronita.
January 6, 2015 at 1:57 AM #21360January 6, 2015 at 8:17 AM #781634
Moving is expensive — I doubt any sane person would move over a 3% rent hike. Hike away!January 6, 2015 at 10:14 AM #781635EconProfParticipant
You should raise the rent, for all the good reasons you explained.
1. One rent increase in three years should be acceptable to any thinking tenant, especially since San Diego market rents have risen. And I suspect they have gone up more than you think.
2. You can point out in your rent-increase letter that your costs have gone up.
3. You can point out higher rent comps in the neighborhood to justify yourself.
4. You can point out that no further rent increases are contemplated for at least_____years.
A rational tenant will not be prompted to move because of your proposed rent hike. Of course, some people might move out of spite, even if it is to their own disadvantage.January 6, 2015 at 10:23 AM #781636
Since your tenant have been good, definitely raise it 3-5% seems fair. You’re still below market, so it’s unlikely the tenant will move. If they move, they’ll have to pay for moving cost, having hassle of moving, and paying more rent. So, they will probably stay. If your tenant is trouble some, increase rent to market value or slightly more.January 6, 2015 at 11:09 AM #781642
I’m trying to raise it by a smaller % each year. An even smaller % is easier to swallow and it gets them used to incremental annual increases.January 6, 2015 at 11:39 AM #781645outtamojoParticipant
Every situation is different, but I have not and don’t plan to raise rent on our 5 year tenants in our 4 bedroom sfr. The are an older couple who take great care of the place and if they left, may have to settle for a family w/ kids who draw on walls and scratch floors and such. The condos… I am thinking about raising after not raising for 3 years but I am lucky to have great tenants there also- dilemma dilemma. Your 3% increase after 3 years sounds reasonable though imo.
I am against yearly raises because if I were a tenant and it was known that rents would rise every year I would be constantly looking for another place even if increases were just a token amount. The annual increases give off bad vibes and makes it feel like you are power tripping or something.January 6, 2015 at 11:41 AM #781646
Not a power trip. Real inflation generally runs above 1% per year on average, so a token 1-2% increase is more than fair.
If you have the right property and they don’t like it, they’re free to move out. If they can find a place that’s cheaper in the same area.January 6, 2015 at 11:42 AM #781647
I agree, every situation is different and you have to deal with rent increase differently based on the renter pool. I signed a 5 year lease with my tenant. They take a great care of the place, pay on time, and don’t bother me. Even after 5 years, I don’t intend to increase their rent. It’s a you scratch my back, I’ll scratch yours type of thing. With a condo though, the renter pool tend to be more transient, so the likelihood of them staying 5+ years is slim anyways.January 6, 2015 at 11:49 AM #781648
Condos also have HOA fee hikes to deal with. You tend to have a 5-10% hike in HOA fees every few years, if not more often.January 6, 2015 at 12:02 PM #781649
[quote=spdrun]Condos also have HOA fee hikes to deal with. You tend to have a 5-10% hike in HOA fees every few years, if not more often.[/quote]That’s part of the cost of doing business. Renters don’t care.January 6, 2015 at 12:13 PM #781652
It’s absolutely part of the cost of doing business. And should be accounted for via rent hikes to preserve profitability. If renters don’t like it, they’re free to move out. Point being that a 1 or 2% rent hike per annum is far from unreasonable.
5 to 10% every year in this market would be unreasonable, but a per cent or two is completely fair.January 6, 2015 at 1:57 PM #781661
[quote=spdrun]It’s absolutely part of the cost of doing business. And should be accounted for via rent hikes to preserve profitability. If renters don’t like it, they’re free to move out. Point being that a 1 or 2% rent hike per annum is far from unreasonable.
5 to 10% every year in this market would be unreasonable, but a per cent or two is completely fair.[/quote]You can do that, but you’re increasing the risk of your renter moving. You have to decide for yourself whether paying for vacancy, cleaning, maintenance is less than the extra rent you get. Sometime it is, sometime, it isn’t. You might think 1-2% hike is far from unreasonable, but it doesn’t matter if it reasonable or not. It’s all about if that’s enough to make your tenant move or not.January 6, 2015 at 2:15 PM #781663AnonymousGuest
Why bother raising the price at all? If the tenants are good, and your expenses have only gone up slightly, why risk pissing off the tenant for a measly 3%.
Given you expect them to move out around the 5 year point, I recommend you plan to do a rent adjustment at the 5 year mark if they don’t move before then. At that time, maybe raise it 5% or more to compensate for your costs.January 6, 2015 at 2:22 PM #781664
Why raise prices in any business to reflect increased costs of doing business? It’s a business, not a charity last I checked.
If the tenant gets pissed off, then they know where the door is.January 6, 2015 at 2:27 PM #781665FlyerInHiGuest
Business is business. Whatever the market will bear.
Take all the conditions into account and act accordingly.
Your costs are not a factor. The price should be what the conditions call for.
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