Raising rent prices…..yes or no….

[poorgradstudent]

As a former tenant I can say that a 3% annual rent increase isn’t much. That’s $60/mo on a $2,000/mo unit. Every big complex in San Diego does small annual increases unless the rental market is truly in the toilet.

There are a few factors that could change things a little. If the tenant is handy and tends to fix things themselves and provides free sweat equity to maintain the property, they may be worth keeping at current rates. Also, if the property realistically will need repairs and upgrades like new carpets or appliances to rent out to new tenants, that can also change the math a little.

The bottom line is one 3% increase in three years is still a pretty good deal, especially if you’ve been actively maintaining it. If it’s a little run down the math might be a little different.

[FlyerInHi]

[quote=poorgradstudent] Every big complex in San Diego does small annual increases unless the rental market is truly in the toilet.
[/quote]

That’s exactly it. Those “luxury rentals” and “apartment homes” do it because it keeps the brand image up and help justify what they charge new tenants.

Most of them keep the deposit for cleaning, repairs, and carpet replacement. They will not refund.

In a “hot” rental area like west Mira Mesa, if the tenants leave, I would take the opportunity to spruce up the place a little and charge the next tenant more. That keeps the tenant quality up over the years.

[CA renter]

[quote=FlyerInHi]

That’s exactly it. Those “luxury rentals” and “apartment homes” do it because it keeps the brand image up and help justify what they charge new tenants.

Most of them keep the deposit for cleaning, repairs, and carpet replacement. They will not refund.

In a “hot” rental area like west Mira Mesa, if the tenants leave, I would take the opportunity to spruce up the place a little and charge the next tenant more. That keeps the tenant quality up over the years.[/quote]

I’ve taken a landlord to court over this…and won. They’d better damn well return the deposit if the renter left the unit in the same shape (minus basic wear and tear) as when they rented it. If not, they are breaking the law.

Personally, I’ve never heard of an apartment complex keeping the deposit for no reason. That would be incredibly stupid on their part.

[spdrun]

Time is not free.

Time is being compensated by the higher rent.

[an]

[quote=carlsbadworker]You are justified to raise rents after 3 years. But I wouldn’t do it personally if the rent is still 10% within the market price. The tenant may not move because the 3% increase, but psychologically, they may want to get back their money by calling your more for small issues and delay the needed maintenance.
You can ask them to sign a contract instead. I read that the contract is not really enforceable in CA but at least psychologically you get them more committed to stay.
But I would raise rents even if they are perfect tenants after 5 years (unlike AN)…but I will always price it under the market (e.g. 5-10% if they are perfect tenant). In fact, 10% under market is my threshold. I will try to keep it between 5-10% below market for perfect tenant.[/quote]But flu’s rent is currently only 7-8% under market rent. Time and stress is not free. What you said in your first paragraph is the reason why I wouldn’t raise rent on a good tenant who don’t bother you.

I currently have a tenant who signed a 5 year lease with me. At the signing of the lease, it was market rent, but right now, it’s probably about 10% below market. When the lease is up, I don’t intend to raise the rent, since it has been pretty hassle free. So, I say a few hundred dollar a year is a worthwhile price to pay for having a hassle free tenant. I general rule is, don’t raise rent on good tenants. Raise rent to market price with new tenants and raise rents for bad tenant to get them to move.

[Coronita]

[quote=AN][quote=carlsbadworker]You are justified to raise rents after 3 years. But I wouldn’t do it personally if the rent is still 10% within the market price. The tenant may not move because the 3% increase, but psychologically, they may want to get back their money by calling your more for small issues and delay the needed maintenance.
You can ask them to sign a contract instead. I read that the contract is not really enforceable in CA but at least psychologically you get them more committed to stay.
But I would raise rents even if they are perfect tenants after 5 years (unlike AN)…but I will always price it under the market (e.g. 5-10% if they are perfect tenant). In fact, 10% under market is my threshold. I will try to keep it between 5-10% below market for perfect tenant.[/quote]But flu’s rent is currently only 7-8% under market rent. Time and stress is not free. What you said in your first paragraph is the reason why I wouldn’t raise rent on a good tenant who don’t bother you.

I currently have a tenant who signed a 5 year lease with me. At the signing of the lease, it was market rent, but right now, it’s probably about 10% below market. When the lease is up, I don’t intend to raise the rent, since it has been pretty hassle free. So, I say a few hundred dollar a year is a worthwhile price to pay for having a hassle free tenant. I general rule is, don’t raise rent on good tenants. Raise rent to market price with new tenants and raise rents for bad tenant to get them to move.[/quote]

My labor is cheap… Look at how long I’m taking to fix my timing belts on my audi… Lol…

In all seriousness, I see the arguments both are making on this and I kinda go back and forth on this too.

In the bay area, this is a no brainer. I would increase the rents simply because well, everyone there is use to the insanity of the rental/housing market there..

For the other rental elsewhere in SD, the tenant pool isn’t as good and currently I have a good tenant, so for that I’m fine with keeping things as is.

For this particular one, however, not sure… It’s in high demand, there won’t be a problem with the tenant pool, turnarond is probably less than a month, and I’m slightly inclined to think the current one won’t be moving. Anyway, I can think about it some more.

[Author]

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