Author Topic: increase rent at lease renewal?  (Read 5744 times)

$_gone_amok

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increase rent at lease renewal?
« on: May 04, 2012, 05:01:24 PM »
My tenant's lease is up soon and he wants to renew for another year. It is a good idea to increase the rent by 3% in this economy?  The house is in the SF Bay Area and comparable rentals are $300/mo higher.  However, the tenant has always paid the rent on time and has never give me any troubles. 

AJ

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Re: increase rent at lease renewal?
« Reply #1 on: May 04, 2012, 05:20:14 PM »
I liked what my old apartment did when our lease was up: They sent us a letter offering to renew our lease at $10 more a month if we renew for 12 months, or $30 more a month for 6 months, or we could go to month-to-month for $60 more a month.  Your numbers may look different but that would reward your tenant for renewing their lease while still raising the rent a bit. Plus seeing that our rent could go up by $60 softened the blow of the $10.

Maybe ask for the full $300 to go moth-to-month, $200 for 6 months, and $50 for a full year lease? Just a thought...

arebelspy

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Re: increase rent at lease renewal?
« Reply #2 on: May 04, 2012, 06:30:10 PM »
Really depends on the rental market.  If you're confident you could fill a vacancy quickly and you're under the market, raise it.  Provide them with a printout from something that has rental estimates like zillow or rentometer to back up why you are raising it.

My most recent renewal in March was already close to market rent, so I did what AJ mentioned. I told them it'll stay the same if they renew for another year, or go up if they wanted month to month.  They signed for another year.
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Mirwen

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Re: increase rent at lease renewal?
« Reply #3 on: May 04, 2012, 10:07:26 PM »
I've found it's best to make small increases every year instead of waiting until you need to raise it a lot.  Especially if you are under market, I think this is to be expected.  Setting expectations is important.  If you don't raise it this year, they will balk if you do it later.

rugorak

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Re: increase rent at lease renewal?
« Reply #4 on: May 07, 2012, 08:00:49 AM »
As a current renter of course I would prefer my rent to never go up. But I am a realist and know it can and will. I prefer my landlord to give me warning as early as possible so that I can budget appropriately. For example my recent rent increase I was told about 3 months beforehand. But I know from talks with my landlord that good renters are hard to find at times. So if you want to keep your tenant (as you seem to suggest) price it as a reasonable increase that shouldn't be too hard for your tenant to absorb. 3% doesn't sound unreasonable at all but I have no idea on the base. $300 a month more would probably give your tenant a panic attack but a modest increase shouldn't be a big deal.

James

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Re: increase rent at lease renewal?
« Reply #5 on: May 07, 2012, 09:44:25 AM »
I liked what my old apartment did when our lease was up: They sent us a letter offering to renew our lease at $10 more a month if we renew for 12 months, or $30 more a month for 6 months, or we could go to month-to-month for $60 more a month.  Your numbers may look different but that would reward your tenant for renewing their lease while still raising the rent a bit. Plus seeing that our rent could go up by $60 softened the blow of the $10.

Maybe ask for the full $300 to go moth-to-month, $200 for 6 months, and $50 for a full year lease? Just a thought...

I like this idea a lot, the monthly number should be backed up with whatever data you have showing the rental being worth $300 more than you are charging.  You want them to feel like they are getting a good deal by signing a lease.  Obviously if you can't back those numbers up you risk insulting the tenant and they might look elsewhere just because you are throwing large numbers around.  Tread carefully, but I agree with raising them every year you thing an adjustment is appropriate, not waiting for some large change.
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