Author Topic: How much to raise rent w/o being a jerk?  (Read 2777 times)

Acorns

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How much to raise rent w/o being a jerk?
« on: January 21, 2022, 01:07:26 PM »
I own a rental home in a very desirable community, right now in this town there are only three other homes for rent. This community is right next to a military base and most of my renters have been military or other government. The tenants have been there for several years and market rent has really increased since they signed the lease. I usually keep rental increases low, like $25-$50/yr, in 2020 we skipped rental increases all together, as a result this house is currently renting for ~$400 under market rate. It is coming up for lease renewal and I am wondering how much we can/should raise the rent without being a jerk. I am ok with having to find a new tenant.

SunnyDays

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Re: How much to raise rent w/o being a jerk?
« Reply #1 on: January 21, 2022, 05:12:54 PM »
I donít think that keeping rent far below market rates really does anyone a favour in the long term.

Of course, the landlord loses money, but it also sets unrealistic expectations for the tenant.  They get used to having low rent and expect it to continue, so may not budget for higher rent.  Then after a few years when rent rises (perhaps quite drastically), they suddenly canít afford it because theyíve spent their money on a bunch of other things, and then have to move somewhere cheaper, which if they can find something, is usually of a lower quality than they had.  Then the landlord has the hassle of finding new tenants.

Regular, reasonable increases are best for everyone, IMO.  I live in a rent controlled province, where increases are limited to no more than 3% a year, but I donít think thatís always sustainable either.  If you want to keep your current tenants, then a small discount would be fine, but I would let them know that you will need to catch up to market in a few years, and will be raising their rent accordingly.  Then they have warning and would have time to look for something else if they want.  If you donít care if you keep the tenants, give them 3 months notice that rent will be going up substantially.  Up to you which you choose.

nereo

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Re: How much to raise rent w/o being a jerk?
« Reply #2 on: January 21, 2022, 05:16:04 PM »
First, check your local laws - many have limits on how high (typically as a percentage) you can raise the rent year-over-year.

Beyond that the local market largely determines a ceiling for what your unit can rent for, and my personal opinion is that there is no moral reason why a landlord canít raise rent based on the current market.

Öthough in order not to be a jerk Iíd give your current tenants at least three months to prepare.  If itís truly at/below market rate the chance they will leave due to a rent increase is low. If you go too high you will perpetually have problems retaining good tenants. And itís very easy for landlords to over-value their own properties, so be as objective as possible.

cool7hand

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Re: How much to raise rent w/o being a jerk?
« Reply #3 on: January 22, 2022, 09:42:56 AM »
You're running a business not a charity. You're not a jerk if the rate is close to market norms. If anyone has a problem with that, that's based on their neuroses and not your problem.

Another Reader

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Re: How much to raise rent w/o being a jerk?
« Reply #4 on: January 22, 2022, 10:11:04 AM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

nereo

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Re: How much to raise rent w/o being a jerk?
« Reply #5 on: January 22, 2022, 11:06:03 AM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

Iím not really seeing how your post disagrees with the others made here.

Cassie

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Re: How much to raise rent w/o being a jerk?
« Reply #6 on: January 22, 2022, 12:59:11 PM »
When we had a rental we didnít raise the rent if we had a excellent tenant. Having a destructive tenant can cost a lot of money.

Archipelago

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Re: How much to raise rent w/o being a jerk?
« Reply #7 on: January 22, 2022, 03:28:55 PM »
There are reasonable and unreasonable ways of raising rent. I think it's reasonable to give as much advance notice as possible about a rent increase. Even if a renewal is 6 months away, I tell tenants they can expect an X increase in 6 months. That way they have plenty of time to prepare and expectations are managed. You can also increase it over time. For example:

$400/month increase over a 1-year period

$2000 base rent
$2100 for Q1
$2200 for Q2
$2300 for Q3
$2400 for Q4

That way they're not being hit all at once. It's reasonable to me.

I would also make a list of reason why rent is increasing so that it doesn't sound like an arbitrary reason to jack up rent. Taxes are increasing X percent next year. Water, sewer and trash pickup all increased. X building improvements were done since living at the property. The increase is justified if sufficient value is returned.

When I received letters from the tax assessor saying taxes were going up, I let all tenants know the same day. Because I knew, there's no reason not to share that information for reasonable transparency.

It's all about being reasonable IMO. I know that's not a black and white thing, but using your best judgment is part of what comes with being a landlord.
« Last Edit: January 22, 2022, 03:31:22 PM by Archipelago »

Dicey

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Re: How much to raise rent w/o being a jerk?
« Reply #8 on: January 22, 2022, 03:36:26 PM »
Here's a wild ass idea: ask them what they can afford. If they're good tenants and you'd like to keep them, that is. We do this with our tenants. Our favorite gives himself a $100 increase every year. Love that guy! Of course, in our case, we're in a Senior Community, so when tenants do turn over, we know we can jack the rent up to maximum market rate, which we do every time.

Random tidbit: There's an apartment complex I'd like to buy. DH and I walked past it yesterday and poked around a bit. For the first time ever, there was someone outside. We talked to the guy. He said the landlords are great and that he's lived there for 15 years. First thing DH and I said when we got out of earshot is, "I'll bet that guy's rent is a total steal!"

Dr Kidstache

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Re: How much to raise rent w/o being a jerk?
« Reply #9 on: January 22, 2022, 07:57:41 PM »
Well, I can suggest how *not* to do it. My former landlord called me from her vacation where "friends told me I could be making a lot more money". She vaguely floated raising the rent 50%, ultimately raised it 30% for the short-term but said it would go up again (unspecified amount) after that. She said multiple times that she didn't want me to move out and I was a great tenant. I was extremely fortunate to be able to buy somewhere in my VHCOL rental/housing market. But I can tell you that I would not have wanted to keep renting from them unless I had absolutely no other options. The rent increases were greedy and thoughtless. Who can absorb 30-50% sudden increases in housing costs?

Abe

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Re: How much to raise rent w/o being a jerk?
« Reply #10 on: January 22, 2022, 08:04:41 PM »
When I used to rent a house out, we'd go up by about the same percent the taxes and whatever utilities we paid went up (within the legal maximum, which was 5%).

People who could afford to rent our house could tolerate a 5% increase in monthly rent, though. We eventually sold the place once housing prices recovered (we bought a few years before the housing bust, so didn't want to sell. Thus wasn't really a profit-making venture).

oldladystache

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Re: How much to raise rent w/o being a jerk?
« Reply #11 on: January 22, 2022, 08:17:07 PM »
I wrote into my rental agreement that the rent would be adjusted annually based on 3/5 of the change in the consumer price index, up or down.

Nobody ever complained and no one was surprised. There were no rent controls then.

Acorns

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Re: How much to raise rent w/o being a jerk?
« Reply #12 on: January 22, 2022, 10:32:38 PM »
Thank you all for your responses. I like the idea about giving them lots of heads up that we will be catching up to market rate, like telling them this year the increase will be $75, next year $100, etc. These people have been good tenants and I am willing to work with them on what is fair for both parties.

cchrissyy

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Re: How much to raise rent w/o being a jerk?
« Reply #13 on: January 22, 2022, 10:48:24 PM »
i like having the original lease agreement spell out what will happen. that way you only have to talk about it one time, and everybody knows what to expect. there is no jerk move, no surprise, just a slow and steady increase over time.

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #14 on: January 22, 2022, 11:33:55 PM »
Thank you all for your responses. I like the idea about giving them lots of heads up that we will be catching up to market rate, like telling them this year the increase will be $75, next year $100, etc. These people have been good tenants and I am willing to work with them on what is fair for both parties.

As a landlord, I wouldn't commit now to next year's increase.  If rates go way up, you will have locked yourself into something you might regret.

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #15 on: January 22, 2022, 11:35:46 PM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

In a hot market, I can't imagine having 2 months between tenants.  I've been renting out our former home since 2010 and I don't think I've had more then 2 weeks, and that was when we needed to do new carpets, paint, some drywall repair, and other fixes.  Generally, my issue has been people pushing to get in sooner. 

clifp

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Re: How much to raise rent w/o being a jerk?
« Reply #16 on: January 23, 2022, 03:50:13 AM »
I faced a virtually identical situation this year.  I didn't raise rents in 2020, it just seemed like the wrong thing to do, especially in place like Vegas which is so dependent on tourism.

My house was renting for $1325, Comps were $1725 so $400 below market. My property manager and I agreed that $125 raise to $1450 was appropriate.  They are long-time tenants, who I know are struggling, and occasionally are short.  I'll probably need to raise it another $100 to $125 next year.

Dicey

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Re: How much to raise rent w/o being a jerk?
« Reply #17 on: January 23, 2022, 04:17:53 AM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

In a hot market, I can't imagine having 2 months between tenants.  I've been renting out our former home since 2010 and I don't think I've had more then 2 weeks, and that was when we needed to do new carpets, paint, some drywall repair, and other fixes.  Generally, my issue has been people pushing to get in sooner.
As another "long time" landlord, I can assure you, the market is not always "hot".

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #18 on: January 23, 2022, 11:51:20 AM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

In a hot market, I can't imagine having 2 months between tenants.  I've been renting out our former home since 2010 and I don't think I've had more then 2 weeks, and that was when we needed to do new carpets, paint, some drywall repair, and other fixes.  Generally, my issue has been people pushing to get in sooner.
As another "long time" landlord, I can assure you, the market is not always "hot".

Of course not.  But the OP is asking whether they should raise the rent now, not "always".  That's why I specified 'in a hot market'--because my comment was for hot markets, not all markets.   

I don't always go up to what I think is absolute top dollar for which I could rent.  If I have a good tenant, I keep raises slightly smaller, but not way below FMV. 

clarkfan1979

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Re: How much to raise rent w/o being a jerk?
« Reply #19 on: January 24, 2022, 06:13:47 PM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

Echoing what others have said. Two months of vacancy in a hot market in which the landlord feels guilty about charging market rent doesn't really seem realistic. Could it happen in the future? Sure. However, based on the current situation having someone worry about two months of vacancy doesn't really seem helpful.

Another Reader

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Re: How much to raise rent w/o being a jerk?
« Reply #20 on: January 25, 2022, 07:29:35 PM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

Echoing what others have said. Two months of vacancy in a hot market in which the landlord feels guilty about charging market rent doesn't really seem realistic. Could it happen in the future? Sure. However, based on the current situation having someone worry about two months of vacancy doesn't really seem helpful.

Your lack of listening skills are apparent here.  This has nothing to do with feeling guilty.  This has to do with balancing the various costs of a vacancy and a rehab against moving more slowly towards market rent without incurring a rent loss and the costs of the updating.  In my market, getting paint, flooring and repairs scheduled takes several weeks right now.  Finding a tenant once that is done is easy, but most tenants want to move on the first of the month.  So 8 weeks from gaining possession to new tenant move-in is not unreasonable. 

centwise

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Re: How much to raise rent w/o being a jerk?
« Reply #21 on: January 25, 2022, 07:37:19 PM »
I agree with Another Reader. I have been a small-time landlord in the past. If they are good tenants, I would raise the rent $100/mo this year, and the same each year after that until it is close to market value. When you raise the rent the first time, tell them that it's still far under market and you plan to gradually raise the rent over a period of a few years until the rent is more realistic.

When to stop raising the rent? I usually priced my units a bit below market value because (a) I wanted enough flexibility to be selective with tenants and (2) the good tenants felt grateful to be there, so they went to some effort to BE good tenants.

Archipelago

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Re: How much to raise rent w/o being a jerk?
« Reply #22 on: January 26, 2022, 10:24:53 AM »
Thought about this topic some more and the way I would do it for good tenants is to let them know 6 months out that we're planning on raising rent $50 each 6 months for 2 years. So the end result will be a $400 increase over time. That's how I would go about it.

clifp

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Re: How much to raise rent w/o being a jerk?
« Reply #23 on: January 26, 2022, 12:03:36 PM »
Thought about this topic some more and the way I would do it for good tenants is to let them know 6 months out that we're planning on raising rent $50 each 6 months for 2 years. So the end result will be a $400 increase over time. That's how I would go about it.

I really disagree with committing yourself to a course of action. Maybe inflation spikes to 10%, and you need to raise rents $200, perhaps the biggest employer in town goes out of business or moves and tenants are hard to find. I knew a young women, in a LA, whose property manager told her with the new renovations rents would be rising.  In the past, she had complained about previous rent increases, but the hassle of moving compared with just paying the $100/month kept her put. Face with the prospect of $300-400 in the next few years, it was exactly the incentive it took to find a roommate in a cheaper part of LA.

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #24 on: January 26, 2022, 01:10:56 PM »
As a long time landlord, I disagree with some of what has been said.  The costs of a tenant turn, especially with a long term tenant, can be significant.  The time to do the turn, plus the lease up time can exceed a month, meaning a loss of at least a month's rent, more likely two months' rent.  In this situation, I would raise the rent enough to start catching up, but not to the market rent for a freshened up property, which is the $400 increase.  In this case, I would probably raise it $100 to $125, with an eye to being closer to market for the property in its' current condition in two to three years.

Echoing what others have said. Two months of vacancy in a hot market in which the landlord feels guilty about charging market rent doesn't really seem realistic. Could it happen in the future? Sure. However, based on the current situation having someone worry about two months of vacancy doesn't really seem helpful.

Your lack of listening skills are apparent here.  This has nothing to do with feeling guilty.  This has to do with balancing the various costs of a vacancy and a rehab against moving more slowly towards market rent without incurring a rent loss and the costs of the updating.  In my market, getting paint, flooring and repairs scheduled takes several weeks right now.  Finding a tenant once that is done is easy, but most tenants want to move on the first of the month.  So 8 weeks from gaining possession to new tenant move-in is not unreasonable.

When your tenant gives notice, you have at least 30 days notice to get those things scheduled, right?  Lease ends on May 31, so they let you know on April 30 (or earlier) that they are not renewing.  That gives you 4+ weeks to schedule crews to start work on June 1.  Simultaneously you've listed the place for rent with ads going up May 2, and a projected availability date of June 15.  Even if it takes slightly longer or the new tenant doesn't want to move in mid-month, that's still only a 1mo vacancy.

Do some landlords not advertise and selectively show the place while it is still occupied, noting that it will be cleaned and painted (and whatever work they plan)?  Most of the time, I've had a new tenant with a signed lease, before the old tenant has moved out.  Actually, I think that has happened every time.  So then we just negotiate move-in date, and it is usually something like telling them it will be no later than July 1, but we will let them know if it is finished earlier, if they are interested.  My current tenants were so eager to move in that they pushed to start their lease before repairs were finished, so there was actually some minor work going on (which they knew about and agreed to) for the first few days of their lease.

That's roughly how it has worked for me, every time.  I've been surprised (and maybe just repeatedly lucky?) that people want to start their leases mid-month, but that has always been the case and in fact usually it has been "please let me know if it is available earlier than June 15 as I'll start my lease as soon as it is ready").  When I've rented, I often want to start mid-month, if it is a local move, so I have some time to actually make the move.  So at least a few days oof overlap, if not more is ideal for a local move.  I've also had tenants ask to not move out month-end and extend a week or two, which has sometimes helped shorten any gap that might have occurred if someone wanted to move in on the first of the month cycle.

In a decent market with a decently priced and fairly attractive rental, where securing a tenant isn't an issue, I'm having trouble understanding how it could take 2 months to turn it, unless one is doing major renovations, well beyond paint, maybe new carpet, and some minor repairs here and there.  With a month+ to get workers scheduled, and work that usually takes 2 weeks or less, unless there is difficulty finding a tenant, I don't understand 2 months. 

(To be clear, I'm not arguing against other's experiences.  I'm striving to understand because they are so different than mine.)

clifp

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Re: How much to raise rent w/o being a jerk?
« Reply #25 on: January 26, 2022, 03:24:59 PM »
Best I've ever had is a just under a month, between tenants. Two months is far more typical for me, and I've had a long as 4 months.  Now, that was special situation, and a lousy property manager.

But, generally it takes a week or two to start a punch list for things that need to be fixed.  Then tenant moves out, utilities have to be turned back on. Then you get the repairmen scheduled.  I've had a showing while the old tenant was still in the place, but the timing never worked out. The old tenant was moving out on the 30th, and the new tenant wanted to move by the 7th, and just wasn't possible to get everything done in less than 2 weeks.


Do you manage your own properties, and do much of the repair yourself?

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #26 on: January 26, 2022, 05:35:41 PM »
Best I've ever had is a just under a month, between tenants. Two months is far more typical for me, and I've had a long as 4 months.  Now, that was special situation, and a lousy property manager.

But, generally it takes a week or two to start a punch list for things that need to be fixed.  Then tenant moves out, utilities have to be turned back on. Then you get the repairmen scheduled.  I've had a showing while the old tenant was still in the place, but the timing never worked out. The old tenant was moving out on the 30th, and the new tenant wanted to move by the 7th, and just wasn't possible to get everything done in less than 2 weeks.


Do you manage your own properties, and do much of the repair yourself?

No, we have a property manager.

She creates a punch list when she does the pre-move out inspection with the tenant, so that is usually at least 2 weeks before the end of the lease.  Typically, we know before then much of what will be needed based on how long it has been since a full paint, how old the carpet is, etc.  Of course there is always the odd broken blind slate, missing knob, etc., but getting those things done in a couple weeks has never (know wood) been a problem. 

As I mentioned with our current tenants, they were so eager to get in that they quite happily moved in while a few repairs were still pending.  I was nervous about that, but the PM was very clear with them that these things wouldn't be done and that they would need to make the place available for them to be completed, and it worked out fine. 

Repairs are scheduled before the old lease is up, for completion immediately after.  Typically crews or workers show up the day after the tenant leaves. 

We also never turn off the utilities.  It is transferred to me (via the PM, but I pay) and then back to the new tenant, so there is never an outage. 


Another Reader

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Re: How much to raise rent w/o being a jerk?
« Reply #27 on: January 26, 2022, 05:45:34 PM »
I operate in a large, urban market.  I do none of the work myself.  Every contractor I work with is fully booked weeks out.  I can't do a complete list of repairs until the tenant is out.  I need utilities on, and that takes a week in some cities.  Tenants generally will not inconvenience themselves and allow the house to be shown while they occupy it so we don't even try.  30 days is a fast turn. 

franklin4

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Re: How much to raise rent w/o being a jerk?
« Reply #28 on: January 26, 2022, 07:27:25 PM »
Best I've ever had is a just under a month, between tenants. Two months is far more typical for me, and I've had a long as 4 months.  Now, that was special situation, and a lousy property manager.

But, generally it takes a week or two to start a punch list for things that need to be fixed.  Then tenant moves out, utilities have to be turned back on. Then you get the repairmen scheduled.  I've had a showing while the old tenant was still in the place, but the timing never worked out. The old tenant was moving out on the 30th, and the new tenant wanted to move by the 7th, and just wasn't possible to get everything done in less than 2 weeks.


Do you manage your own properties, and do much of the repair yourself?

No, we have a property manager.

She creates a punch list when she does the pre-move out inspection with the tenant, so that is usually at least 2 weeks before the end of the lease.  Typically, we know before then much of what will be needed based on how long it has been since a full paint, how old the carpet is, etc.  Of course there is always the odd broken blind slate, missing knob, etc., but getting those things done in a couple weeks has never (know wood) been a problem. 

As I mentioned with our current tenants, they were so eager to get in that they quite happily moved in while a few repairs were still pending.  I was nervous about that, but the PM was very clear with them that these things wouldn't be done and that they would need to make the place available for them to be completed, and it worked out fine. 

Repairs are scheduled before the old lease is up, for completion immediately after.  Typically crews or workers show up the day after the tenant leaves. 

We also never turn off the utilities.  It is transferred to me (via the PM, but I pay) and then back to the new tenant, so there is never an outage.

Wow, I'm surprised that it seems so widespread for turnovers to take so long! For the past few years I've tried to give myself a couple days to clean carpets, touchup paint and generally shine the place up for a turnover. Sometimes I'll incent tenants to leave a few days before the end of the month by refunding prorated rent. But many times someone has left the last day of the month and I've started cleaning that night, continued the next day, and gotten the new people keys the evening of the first. And I always show units while they are still occupied, even during covid and no one objected. Sometimes folks will leave for the couple hours showings take place but that's up to them.

Leaving a place empty for weeks is expensive! What sort of work is being done that takes so long? My tenants are encouraged to let me know if something needs repair so things can be working properly while they are living there. If it drastically improves the appearance of the place then sure, you need to wait until it's nice to advertise and show the place. But does that happen more often than every 10-15 years?

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #29 on: January 26, 2022, 07:41:56 PM »
I operate in a large, urban market.  I do none of the work myself.  Every contractor I work with is fully booked weeks out.  I can't do a complete list of repairs until the tenant is out.  I need utilities on, and that takes a week in some cities.  Tenants generally will not inconvenience themselves and allow the house to be shown while they occupy it so we don't even try.  30 days is a fast turn.

Why are the utilities ever turned off?  If my tenants are moving out on June30, they are required to keep service until then, so I (or my PM) call the utility company and say that they should be put into my or her company's name starting June30/July1.  There is never a break in service.  This is both cheaper (I think I recall there being a fee to reestablish service, but not to change names if it has never been shut off) and more efficient as far as repairs.

Also, in both the state I own and the state I rent, legally the tenants can't stop us from showing the place.  I try to be respectful, give plenty of notice, ask if there are better times/days, vet people first and minimize the number who actually view it, send photos first to weed out some people, etc. (I instruct my PM to do this), so there are very few showings to inconvenience them.  I've chatted with the PM about it and if a tenant ever balks, we will offer a small bit off rent for each showing if the house is in decent condition, but it has never come to that. (Figuring that paying them $50 a few times is cheaper for me than vacancy) I don't think we've ever shown the place more than 3 times before getting a signed lease, so it's not like a revolving door of lookers.

She's able to book a month (or more) out with the contractors she uses for things like paint, carpet cleaning, general cleaning, and handyman stuff.  Usually, that's all that is needed. 

PDXTabs

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Re: How much to raise rent w/o being a jerk?
« Reply #30 on: January 26, 2022, 10:25:58 PM »
$400/month increase over a 1-year period

$2000 base rent
$2100 for Q1
$2200 for Q2
$2300 for Q3
$2400 for Q4

This wouldn't be legal where I live, nor would I consider it reasonable.

theoverlook

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Re: How much to raise rent w/o being a jerk?
« Reply #31 on: January 27, 2022, 06:24:55 AM »
The length of turn in a good market really sounds like it's down to either proactive, well organized management or reactive, poorly organized management. There's no reason you have to wait until the place is empty to schedule work. You know what will need done, just not how much of it. Anything unusual, sure that might throw a wrench in the works, but if the unit is functional before move-out, you know it will be functional after. You're shooting yourself in the foot if you wait until the tenant is out to schedule work.

PMJL34

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Re: How much to raise rent w/o being a jerk?
« Reply #32 on: January 27, 2022, 01:40:03 PM »
I wish I could participate in this conversation, but I live in rental controlled territory.

Thinking back to when I was a frugal renter...I would certainly move out if the owner wanted to increase my rent to market rate. The only reason I lived here to start with is because it was below market (and there was probably a reason for it being below market as well). If I am going to be charged market, I could live anywhere else. 

As a rental owner, I charge slightly below market rent because I value the best tenants possible and also value long term tenancy.

clifp

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Re: How much to raise rent w/o being a jerk?
« Reply #33 on: January 27, 2022, 02:23:59 PM »

We also never turn off the utilities.  It is transferred to me (via the PM, but I pay) and then back to the new tenant, so there is never an outage.

That makes a ton of sense. I've not had a new tenant in my three properties in over 5 years, so I've forgotten the details, off why I had to turn on the utilities.

But in my next turnover, I'm going to really insist that we keep the utilities on. It will save a week. 

If you are organized and live in a hot rental market it is certainly possible to do everything in a month.  Still, I think is better to be conservative and figure two months+ another month's rent for repairs in trying to figure out how much to raise rents.
So in the case of the OP.  I'd say the cost of churn would $6,000
Option A raising rent $100 will not cause the tenant to leave because of higher rent.
Option B raising rent $300 to $2,300 to give a chance of the tenant leaving which will cost you $6000.  You'll recoup the turnover cost in 30 months ($6000/$200 in additional rent). Potentially, if the tenant leaves you could rent the place for $2,400 , making your payback period only 20 months.

I suspect, in general including myself probably are too conservative about raising rents.

I felt morally the right thing to do was not raise rents during the beginning of the pandemic in 2020, but with inflation kicking in, I think we probably should be raising rents faster.

PoutineLover

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Re: How much to raise rent w/o being a jerk?
« Reply #34 on: January 27, 2022, 02:34:26 PM »
This whole conversation is fascinating. I'm a tenant, but helping to manage my building for family members, so have been dealing with some rent prices, move in dates, and repair issues. Where I live, all moves basically happen day of, so previous tenants have to leave by noon, and new tenants move in anytime after. If you are lucky, previous tenants will move a couple days before so you don't have to move on the same day as the rest of the city (oh yeah, the whole province has leases that turn over the same day of the year, on purpose).

I've rarely had a landlord do anything in between tenants, even clean. There are no security deposits, so there's no incentive for anyone to leave a place in good condition, and landlords have little incentive to deliver it in good condition. Anytime that repairs have been needed, I've had to ask for them while I'm living there.

Tenants are not allowed to refuse visits, as long as they are scheduled at least 24 hours in advance. Rental increases are limited by a formula based on taxes, utilities, repairs, etc. and usually ends up somewhere in the range of 1-5% annually. There's no such thing as month-to-month leases, they automatically renew for a year.

So OP would take ages to get back to market rent here, unless his tenants decided to leave on their own, and they have the right to lease transfer, keeping the same rent for the new tenants. My jurisdiction has very tenant friendly laws, but scummy landlords do find ways to break the law anyway, and it's hard to fight them on.

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Re: How much to raise rent w/o being a jerk?
« Reply #35 on: January 27, 2022, 03:54:18 PM »


Thinking back to when I was a frugal renter...I would certainly move out if the owner wanted to increase my rent to market rate. The only reason I lived here to start with is because it was below market (and there was probably a reason for it being below market as well). If I am going to be charged market, I could live anywhere else. 

As a rental owner, I charge slightly below market rent because I value the best tenants possible and also value long term tenancy.

I think this is a good point: by definition at least half of renters will be renting at or below market rate. Which means if you charge market rate youíve eliminated a good chunk of perspective renters, many of whom can find below market units precisely because they are reliable, good renters.

Villanelle

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Re: How much to raise rent w/o being a jerk?
« Reply #36 on: January 27, 2022, 05:26:44 PM »
My rental is really hard to comp.  It's a 3 bed, 3 full bath duplex-style townhouse.  Nearly everything else in the area is either a large single family, or an apartment (or apartment-style--meaning many units and multi-story).  So comping it is rough.  But the PM and I chat each year and figure out what we think is FMV.  If there is an existing, solid tenant, we aim for the bottom of that range or just below.  So probably not quite at FMV, but not hugely under it, either.  When listing for a new tenant, we go further up in what we think is a fair range, but the understanding is always that if it isn't rented in 10-14 days max, then we drop the price a bit.  Haven't had to do that yet though.

Clearly, I want to get as much money as I reasonably can.  But I also want to keep good tenants and avoid the stress and expense of a turnover (even a short vacancy has costs).  And I want a new person to feel like it is a pretty good deal, so that we get lots of interest and so that we can attract and keep someone longer term. 

One other thing to consider is that if you don't at least come close to keeping up with FMV, it gets harder and harder to get back there, because doing so would mean a massive increase.  If $100/mo seems like a lot and you do $50 instead, and you do that for three years.  Then you need to raise it $250 to get back up to FMV.  If it is awkward to do $100, it will be painful to do $250.  And the lower you sink below FMV, the less likely you are to have the current tenant move out, so waiting until you have a new tenant and clean slate doesn't necessarily work so well, either. 

When I tell my PM what I want the new rent to be, I usually also tell her that if the existing tenant balks, I'm willing to accept $x less to keep them.  So I'm also wiling to work with them, and show I'm working with them.  But that has never happened.  Maybe that means I have the formula just right.  Or maybe it means I'm underpriced.  lol

So yes, I think it makes sense to be somewhat conservative in increases, both due to expenses of turnover, and to goodwill, which it never hurts to have with the person who has day-to-day control over a huge asset.  But not to just give it away, either. 

Archipelago

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Re: How much to raise rent w/o being a jerk?
« Reply #37 on: January 28, 2022, 10:34:26 AM »
$400/month increase over a 1-year period

$2000 base rent
$2100 for Q1
$2200 for Q2
$2300 for Q3
$2400 for Q4

This wouldn't be legal where I live, nor would I consider it reasonable.

I'm reading this selective quoting of my post as a little off base, no? Did I misinterpret?

nereo

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Re: How much to raise rent w/o being a jerk?
« Reply #38 on: January 28, 2022, 10:45:39 AM »

I'm reading this selective quoting of my post as a little off base, no? Did I misinterpret?

Many localities limit how much a landlord can raise the rent in a given year.  If your rental(s) are in such areas, it is almost certain that a 20% rent increase inside 12 months is illegal. As always, check your local regulations.

Personally, I would never raise the rent by 20% y/y regardless of local laws and ordinances. But that's just me.

PDXTabs

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Re: How much to raise rent w/o being a jerk?
« Reply #39 on: January 31, 2022, 09:15:11 AM »
Personally, I would never raise the rent by 20% y/y regardless of local laws and ordinances. But that's just me.

Indeed. If it is legal to raise rents by 20%/yr in your location and you really want/need to, go for it. But every mom-and-pop landlord that I know IRL wouldn't do it to a tenant that they liked and wanted to keep. Remember: your next tenant could turn your property into a drug den.

elaine amj

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Re: How much to raise rent w/o being a jerk?
« Reply #40 on: January 31, 2022, 09:47:17 AM »
Very interesting. In my city, rents have skyrocketed. And in every rental listing on Facebook, keyboard warriors descend in full force, howling how terrible it is that honest, working folks can no longer afford to live in our city and how these evil landlords are predatory because they are charging market rent - which is way, way, way more than anyone charged just a few years ago.


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nereo

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Re: How much to raise rent w/o being a jerk?
« Reply #41 on: January 31, 2022, 09:53:41 AM »
Very interesting. In my city, rents have skyrocketed. And in every rental listing on Facebook, keyboard warriors descend in full force, howling how terrible it is that honest, working folks can no longer afford to live in our city and how these evil landlords are predatory because they are charging market rent - which is way, way, way more than anyone charged just a few years ago.


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I thought Ontario had fairly strict limits on how much landlords could increase rent.  Is that no longer the case?

elaine amj

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Re: How much to raise rent w/o being a jerk?
« Reply #42 on: January 31, 2022, 11:29:21 AM »
Very interesting. In my city, rents have skyrocketed. And in every rental listing on Facebook, keyboard warriors descend in full force, howling how terrible it is that honest, working folks can no longer afford to live in our city and how these evil landlords are predatory because they are charging market rent - which is way, way, way more than anyone charged just a few years ago.


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I thought Ontario had fairly strict limits on how much landlords could increase rent.  Is that no longer the case?
Yes - max increase of 1.2%. Iím no expert but my understanding is rent in my city has jumped up 25-30% in year or two and it was already on an upswing before that. Compared to 10 years ago, rents have easily doubled. Very odd for us when rents have been stagnant for a very long time.

I imagine the vast majority of soaring rental prices have been due to houses being sold to new owners. Or cashing in when a tenant moves out.

Eg in this case - a familyís rent was $850/mo. Then their rental house was sold and they had to move. The cheapest place they could find is $2080/mo.

https://www.theglobeandmail.com/investing/personal-finance/young-money/article-rent-prices-in-canadas-small-cities-and-towns-have-shot-up-making-it/


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