Thanks, everyone, those weren't facepunches but I definitely needed a kick to the head.
We visited another open house today, and it was pathetic. Crappy remodel, abused by tenants, some of tenant's personal items still on the closet shelves, poor maintenance, the owners & listing agent couldn't even bother to clean it up properly before the open house. Two story 4BR/3BA, tiny yard, bad drainage, neighbors within spitting distance on all sides, dirty inside & out, 15-year-old stained carpeting, ancient vertical blinds, filthy windows, bad sheet vinyl in the bathrooms, a cigarette smoker in one bedroom that drove you away with your eyes & nose smarting. The realtors didn't even know why the owner was selling but they encouraged us to get our offer in "tonight!"
20 years ago I would've been eagerly rubbing my hands and considering how much we'd earn from our sweat equity. Looking at it today just made me tired.
$700K. What's even more pathetic is that they'll probably get their asking price. Considering the neighborhood & schools, there might even be competitive bidding.
But that walkthrough started a good discussion, and now we're ready to raise the rent.
"Dear (tenants),
We've enjoyed having you as tenants for the last four years! We were surprised to realize this week that you've been in the house longer than any of our other renters.
Although the markets have been flat for the last few years, we've noticed an abrupt change in the last six months. There are fewer listings and prices are soaring, which means higher property taxes are on the way. We also expect higher federal taxes on landlords this year.
We've reluctantly concluded that we need to raise the rent. If you'd like to continue renting month-to-month then we're increasing it by $(5%) effective 1 July. If you'd like to sign a one-year lease then we'll raise the rent by $(3%) and re-assess the market next year. If you decide to sign a lease then we've included the form for your signatures. Thanks,"
I don't feel like Snidely Whiplash after all. And spouse noted that it's probably time to paint most of the exterior.
Even if your expenses have been flat (property taxes the same as in 2009?), that doesn't mean they will continue to be.
I had to look that up. To my surprise, this year's tax bill is still a few dollars lower than 2009. It looks like in 2009 the assessor was about two years behind the market (no surprise there), and is still lagging. I bet the assessment catches up fast now, though. I thought the market was up 10% in the last six months, but the open house we saw today is pricing more like 20%.