New Landlord - Priced Rent Too Low

[Mike B.]

Hello BiggerPockets, 

So I'm only a couple of months into this new landlord experience of mine and I just realized we priced the rent too low. A couple of months ago we turned our primary residence into a rental and moved into a new home. We thought the market rate was closer to $1800/month, but it's actually $1950. I think the biggest reason is increasing property valuations are leading to higher taxes. I expect it's probably not a big shock that an inexperienced landlord would make this mistake, so I'd like some advice from experienced landlords. We are only a month into the lease, but I am a planner by nature and want to put thought into how a professional handles the lease renewal.

Question: How does a professional landlord handle a lease renewal under the following situation? I'm completely confident in the numbers listed below. For 2021 I have a homeowner tax exemption that will expire in 2022. In 2022 tax appraisals will almost certainly increase to $400,000 or higher. Our tax rates are 2.92%. 

• 2021 - Current Lease = $1800/month
• 2021 - Comparable Homes = $1950/month est. 
• 2021 - Property TAX = $620/month 
• 2022 - Property TAX = $970/month est. 
• 2021 Property Tax Appraisal = 300000
• 2022 Property Tax Appraisal = 400000 est.

[Charles Carillo]

@Mike B.

If someone raised my rent by 10%+, I am leaving. One month of vacancy nearly kills the rent increase of the whole year. Chances are, that between vacancy and repairs, if they move out, you will lose 2 months of rent.