Raise the Rent soon?

Question

My tenants' lease is up in June. Before Covid hit, I had considered raising the rent because the house is a bit below market. At least, I don't currently see any other homes in the same zip code as cheap.

They both have steady jobs and have paid rent on time for the past year.Just asking for opinions. What would you all do?

Ramon Flores · Answer

@Joshua Savage I am not sure how much below market you are talking about. Is it 25 dollars or 200 dollars under market? Don't forget that the turnover cost will kill your profits. If it is not too much I would advice to keep the rent the same. Hope this helps!

Anthony Wick · Answer

@Joshua Savage. I just had a tenant renew their lease, at a markup of $40 per month. If they wanted a similar unit, it would cost them probably another $40 per month over that. Don't let the Covid ruin your business. Adjustments sometimes have to be made, but if the unit is way below market rent, raise the rent. Of course, you need to know the limit and if it can easily rent should they decide to move.

Anthony Wick · Answer

@Joe M.. What does the overall unemployment rate have to do with his decision here? I don't see the grocery stores lowering all their prices because more people are unemployed.

Jon Hill · Answer

@Joshua Savage I had planned on raising rent only $50 as we were a bit below market. The $50 would keep us about $25 under market still. I do not believe I will do this now as my tenants have continued to pay rent on time and maintain the property well. With all this uncertainty having that means the world. Like @Ramon Flores said one month of vacancy could kill those profits you hope you have from the increase. Hope that helps!

Kenneth Garrett · Answer

@Joshua Savage

I would be careful raising rent in this economic environment.  Having the tenant leave at any time is just a losing proposition for landlords.  If you raise the rent make sure it’s fairly insignificant.  I just renewed a tenant.  I could have pushed the rent from 1435 to 1450, but I just didn’t think it was worth the $180 a year.

Joe M. · Answer

With all the unemployment and uncertainty in the world, is that how you want to treat a good tenant?  Seems like a dumb time to do so

Joe M. · Answer

No, but if I went to a grocery store that jacked up prices during this time, Im going to a different store/buy online where they didnt jack up the prices

Joshua Savage · Answer

Good point @Kenneth Garrett.

Raise the Rent soon?

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