Rental Property Investor · Macon, GA · Member since 2017 · 61 posts · 12 votes
I am below market rent and rents have increased quite a bit in my area, what percentage are you using to increase rents in 2021? I was thinking 5%-10% just not sure.
Multifamily Investor · Toledo, OH · Member since 2008 · 296 posts · 308 votes
5y
I am also in Toledo. I don't use a standard %, I do a rent survey and raise the rents to market. With that said, it seems to be typically landing around 6%.
I am also in Toledo. I don't use a standard %, I do a rent survey and raise the rents to market. With that said, it seems to be typically landing around 6%.
One of my properties rents for $1,200 which was fmv one year ago, now the market analysis is saying $1,500, seem to good to be true. I don't want this particular tenant to leave anytime soon.
Multifamily Investor · Toledo, OH · Member since 2008 · 296 posts · 308 votes
5y
@Natelya G. I used to worry about the same thing. Just pretend you are a tenant and do a rent survey and see what their alternatives are. If you raise the rent to $1500 and everything else is $1500, they won't move. Moving is expensive and a huge pain. Tenants don't take moving lightly. It's a big decision. One other thing...I don't raise rents. I offer renewal options. I give them a notice that offers a 12 month renewal at the going market rent, a 6 month renewal at a $40 premium, and a month-to-month option at an $80 premium. The fourth option is to give their 30 day notice. This takes the conversation away from the rent raise and makes them think more about which option they want. It works very well. I have been very surprised over the years at how many tenants take the 6 month and month-to-month options and still never move. I have tenants that have been renewing their 6 month leases (at the new going rate plus the premium) every 6 months for years.
@Natelya G. I used to worry about the same thing. Just pretend you are a tenant and do a rent survey and see what their alternatives are. If you raise the rent to $1500 and everything else is $1500, they won't move. Moving is expensive and a huge pain. Tenants don't take moving lightly. It's a big decision. One other thing...I don't raise rents. I offer renewal options. I give them a notice that offers a 12 month renewal at the going market rent, a 6 month renewal at a $40 premium, and a month-to-month option at an $80 premium. The fourth option is to give their 30 day notice. This takes the conversation away from the rent raise and makes them think more about which option they want. It works very well. I have been very surprised over the years at how many tenants take the 6 month and month-to-month options and still never move. I have tenants that have been renewing their 6 month leases (at the new going rate plus the premium) every 6 months for years.
I love these options, will definitely revise my letter. Thanks!