Raising Rent for SFH

[Charles Stubblebine]

For my two SFH I need to raise the rent this June 2023 on both. Mainly to cover the cost of inflation and for the Florida home, the insurance down there is going bonkers and I need to recoup that cost as well. I honestly want to raise the rent to $200 per property but on the Florida SFH I just raised it $100 last year. Is there a rule of thumb out there for this or anyone have some wisdom from past experience? I don't want to brake my tenants and I want to be mindful that they are probably just trying to survive this outrageous inflation as well. TIA!

[Greg M.]

Quote from @Kenneth Garrett:

Raising rent should be based on the market.  I take a different approach when raising rent.  I always look at market rent, higher cost to me and what the impact to the tenant is going to be.  What I mean about impact to the tenant is if they don’t stay.  Every property does not need to be at market rent.  You need to weigh in the cost of replacing a tenant, how long it will be vacant and the cost of repairs.  Of course this is market driven as well.  If the cost to repair your unit to get it rent ready is $3000 and the total length of vacancy is 60 days, then you are down $5000 if rent is $1000 a month.  Raising rent in increments of $100 and keeping a good tenant is worth more than jumping a significant amount.  You should take all factors into consideration.

I agree with what you said, but too many people incorrectly look at the cost to rehab the unit and the vacancy cost. Those costs never go away, they just get pushed down the line. 

You can take $100 less a month to not have a $5000 hit today, but that $5000 hit is still coming. You just pushed it 1 or 2 or 5 years down the road. All the while you're traveling that road making $100 less per month. 

Personally, I'd like to start collecting that extra $100 as soon as possible so that I can recover my $5000 hit as soon as possible.