Raising Rent - Under Market Rent
Hi All,
I have a property that is under market rent. Tenants have been good tenants for the past 3 years. They started paying $1500 and are now at $1850, market rents suggest around $2300 - rents have risen drastically in Nashville in the past few years. I value good tenants but I feel that there’s a good bit of difference between current rent and market. A $500 increase in rent seems steep, any suggestions on how to offer their next lease? I have a management company actively managing the property so I don’t have direct communication with tenants. Thank you.
Most Popular Reply
Turnover costs $$...sometimes a LOT of $$....especially if you use a PM that charges for new tenants, screening, etc etc.... PLUS getting the place cleaned, painted, marketed etc etc. Your increased rental income can be offset by turnover costs for years sometimes.
Its a balance of keeping within "arms reach" of market rent but not enough to induce a turnover. Yearly increases of 5-10%, but staying 5-8% below the current market is my balance point. Enough to be keeping up with rent increase but not enough for it make it worth it for tenants to move