My question has two parts.
I have a tenant that signed a year lease, last year. The end of the lease is coming up. They're a good tenant. Auto pay for rents and pretty quiet as far as tenants go.
Part A. Do I raise the rents when the lease is up? There's no rent control but I'm on the higher end of the spectrum. The rental market in southern California is bonkers. Theoretically I could raise the rents but I'd almost prefer to keep the rents the same and not get greedy for another year locked in ...
Part B. Wondering how to ask/get the tenant to sign another year lease. Do you simply state that's what you expect? Or offer it as an option? One option was to maybe "not" raise the rents if she signs a year lease, then raise the rents slightly if they don't.
Any thoughts would be greatly appreciated.
Seems to me if you have a good tenant and already receiving rent on the higher end for your area, just present an addendum to extend the current lease one more year and see if they are agreeable. I do not like month-to-month (many prefer it), so at 60-90 days before the current lease converts to a month-to-month, if they are a good tenant, I give them the option of one- or two-year renewal, 2-year option is normally $25/month lower, as I like knowing I shouldn't have to worry about a turnover on that unit for 2 years.
I give my tenants an option. They can sign a new year at the same or a slightly higher rate, or they can pay $100 a month higher for month to month My rents are all in the $1700-$1900 range). I give them the option, so they can either lock in for a year or have the flexibility of a month to month if they are planning on leaving anyway.
Part A: I think of it as I have to raise rents each year to keep up with costs increases (mainly inflation). I do not see it as greedy. If you raise them too much you will loose tenants too low and you will not keep up with rising costs and your unit suffers. Supply/demand blah blah blah.
Part B: I would weight the cost of not keeping up with increasing prices to the peace of mind of having good tenants. Seems like you are leaning towards keeping the tenants, I would be sure to explain this to the tenants, normally you increase rent each year to keep up with rising costs (use an example like cost of milk or eggs in the grocery store or something) but since they are such good tenants you are going to skip this year. I don't feel like nickel and diming good tenants each year is necessary but I would get another year lease signed by them. They should expect you to bring this up.
In the past I would send a written notice to tenant as the lease reaches the final 60th day mark, I would give inform them about lease expiry date and inquire their interest about possible renewal. I would state the rental value in today's rate (typically higher) and offer a discount to them (same rate, or less increment amount) if the lease is renewed within 7 -14 days. (after the given date, the rent will be market rate)
Hope this helps
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