Raising rent?

[Michael Newhouse]

What month is the best to raise rents? Is any month better than others in case of a move out? Thanks for any help... Mike

[Bill S.]

@Michael Newhouse my rent increases vary depending on when the lease was written. I was using 5% when rents in my area were going up 10% per year. Now I use 2.5% since rent grow has flattened a bit (8%) and there is a lot of new inventory coming on the market. My increase is a fixed dollar amount. Percentages are too hard for most people to figure so my $25 a month on $1,000 rent is easy to know how much it is and no worries about rounding etc. When you only have one unit it's not so much an issue to have a "discussion" with the tenant a few months out. When you have more units, you will want it on auto pilot.

Since my rent increases are below market for rent growth, tenants that stay multiple years are below market rent and they know it. Since the increase is built into the lease there is no "discussion" about it happening. I have discussed the amount and done less of an increase for those that asked and who have been quality tenants. Having the increase built-in avoids the possibility of tenants getting their nose out of joint during the "discussion" and moving out of spite. 

@Eric Petersen with my approach there is really no discussion. If the amount of the increase is more than the tenant wants to pay then they can move. As I said, they will likely be paying more for a similar property so if they move, it's not about rent being too much. If they can't afford the increase then it's time for them to move and find a smaller place or one with fewer features. In my market tenants have few options but to accept the rent increases. There are several applicants for each vacancy and I've been increasing rents at least $100 between tenants. Perhaps when things change your question would get a different response. The market drives my response.

Most folks think a "good" tenant is hard to find. I've found with proper screening, most tenants are "good" or "excellent" tenants. Those that roll the dice and take the first applicant might have more difficulty finding quality tenants but screening is the key to sifting through the chaff.