Raising rent - how much is too much?

Question

We recently found our tenant is paying about 200/mo less than market rent.  He's a great tenant.  How much/ how often should we raise the rent without making him look elsewhere?  Lease is month to month.  Thx for your input?

Brad M. · Answer

@Jeff Caravalho

If it were me, I would factor in the following: How long has he been a tenant? How is the market? Would he be easy to replace with a market rate tenant? Would you have significant turnover costs (repairs, painting, etc) if he moved?

If the market is great, and it would be a relatively cheap turn, I would raise it to market. Otherwise, just wait until he leaves.

Sylvia B. · Answer

It would also be helpful to know what the rent currently is. You say it's $200 below market, but is market $400 or $1400? It makes a difference.

Jeff Caravalho · Answer

Good point John, Thx.

John Thedford · Answer

The bottom line is: you are giving away $2400 per year. I made a mistake not keeping up with rents when I had health issues. As I saw my costs skyrocket (particularly taxes) I realized I was hurting myself, my income, and my business. I started raising rents and within six months had raised some almost 20%. I didn't lose any tenants and it makes a BIG difference getting the additional revenue.  I realize it is important to keep good tenants, but that should not be your only concern IMO. They ARE costing you money.

Jeff Caravalho · Answer

Thank you all for the great tips!  These are all important things to consider and we'll be more comfortable with our decision because your input.  Yeah @Mike Sedlacek, rento meter & hotpads is how we found out!  Nice resource!

Mike Sedlacek · Answer

Check out www.Rentometer.com for comparable rents for your area, or www.hotpads.com

Austin Youmans · Answer

I would raise it $50 per year but keep him $100 below market so he doesn't move.

Raising rent - how much is too much?

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