Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
10y
I raised rents on the four unit we acquired in February by $140.00 per unit due to sky high water bills and rents so far below market. The existing rents are still in the lowest quintile for a 2 mile radius. I'll raise rents another 100 next April. In your market, rents at $1200.00 means you left a lot of money on the table, only going to $850.00. Rents in a two mile radius of my property have a mean of $1050, with a range of $850.00 to $1200.00. I am aiming for the mean. Next April, I'm raising rents another $100.00. A factor for me is not how the tenants feel about it. It is the risk/reward of retaining the tenants I have. When I raise rents, I send a letter explaining where my rents lie in relation to that 2 mile radius, so they are informed that they won't find a better deal.
My advice. Next April, hike those rents toward that mean. You will have the needed funds to maintain your building well, which is great for retention. And making money off an investment is a good thing.
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
10y
The most we've increased rent at one time was $100 (from $800 to $900) on a tiny 2BR house that was way under market value.
We raised rent one time from $600 to $660 (10%) on a 2BR duplex apartment that hadn't had rent raised in five years. The tenant got upset at first until she looked at the market value.
We tend to make our rent increases $30 at a time and we don't raise rent every year. Our market niche is affordable properties that we rent to responsible tenants who are on fixed-income or in the low income bracket. We still are able to maintain good cash flow. :-)
Investor · Monroe, WI · Member since 2015 · 691 posts · 610 votes
10y
That landlord must want that guy out or something, that is beyond unacceptable for a landlord to hike the rent that much, does he really think the tenant would or could pay it for that matter?
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
10y
In CA - where there is no rent control - a landlord can raise the rent as much as he/she wants.
I thought all rentals in SF were under rent control, but I looked it up and they aren't all under rent control. So, if this house is not covered by rent control, then the landlord can raise the rent as much as he wants.
Some apparently, even if they aren't under rent control - still must only kick out a tenant for "just cause."
So, I'm wondering if this landlord raised the rent, which was legal, but also knowing the tenant can't pay it - then, kicks the tenant out for nonpayment of rent, which is "for cause."
Pretty clever, really. I am not a fan of rent control, even though I'm a renter. It's just not right to limit any business from being able to ask market rates, in my opinion. Whether that's tires or cars or clothing or apartments. It's my opinion that if a city or county wants to provide affordable public housing, then they need to build it. It would be more appropriate to tax the citizens of that city/county, rather than force one sector to provide it, and eat the lost profits. It's just so wrong, I can't believe it's legal. It shouldn't be. I have spoken :-)
That landlord must want that guy out or something, that is beyond unacceptable for a landlord to hike the rent that much, does he really think the tenant would or could pay it for that matter?
I don't think it is unacceptable. This is the problem of cities having rent control - the market gets out of line with real values. So this guy has been living in a million dollar apartment for far too long, paying way under the market rate.
And it's not like there is no where else for him to go with $1800pm available to him to pay rent. It just won't be in a millionaire neighborhood in the center of San Francisco.
Now I'll throw this out there - maybe - just maybe - he should have bought a house at some point in his life.
Investor · Cumming, GA · Member since 2016 · 153 posts · 34 votes
10y
Thanks for the responses! I had to raise rent from $750 to $850 after 3 years of running of running on autopilot and not raising rents (which are $1200 in my area). They are great tenants, and I hated to do it, but it was/is still way under the market. I'll admit, that was my first rental, and I was on autopilot. Their 1 year lease had gone month-to-month, and had been that way for 2 full years.
I now do 1 year leases with a clause notifying them that rent will go up by X amount the next year.
Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
10y
I raised rents on the four unit we acquired in February by $140.00 per unit due to sky high water bills and rents so far below market. The existing rents are still in the lowest quintile for a 2 mile radius. I'll raise rents another 100 next April. In your market, rents at $1200.00 means you left a lot of money on the table, only going to $850.00. Rents in a two mile radius of my property have a mean of $1050, with a range of $850.00 to $1200.00. I am aiming for the mean. Next April, I'm raising rents another $100.00. A factor for me is not how the tenants feel about it. It is the risk/reward of retaining the tenants I have. When I raise rents, I send a letter explaining where my rents lie in relation to that 2 mile radius, so they are informed that they won't find a better deal.
My advice. Next April, hike those rents toward that mean. You will have the needed funds to maintain your building well, which is great for retention. And making money off an investment is a good thing.
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
10y
We raised rents from 3100 to 3600 on one house and 3100 to 3500 on another in a single year. But thats the Bay Area for you! And why it makes sense to buy break even or negative cash flow properties.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
10y
That guy has been paying a fraction of market tent for years! This guy won't pay anything close to market- he enjoyed milking his artificially low rent control price. New owner might as well rip the bandaid off and get market rent. I'm sure he paid a pretty penny for an apartment that rents for $8000. He has the right to do this, as long as the flat isn't under RC- which I'm sure it's not, or else he would have been laughed out of by a rent board appeal muy pronto.
Investor · Cumming, GA · Member since 2016 · 153 posts · 34 votes
10y
We do have a brand new (few years old) low income apt complex in the area that rents a 3/2 for $700, but I'm assuming I'd exclude that from the comparable properties for rental prices, since mine are single family homes (I know I exclude then for sales price, so I would assume also exclude them for comparing rents).
Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
10y
On the block where I own my four unit, one owner charges $500.00 below market, because he wants to keep the same tenants. Right next door, a new investor bought the building, and filled the place charging rents $400.00 higher, with a sign on his building stating the rents. The book value of the four plex charging market rents increased $160K over the other building, on that difference alone, due to cap add.
I think your understanding of why the low rent comp is not a good comparison makes sense. I'd exclude that one from my comps.
New Haven, CT · Member since 2016 · 90 posts · 99 votes
10y
My grandmother lives in Gramercy park in NYC, and she's been rent controlled for 40 years and even before then, when her father lived there obviously (program started in 1943 - 1950 I believe). I believe she pays $1,600 or $1,800 a month, but when she dies the owner of the apartment complex will without a doubt charge over $8k which is fair for that area, and her place. Might be the same application here. She's been milking the system for years, but I wouldn't blame the owner if he increased it to 10k and she had to move. That's a lot of money lost each month.