To Raise the Rent or not to Raise the Rent

28 Replies

@Michael Dorey It is always a balance between turnover, market rent and future expenses, like hvac replacement. The longer term tenants are worth lower rents mainly because you are kicking the rehab costs down the road...because after a certain time your vacancy cost will be longer so you can repaint etc. I have raised rent as little as $15 to cover higher property taxes but avoid turnover. I feel they are renting a slightly shabbier place every year (the fact that their wear and tear created the shabbiness is irrelevant) so at some point they will see moving as trading up and if they get it for the same rent they may do it. Just the way I look at it.

There are some really good points in this thread. 

(1) it's relative, $50 on $500/mo is *huge*, but on $3000/mo is less of a shock

(2) there are great tenants, good tenants, ok tenants, nightmare tenants... I have tenants who have left the place better than they found it, they never complain about anything, and fix stuff on their own. I also have tenants who always seem to have some problem: the toilet, noise from the neighbors, dogs barking, etc. If you have an A+ tenant who never complains and fixes stuff so you don't have to, that would definitely be worth $50/mo to me! But one who always needs the toilet fixed or is a constant pain will get charged more, as I'm constantly running around trying to keep them pleased and always anxious about their next complaint or demand.

We have a similar situation. Tenant has been in the house 7 years. He was actually our first tenant. His rent is $525 and market is about $675, but:

  1. He is the most undemanding tenant possible. We hear from him only when we actually need to hear from him.
  2. He pays like clockwork, autopay through his bank. Never an issue.
  3. If he moves, we will have significant turnover costs. He heats with an outside wood furnace and cools with a window unit, so new HVAC; new paint & flooring throughout; bath, kitchen, and lighting need updating; etc.
  4. We didn't buy the house for investment purposes. It simply came with the land we needed for a new drive for our personal house.
  5. The house is at the end of our drive, so it's very important that we have someone in there that we can get along with.

So we generally raise rents about $10-15 every year or so. Sometimes there are things that are hard to put a price on.

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