"Shouldn't Landlords Feel Guilty about raising rent?"

General Landlording & Rental Properties
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"Shouldn't Landlords Feel Guilty about raising rent?"

Tyler RowlandBusiness Member
Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes

I was talking about Real Estate Investing with some people at Home Show event, and as I was talking about getting rents up to market rates. A lady in the conversation asked me if I felt guilty about that (raising rents to market value).  Almost as if rents should stay the same forever.  

I told her "of course I don't feel guilty, because I try to do everything in the correct way.  And as someone that provides housing and services to people that need them, I feel quite the opposite."  But the thing that really got me about the question she posed was that potentially, there are a lot of people out there that feel it is shameful to raise rents and therefore something to feel guilty about.  How have/would you answer her question.  And how does that perception get corrected?  How do Landlords/ Property Management Companies help your tenants understand incremental rent increases, especially when rents are well below market averages?  

[email protected]435-592-4002
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
6y

Just ask , " Does the government feel guilty when they raise taxes?"

39Reply
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  • Cassi Justiz
    Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    Unfortunately some people will always think of landlords as rich and greedy. 

    I think of it as any other aspect of the economy. There are people that are willing to pay fair rates for a good product. While there are other people that only care about finding the cheapest product. 

     I know I provide a great product, so I rent to people that are okay with paying fair rates. Every year, my taxes and insurance increases as do my costs to replace an AC unit or furnace. By renting at "fair market rates" I am able to build up reserves that allow me to pay for reputable contractors to maintain the property. So no, I don't feel guilty about having to charge fair market rent so that I can afford to maintain the property to the standards that I feel comfortable allowing people to live in. 

    34Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    Just ask , " Does the government feel guilty when they raise taxes?"

    39Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y

    @Cassi Justiz.  Well put!  Thank you!  You put my thoughts to words perfectly!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
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    1Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y

    @Matthew Paul,  Good Point! lol!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
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    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    6y
    Originally posted by @Tyler Rowland:

    I was talking about Real Estate Investing with some people at Home Show event, and as I was talking about getting rents up to market rates. A lady in the conversation asked me if I felt guilty about that (raising rents to market value).  Almost as if rents should stay the same forever.  

    I told her "of course I don't feel guilty, because I try to do everything in the correct way.  And as someone that provides housing and services to people that need them, I feel quite the opposite."  But the thing that really got me about the question she posed was that potentially, there are a lot of people out there that feel it is shameful to raise rents and therefore something to feel guilty about.  How have/would you answer her question.  And how does that perception get corrected?  How do Landlords/ Property Management Companies help your tenants understand incremental rent increases, especially when rents are well below market averages?  

     What's really bizarre to me is that when rates are up, such as in summer 2018, no one asks me that exact same question - "aren't you guilty about my rate being 4.75% instead of the 3.75% that you offered just a year ago?" Not a single person has ever asked, and a mortgage interest rate is more or less just the rent you pay for leasing an amount of money for a period of time. 3.75 to 4.75 is about a 27% "rent" increase, too.

    Because I've never been asked that question as a loan officer, I can only assume there's self selection bias at play. For whatever reason, evidently, the people that would feel inclined to ask that question are also never interested in purchasing a home. Literally, I've never been asked, not a single time, so the relationship is rock solid to the tune of 100% or nearly so.

    Don't get me wrong, you better bet people were howling to the moon about their rate in Summer 2018 and other times like that, but no one asks if I feel "guilt," or ever implies that I was a bad person or anything remotely similar, even when the spike is >25% in 1 year. Here's what's super interesting: now that rates are low again, I get credit and I'm the nice guy and they appreciate it. So I get none of the flak when it's going up, and somehow get all the credit when it's going down, like I personally walked onto Wall Street and was like "hey jackwagons, lower rates for Mr. Smith please" and they listened. :P

    Not sure the meaning of that or the implication...

    8Reply
  • Terrell Garren
    Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
    6y

    About as guilty as the utilities, Internet service providers and Apple feel.  I wish Home Depot and Walmart had to let people walk out the door with stuff without paying, have to serve notice, wait 30 days, show up in court to MAYBE get their stuff back. 

    20Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y

    @Chris Mason  I really like how you put that.  I became an LOA last April, and really haven't experienced a time when they are pissed about higher rates, but it will happen.  But I have to agree with you about the selection bias there.  I really think there is just an innate negative feeling towards raising rents and would like to know all of the sources that is coming from.  Maybe that just makes the perfect narrative for a Hollywood sob story.  Wish the narrative weren't so one sided!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
    WebsiteView Page
    1Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y

    @Terrell Garren  Imagine that!  That analogy is perfect!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
    WebsiteView Page
    0Reply
  • Noah Mccurley
    Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
    6y

    @Tyler Rowland

    Landlords expenses go up every year so why shouldn't the rents also increase.

    4Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Tyler Rowland

    "Due to inflating expenses, if I am not raising rents, I am actually getting a pay decrease. I provide my tenants with a place to live for less money than it would cost them to provide the same quality housing for themselves. The fact that I have more buying power and can do it at a low enough price point to profit from renting it is the result of discipline and patience that allowed me to make the personal sacrifices to put me in the position that I am. The charitable causes that I have and will continue to support (which include below market rents in some cases) are made at my discretion because I made the sacrifices necessary to own the properties that I do."

    Or,

    "F#$% your entitlement"

    Just have to know your audience and pick the right one.

    Our tenants understand incremental rent increases because we constantly make small adjustments to maintain the correct position in the market instead of unpredictable stagnant and then large increases. For tenants that want to "share" in our potential costs by signing longer leases, we are happy to oblige them and split the difference with them in discounted rental rates. Generally a $900 overall discount below market rent for a three year lease is the largest we offer. 

    9Reply
  • Brent Paul
    Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
    6y

    These people don't understand that this is a business we are trying to run.  I would tell her it's not different than the gas prices going up or food prices going up at a restaurant.  Most people understand, but I have run into a few that didn't agree with me. It should come as no surprise that these people had other financial troubles of their own.  Large credit card debt and low credit scores.  30 bucks a month increase affected them because they don't know how to budget their money and have no savings.  They live paycheck to paycheck.  One thing happens and their life falls like dominoes.  Just my 2 cents, from what I have seen.  

    4Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    Well....... Greedy landlord's have brought a lot of bad will down on all of us.  While of course you have the right to raise rents, doing so in a manner that hurts the community will draw negative attention. 

    Ask yourself why are there so many place instituting tighter laws on rentals? (california, Oregon, etc)  Because of greed.... So i totally get why she made the comment.

    i raise rents, but I do so judicially and calculate how much i would lose if the tenant moved out and I had a month long vacancy. 
     

    6Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y
    Originally posted by @Mary M.:

    Ask yourself why are there so many place instituting tighter laws on rentals? (california, Oregon, etc)  Because of greed.... So i totally get why she made the comment.

    Come on, you don't honestly believe that tighter laws on rentals is due to greedy landlords. It's all political smoke and mirror BS to shift blame. 

    Politicians limit supply. Demand keeps increasing. Prices keep going up. Voters who think they are smart since they have a liberal arts degree, an Obama-stamped change the world directive, and $150K in student loan debt want someone to blame. Politicians aren't about to admit that they don't want more housing as it puts strain on the infrastructure and it's just not sexy to spend money on infrastructure, not to mention it takes away from spending on their pet projects and eye candy that can get them re-elected. Instead they attack the boogeyman landlords knowing it will only make the problems worse, but that they will gain votes from the stupid voters. 

    19Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    Cost of living goes up, governments raise property taxes, insurance goes up, materials and labor costs go up. These things drive up market rent rates. You are running a business and have to treat it that way.

    2Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    Ummmmmm.... ok.  Isnt your Governor the one that is working to bring something like 200,000 new units online before 2025? This is a HUGE amount of money (billions) 

    And from where I sit I see plenty of stuff coming out of the ground.  Sadly, given prices not much of it is affordable. 

    The renovation craze has really pushed a lot of low income people into the streets and they start yelling as There have been many many people who bought assets, doubled rents or booted all the tenants. While there is plenty of blame to go around, that kind of visible and obnoxius behaviour ends up hurting every other landlord.

    I am not for rent control at all, but I do think we all should try to understand the ramifications of every action we take 

    8Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    As for the OPs comment - I think most tenants understand raising rents to cover rising costs. What I think they have a hard time with, and what I assume the questioner was asking about, is raising rents “to market rent” which generally entails large increases in rent. 

    2Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    6y

    @Tyler Rowland

    Are they happy when they get a salary increase ?

    1Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Mary M.:

    Ummmmmm.... ok.  Isnt your Governor the one that is working to bring something like 200,000 new units online before 2025? This is a HUGE amount of money (billions) 

    And from where I sit I see plenty of stuff coming out of the ground.  Sadly, given prices not much of it is affordable. 

    The renovation craze has really pushed a lot of low income people into the streets and they start yelling as There have been many many people who bought assets, doubled rents or booted all the tenants. While there is plenty of blame to go around, that kind of visible and obnoxius behaviour ends up hurting every other landlord.

    I am not for rent control at all, but I do think we all should try to understand the ramifications of every action we take 

    Hi Mary,

    3.5 Million actually. We're only 410,000 units behind a year in. My favorite thing the Gov has done to support affordable housing is to sue the city of Huntington beach for not being compliant with the state's laws regarding affordable housing and allowing exceptions from the law in Marin county. (Population density of 5,959 people per sq mile versus 501 respectively)

    Guess which one was rated as one of the top five most wealthy jurisdictions in the US and votes for the same party at the Gov?

    I'm not going to pretend that profiteering doesn't exist nor isn't a problem, but CA isn't solving any problems with their current legislation hopefully OR is doing better.

    All of the grants CA is pledging for low income housing just allows developers to create non profits, force cities to let them build monstrous apartment complexes, hold them for a few years and then sell them to a for profit entity for a depressed value based on the limited income. Once they are in the hands of the for profit entity, the rents go up drastically because MF younger than 15 years is exempt from CA rent control. Within a few years someone makes a few million subsidized by the CA tax payer.

    The rent control laws in CA have only encouraged owners to increase rents drastically and/or evict quality tenants due to missing rent raising deadlines. The fact that professional lawmakers didn't consider limiting rent increases as you approached or surpassed your markets average is in the best case gross incompetence.

    My disdain for legislative solutions is one of the few things that crosses party lines and obviously because money and power corrupts, legislation is the most necessary evil (Ironically). It just is painful to see the government waste through poor execution when many non profits could do twice as much good with 10% of the funds.

    Thanks for your promotions of social responsibility. I can't help but feel like if most of our reputations got a fraction of the press that the examples you cited did, that a little more discretion might be show from lawmakers.

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    6y

    Simply ask the person if they felt guilty the last time they got a raise.

    Or you could be more snarky and ask "Are you a troll or are you really that stupid?"

    8Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    6y

    The same people get mad when the price of Newport’s ,booze , dog food for their pit bull and lotto tickets inch up but they still buy all that junk anyway . Look the reality is The average tenant has a great deal of disdain for their evil rich greedy landlord no matter what he charges ,it’s always too much and he’s always the prick in the scenario despite his best efforts .

    I used to try to figure people out but then I realized life is too short . I adopt the philosophy that Some things are best left unsaid . Frankly I really don’t care what they think . It’s best to not waste time pondering such things . Sadly The average tenant is what I call “mind broke “ . It’s everyone else’s fault they are in the situation they are in * except them !

    6Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    The majority of tenants I have dealt with have no concept of basic business math or survival & no idea of the financial drain of guvt., welfare economics. They'll blow their money on booze, vaping, Rx drugs legal or otherwise, fast foods, a couple of 55inch TV's, monthly cell phone & cable TV bills etc but have no concept of a Landlords property taxes going up to fund wasteful medicare, baby momma benefits, HEAP, food stamps etc etc. They show no sign of bettering their lot but instead martyr themselves in perpetuity to low income menial jobs that they rarely keep for more than 18 months.
     We had one guy b!tch about our recent "unnecessary, greedy" $25/month rent increase because he just bought a truck he couldn't afford. This same guy's Vegan live-in orders all her foods on-line. The veggie burger she buys runs $8.95/lb plus delivery & when BBQ'd it has the distinct odor of fermented silage (a.k.a. cattle fodder). BUT they have no use for the huge vegetable garden area we have provided, but our old Italian tenant does grow a LOT of produce, God Bless him.

    5Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y

    Business is Business..that's it! 

    1Reply
  • Jim S.
    Sterman, MI · Member since 2017 · 378 posts · 306 votes
    6y

    If you think the market price is too high. Maybe you should work for $5/hour. Set an example.

    3Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y
    Originally posted by @Tyler Rowland:

    I was talking about Real Estate Investing with some people at Home Show event, and as I was talking about getting rents up to market rates. A lady in the conversation asked me if I felt guilty about that (raising rents to market value).  Almost as if rents should stay the same forever.  

    I told her "of course I don't feel guilty, because I try to do everything in the correct way.  And as someone that provides housing and services to people that need them, I feel quite the opposite."  But the thing that really got me about the question she posed was that potentially, there are a lot of people out there that feel it is shameful to raise rents and therefore something to feel guilty about.  How have/would you answer her question.  And how does that perception get corrected?  How do Landlords/ Property Management Companies help your tenants understand incremental rent increases, especially when rents are well below market averages?  

    Turn the question around to ask them if they would feel guilty asking their boss for a raise if they were being paid less than a co-worker doing the same job.

    I think part of the problem is they think landlords are rich and make tonnes of money.  They don't realize that many of us are 'normal' people who have saved to get to where we are, our properties have mortgages and the rent covers our expenses and that's about it.

    1Reply
  • Ralph Poirier
    Rental Property Investor · Wrentham, MA · Member since 2019 · 137 posts · 104 votes
    6y

    Like every industry there are good landlords (take care of their property and deserve to raise rents) and there are bad slumlords.  Unfortunately, the media has a tendency to only talk about the latter.  You have to follow your own moral compass.  It's what allows me to put my head down on my pillow every night.

    1Reply
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