"Shouldn't Landlords Feel Guilty about raising rent?"
Tyler RowlandBusiness Member
Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
Tyler Rowland with Intercap Lending 555 Reviews
"Shouldn't Landlords Feel Guilty about raising rent?"
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Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
6yJust ask , " Does the government feel guilty when they raise taxes?"
105 Replies
- Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes6y
Originally posted by @Chris Kdjdfjb:
@Michael King Steve K. gets it. Scroll over to his post.
I read it. I see his point, but I don't see yours. To be in this business as a landlord, and a successful one, you have to modify your business profile to meet market prices and costs of business. To do anything else is to operate a charity.
If you enter this business as a renter, then you simply pay what the business owner asks for. If you don't like it, you go somewhere else.
What exactly are you looking for here bud? Someone to say they feel bad raising the rent to stay in accord with inflation? You don't seriously think a landlord should feel guilty for trying to keep his business viable?
Let me throw it back to you. How exactly should a landlord maintain his rents to ensure he manages to cover costs associated with keeping a roof over your head? Is there a particular percentage increase you feel would be fair each year? Tell me, in your experience as a landlord, what's fair.
Not looking to get into a back and forth, but just for the record, I said I have sympathy for renters struggling to get by because I was once one myself and understand how the struggle is real as a renter in an expensive market with rising rents. But I also understand how rent increases are necessary because expenses go up every year and the property owner is ultimately responsible for maintaining the property and providing a safe environment for people to live in, which would be impossible to do without increasing rent over time (empathy would be the correct term I suppose, since I'm not currently a renter, sorry for that grammar police).
I see no parallel between being a property owner and running a pyramid scheme, which is an illegal business structure that works by recruiting new members to pay a fee to join, who then receive fees themselves by encouraging other new members to join. In order for a business to meet the definition of a pyramid scheme (which again, is illegal), the business must be fed by new fees primarily and not generate revenue by selling a product, service, or provide any value in exchange for the fees collected. Eventually pyramid schemes fail because they run out of new members. A Ponzi is slightly different, more of a "robbing Peter to pay Paul" scheme where money from new investors is used to pay returns to earlier investors in order to hide the fact that whatever the investment vehicle is that the scheme is based upon (originally the arbitrage of postage stamp coupons) is insufficient in realizing the promised returns. Network marketing and MLM companies are similar to a pyramid in that people pay to join, but are usually legal because they actually sell a product or provide a service whereas true pyramids do not.
Of course owning rental property doesn't meet any of those definitions because the rental business provides something extremely tangible and useful: a place for people to live. There are probably pyramids, ponzis, and network marketing schemes operating within the RE space, I would imagine, but they would be on the fringes, not representative of the basic concept of the real estate rental business structure which is a service for those who don't own property to obtain housing by paying property owners to live in their property. The tenant chooses to live in the property and is responsible to pay the agreed upon rent amount for the lease term as well as abide by the terms of the lease. The landlord is responsible for providing a safe and habitable property as well as to uphold their end of the lease agreement. For the landlord to meet their responsibilities, adjusting rent as leases are renewed becomes necessary in order to continually maintain the property keeping it safe and habitable as expenses increase.
Renters don't always keep it top of mind that their rent amount is worth 3% less each year due to inflation, or that a building is a depreciating asset which requires increased maintenance as it ages, or that property taxes go up every year along with utilities, insurance, labor and materials costs, rental license and inspection costs, complying with rental property regulations, increased business expenses, appliance replacement costs, furnaces that used to cost $2k are now $10k due to increased efficiency requirements etc. etc. etc. it is actually a lot more expensive to own property than most renters probably realize hence the need for rent increases along with these increased expenses. There probably aren't actually that many markets where average rent increases greatly exceed the increase in expenses that owners absorb.
I see both sides of it as macro economics has been leading to increased disparity of wealth at a rapid pace over the past decade, and this has had an unequal impact on low wage earners, a high percentage of which are now competing with automation. But none of that is driven by landlords arbitrarily raising rent. It's unfair the way many renters like to depict landlords as Scrooge McDuck swimming in piles of gold coins and not working for their money while in reality a small percentage of the rent actually makes it into a landlords pocket most of the time and it's actually a lot of work to start up and run a successful real estate investing business. Most of the actual wealth building in real estate doesn't come from bleeding tenants dry but instead comes from either scaling a very low margin business well though hard work or by appreciation which is just a basic function of limited supply and increasing demand. Call me cynical but my plan is to work towards owning as much of that limited supply as possible.
- Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes6y
@Chris Kdjdfjb
Not sure what to tell you man. You came to a real estate investment website and are calling it a pyramid scheme and are blasting landlords. So, you’re gonna get schooled.
EVERY person can buy their own place. I don’t own a monopoly. But not nearly everyone will work as hard as me, sacrifice like I did, and make these tough decisions.
You say I look down upon tenants. But you clearly didn’t read my posts very well. I specifically said my family comes first. I would hope everybody else would say that as well. Imagine if my tenants put me first over their own kids?!
Not every tenant loves me, I’m sure. That’s ok. They can move out any time they want. Seriously. They can. They can break their lease. I can’t chain them to the radiator. But I know I do a great job enough wherein almost every tenant renews their lease at least once. And I do that at market rates.
I give to charity. My tenants name is not Charity.
- Property Manager · Member since 2021 · 24 posts · 10 votes5y
Hello! My husband and I recently became the property managers for my father-in-law's rental portfolio. My father-in-law has not raised rents in a decade and was low to begin with. All his properties are single-family dwellings and are not subject to rent control. Several of his tenants are paying rent $700-900 below fair market value. For example, one tenant since 2016 is paying $1200 for a home that could rent for $2000. Part of our job is to raise rents. We are thinking to raise the rent from $1200 to $1500 now and then raise it up gradually to meet market value. Thoughts? Thanks in advance!
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