How did you present a rent increase

Question

Hey guys,

I’m about 3 months away from having to renew my renters lease. I know this is an odd time, so two questions.

First what’s your thought on increasing your rent during this time (my tenant is in the medical field and still working).

Second, how did you present the rent increase when the least came up for your tenants.

I don’t plan on increasing rent much because of the virus but I did want to implant a small increase.

Thanks for the input!

Nathan Gesner · Answer

I have a form letter that keeps it professional, provides them with some options, and requires them to choose one. Here's a very simple example:

Dear Tenant,

Your lease is expiring on ________. After a review of our records, we've decided to offer you the following options. Please initial your choice and return to us no later than ________.

1. Terminate my lease on the current schedule. I understand I must vacate the home no later than the lease expiration date listed above.

2. Renew for an additional one-year period at a rate of $_______. Your new termination date will be ________. All other terms and conditions of the original agreement remain in affect unless agreed to in writing by all parties.

3. Extend on a month-to-month basis with a 25% increase. Your monthly rate will be $_______. Under this option, Tenant may give notice of intent to terminate by serving Landlord with a 30-Day Notice in writing.

We look forward to hearing from you soon!

Landlord

Ujwal Velagapudi · Answer

I agree with @Kenneth Garrett, if you've got some room to increase given your market, then even during this time I think it is OK to have a minor increase. I wouldn't do anything greater than 5%. As for how, I typically renewed a few months beforehand as I want to have the assurance and also give my tenants time in case they did choose to move out. I'd email the new lease and in just a sentence or two explain that the rent is well below market and you are needing to increase it (but still below the top of market). Something to justify the increase, explain to the tenant, and then definitely show appreciation for the time they've stayed with you.

Joe Splitrock · Answer

^^^ same for me. Give them three choices and let them pick. Then it is their choice and not you pushing something on them.

Takeo Kingi · Answer

Thanks for that, I like it, I’ll definitely tweak it to my tenant and use it. Appreciate it!

Andrew Powers · Answer

I've also heard but havent tried yet, and may depend on region... in your lease document, state that rent increases xx% for each subsequent lease renewal. Takes away the awkwardness since the tenants agreed to it when signing originally.

Kenneth Garrett · Answer

@Takeo Kingi

It’s definitely an awkward time.  Small increase not a big deal provided your not at the top of your rental market.  I just renewed a lease and they were at the high end of the market. I just chose to renew at the same rate.  If it’s a big increase there going to want to know why.  Your not obligated to give an answer, but without any property improvements there’s a good chance they won’t renew.

As far as how I go about a new lease.  I send them an email or text indicating there lease is expiring soon and I am offering them a new lease.  I let them know of the new rate.  If they agree I send them a new lease.

Nathan Gesner · Answer

Yes, my lease includes an automatic rent increase of 3% so there's no surprise for the renter and it's a reminder for me and my staff to keep rents up.

Takeo Kingi · Answer

Great information, that makes sense. Thank you!

How did you present a rent increase

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