Updated over 5 years ago on . Most recent reply
Feeling confused to raise rent!
Hello,
My tenant currently pays below market rent at least by $200 a month. They are a couple and keep the home really clean.I am afraid increasing the rent will make them want to move out. The tenant once admitted he has OCD so he wants to keep everything clean,I feel they are perfect tenants to have to navigate this pandemic.I am somewhat reluctant to vett new tenants now due to the corona virus, besides not everyone is on the same page about Corona safety protocols.I prefer to err on the safety side since we are not dealing with just another flu virus so I have this fear of unknown.
Appreciate if anyone here can provide any suggestions or if they have been in a similar situation.
Most Popular Reply
Almost every new land lord (and sometimes old timers) say they are "afraid tenants will move" if they increase the rent. So here's my question: where will they go? Think about it....there isn't anywhere cheaper.
You said your unit is $200 BELOW MARKET. So if they stay with you and you raise the rent, they will be paying market rent. If they move they will be paying market rent, plus the day(s) off work and/or loss of weekends to pack and move, plus the time finding a new place, plus coming up with a new deposit, plus changing over their mailing address at dozens of businesses, plus moving supplies, plus buying friends pizza and beer to help move, etc.
The point should be clear: Market rent is market rent. They can't go anywhere cheaper by definition, unless you are incorrect about your unit being below market rent. Or unless there are other scared land lords out there who advertise vacant units at below market rent.
Also, if I had a dollar for every tenant/applicant who claimed they were "OCD clean" I'd have several thousands dollars. If they keep it clean: great. If not, they lie.
My advice: raise the rent $100 ASAP, and every year after by $75 until you get within 2% of market. If they move, it will be for other reasons that you can't control and that keeping rent below market won't help.