Are you comfortable raising rents now in 2021?

Question

hi all, I'm looking for feedback on whether my fellow investors plan on raising rents in 2021 or how they feel about this topic. I'm an investor in the phoenix area and rents are still rising at a crazy pace with no end in sight. I'm reading that the eviction moratorium will be extented into 2021 for a few more months and not sure if this should be taken into consideration for whether to raise rents or not just to keep up with what's going on in the Phoenix market. Thanks for your whether you are in Phoenix area or for letting me know what you plan to do in your market.

George C.

Brett Robinson · Answer

Well you say it will be a full month vacancy for turn over. That doesn't have to be true. I give my tenants 3 month warnings on rent increases (as required under our laws). If they decide to move then I have 3 months to find a new tenant that moves in the day or two after the prior tenant leaves (depending if maintenance is needed etc). I'm sure this is common for many landlords. I rarely have any vacancies and if I do it's usually because I am needing to do some work in the unit. @Waleep Alvi

Tammy Mason · Answer

I’m not going to do any increases for existing tenants right now. And in a year or two when I reassess, it will be unit by unit based on where the current rent is vs market rent. If it’s way to low then it will get a small adjustment to get it closer. If it’s not way too low then I’ll leave it alone. If rents crash then I’ll be looking at lowering everyone’s rents.

I don’t like the philosophy that no one gets a rent increase ever and I also don’t buy the idea that it should go up every year for every tenant to maintain that expectation. I just want my rents to be fair. About market for new tenants and a bit lower than market for (good) long-term tenants.

George Cocokios · Answer

Hi Debbie. Thanks for your post. I typically raise rents slightly every year and even did so during the pandemic and only had 1 tenant leave because of it and i was happy they did leave. The west Valley is seeing crazy rent increases right now, up over $200 from my current rents there even after my slight increase last year. I hate to raise them that much but also don’t want to be that far below market rate. I’ve had a long time tenter there so hate to lose them but also don’t want to raise it that much. It’s a bit of a dilemma for me.

Debbie C. · Answer

@George Cocokios

I have rentals in south Scottsdale and even though rents have gone up, and I will be increasing renewals somewhat now, I carefully look at what is going on in my area and decide accordingly. I would like to keep my good tenants, and on the previous renewals, ( in 2020), I chose not to increase the rent.

Of course I keep an eye on taxes, and any other costs.

George Cocokios · Answer

Thanks to all for your feedback. It’s good to see people are thinking long and hard about their specific markets when considering rent increases. It’s certainly one that warrants weighing the pros and cons considering costs are rising in all areas: taxes, insurance, HOA costs, labor and material for maintenance while at the same time trying to not lose tenants over an increase and then have a vacancy.

Colleen F. · Answer

Yes, Raising them. I saw a Crazy tax increase in MA property and expect tax increases in RI.  Only one hard to rent property will not see an increase if the current tenant stays. Consider market rent but also costs. If my taxes go up I have to increase if the market will bear it.

Julie Hartman · Answer

We have about half of our property owners raising rent to cover increased taxes and HOA's. The other half don't want to risk losing a good tenant. Our market can definitely sustain increases but for our owners who want to increase, we caution them to split the difference since the market has gone up so much especially in some areas of the city vs others.

Nathan Gesner · Answer

Yes, we are raising rents. However, you have to know your own market and what it will sustain. In my market, we're seeing a major increase in the number of new people moving to town so rentals are in high demand which justifies higher rates. In other markets, like NYC or San Francisco, people with money may be leaving and governors are using COVID as an excuse to close the economy, so demand may be lower and rent decreases may be justified.

You do you.

Nam Trang · Answer

We had three or four leases that were coming up for renewal during this Covid window and had planned moderate increases for them but given everything that was going on we thought it better not to implement the small increases if it generated a chance of turnover, which quite frankly we did not want to deal with during the height of Covid.

Are you comfortable raising rents now in 2021?

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