Wife doesn't want to increase rents
Rental Property Investor · San Diego, CA · Member since 2018 · 27 posts · 36 votes
Wife doesn't want to increase rents
Most Popular Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votesI see mostly replies that are not local to CA/San Diego. This implies that they likely do not know the nuances of the local market.
First I value good tenants and let my good tenants get slightly below market rent, but you asked to justify the opposite which is very easy to do.
- In CA, duplexes are rent controlled state wide (5% + CPI, capped at 10%). If your rents get below market rent, it may never be possible to get the rent to market rate with the existing tenants.
- There is no better way to get rid of an undesired rent than to raise the rent above market rent and have them give you notice. This by-passes any claims of retaliation, discrimination, etc. Prior to rent control, this is how I got rid of every tenant that I wanted to get rid of that was current on their rent.
- COVID has identified new risks. in particular regulations that in effect result in not being able to get bad tenants out of your unit for lease violations (except as related to health and safety), non-payment, etc. Look up the anti eviction moratorium that was passed by the San Diego County Board of Supervisors. It was the most stringent in the nation. It allowed tenants to break any part of lease, not pay, do damage to the unit and you could not evict (only eviction exception was for health and safety). Fortunately this regulation expired last month. However, increased risks deserves increased profit to compensate for the increased risks. These anti eviction rules are likely to result in significant rent increases over the next few years.
- Home prices in San Diego rose ~25% county wide in the last year. To have rents increase the same as the property increase would result in a ~25% rent increase. That would be illegal on your units. The rent increases always lag the property increases. However, this is another indicator that rents are going to go up a lot in the near term.
- CPI in the last year was highest in many years. local wages have gone up significantly. skilled tradesmen (especially plumbers) have increased their costs significantly. Material cost similarly have increased significantly. Plywood has risen ~300% since pre-Covid. This implies your expenses are higher than the previous owner paid last year.
- Political climate and the COVID anti eviction rules indicate that politicians are significantly more tenant friendly than LL friendly. This implies that regulations could come at any time further limiting rent increases. What would you do if there was a rule passed indicating that even at tenant turnover you were limited in the rent increase? If you have a below market rent for a good tenant, but have to place a new tenant that inherits the rent base of the existing tenant then you are supplementing a new tenant of unknown quality.
- In part due to rent control, reduced rents even on non-commercial MF (4 units and less) does affect the value of the property if you need to exit for any reason. I recognize the appraisal will be set based on comps, but what a buyer will pay will take into account the current rents because of the difficulty in raising the rents (cash for keys, rehab extensive enough tenant cannot occupy, move in immediate family). Buying a multiplex with reduced rents will affect new buyer's cash flow/profit and is sure to be reflected in the price the RE sells for.
I gave out 6 maximum allowed rent increases this year having never given that size rent increase previously. Only one tenant gave notice and with the max increase she was still over $500/month below market rent. My point is I expect rents to rise a lot more than the 3% to 5% you are considering due to the increased cost of RE, the newly identified risks associated with providing residential housing, the high CPI and associated wage increases, etc.
I suspect if you raised the rent only 3% to 5%, your tenant may feel fortunate.
As indicated, I let my best tenants get a bit below market rent, but you should not let them get significantly below market rent. I have tenants that I could give max allowed rent increase and they would still be below market rent and it is not easy to catch back up with the market rent.
The rent increase you are considering (3% to 5%) should occur to protect your investment.
Good luck
117 Replies
- Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes5y
Time to get a property manager!
As much as it pained us early on to consider giving up profits by paying a property manager... it was the best business decision we made and it ensured that we didn't even have to have these conversations.
Save your differences of opinions for things that matter to your relationship and let the experts raise rents when the timing is right! ;) - Member since 2020 · 984 posts · 1k+ votes5y
We raise the rents 3% to 5% every year to attempt to keep up with inflation. Every year, in California, your property taxes increase 1%, water doubled and tripled in the past few years., the prices for materials and contractors has more than doubled.
You are running a business and it is not about being generous. Every business that is operated like a business raises their prices every year to keep up with increased costs. One more important reason we raise rents every year is so tenants actually expect to get an increase notice. If you don't raise rents you will have serious problems making a good profit when you sell the property because buyers want properties with the highest rents, obviously.
One thing a very wise man told me 48 years ago was that if I wanted to have a good relationship with my wife I needed to keep her out and away from my business and since that day my wives (all 3 of them) never had a say in what I did. Sorry, but I don't understand why married people think they have to have their spouse's approval for everything they do. I own several apartment building in Los Angeles county, several homes in several states and I never ever asked my wife whether or not I should buy or sell a property and because I never involved my wife she already has the expectation that I don't involve her in my business affairs. I don't need my wife's input nor do I need her approval with the exception of during the night.
Maybe, your wife is putting up some of the cash, or you are pulling cash from the family's retirement money and you need your wife's approval. In that case, just agree with your wife for now, buy the property and send a few rent increase notices with you think it is appropriate and I can't understand why any woman on this planet would not like a little more free cash to spend at Nordstroms and that brings up another small subject about how my wife and I discuss money and other issues. We ride bicycles about 100 miles every week and almost every week we stop at Nordstroms so my wife can get bag loads of Shiseido makeup. My wife tries to tell me how much money she spends and I always tell her that I don't want to know. I know she spends about $500 to $700 every month on makeup and I don't want to know if she pays $3000 for a purse. I respect my wife's decisions in regards to her ability to avoid spending more that she should, or more than we can afford and my respect for her avoids arguments.
I buy properties without asking my wife and I don't want my wife to ask for my approval when she wants to buy something.
I've been married to my current wife for 23 years and only had maybe 2 or 3 minor issues that lasted less than a few minutes.
- 5yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
@Zachary Jensen Sounds like you have made a great partner to allow you to think from both sides of the fence for tenants and rentals. There are many factors and you mentioned a few. There was a property we bought back in 2013 still has the same tenant in there, and we have raised the rent each year except for last year when she renewed in May due to all the stuff going on. We did just sign a 3 year lease with her with 5% increase built in and with those built in each year of the lease we will still not be where we should be in terms of rent. Some years in the beginning we were only increasing the rent about 2%, and now you can see we have not kept up with inflation and rental amounts. We could be right now about $200 more a month which is 9% more on what she pays now. We have done a lot to keep the property very well maintained and also had an insurance claim last year that caused a ton of work to be done.
In the end, if you do not keep up you will be supplementing the rent and if you do not do that you'll get hit with a new roof bill at some point that can knock you out of the race then too. We got hit with a bill to fix one area of the roof on that property that was only 300sf, it was $3200 to fix due to it being an addition.
Keep raising the rents and make sure all the stuff the tenants ask for are taken care of that are realist (repairs/maintenance) so that the rental raises are justified.
The McKernan Group4.957 Reviews - Member since 2019 · 7 posts · 4 votes5y
@Zachary Jensen
I would agree with this. If you can add value for them in a efficient upgrade/renovation plan that doesn’t overly encumber them then I would alert them of some updates you’ll be making and slap on a 5% increase.
I work as a lender at Walker & Dunlop and flat rents don’t play well in making a story for a refinance. Possible but makes it more difficult to make a case for solid property value increase. If you’re in scaling mode rent increases are the best way to boost value, refi and scale/stack.
- Rental Property Investor · Katy, TX · Member since 2013 · 417 posts · 171 votes5y
@Zachary Jensen
Congrat’s on the first property! There are lots of great perspectives here so far. I fully agree that it is smart of landlords to treat great tenants as if they are worth their weight in gold. But, if this great tenant has been conditioned to accept annual 3-5% rent increases, why would you disrupt that, especially in a period of high inflation?
Also, perhaps consider hiring a good property manager to handle the interactions and everything with the tenant. I assume that and your wife likely would rather not spend your time working for close to minimum wage self managing. Especially if yall each have full-time jobs of your own already. Also, having a property manager may help to create some walls between you and the tenant who are already only separated from you by a wall. I’ve self managed and I’ve employed a property manager...I MUCH prefer employing a property manager. This is obviously heavily influenced by my personal situation however, and everyone is different. .
- 5yJake KnightPro MemberProperty Manager · Indianapolis · Member since 2017 · 303 posts · 146 votes
I'll first state that I'm not in your market and don't know the nuances of it. Having said that, we do rent increases every year. Property values rise, taxes increase and you're providing a service to them and taking all the risk. As landlords, we have a lot of responsibilities and need to be compensated accordingly. While it might seem harsh to raise rents every year to some, it's important to see this as business and not a charity. You may tell your tenants that any/all rent increases are reflective of the market rents for the area and your not just randomly increasing it. Hope that helps and good luck!
- Rental Property Investor · Gilbert, AZ · Member since 2020 · 210 posts · 163 votes5y
@Zachary Jensen, I would just sit down and have a conversation about it. I think it's important that spouses are aligned when it comes to real estate investing, and I think you both probably have legitimate points to make on either side, and maybe you can agree to meet in the middle somewhere.
My 2 cents, if the previous landlord raised rents 3-5% with this same tenant each year, then the expectation has been set and you likely won't have an issue continuing that trend. My fear would be that if you stop raising rents, then it sets an expectation with the tenant for what to expect from their new landlord. The justification to your wife to raise rents would be that your costs of ownership will continue to rise each year (yearly tax & insurance increases, repair/maintenance/CapEx escalation over time, etc). If your tenant stays for 20 yrs, are you going to hold their rent over that time? I'm all for helping people when they need help and for trying to keep good tenants, but at the same time most of us operate our properties for what they are, which is a business; but I think there is a happy medium that can be met between you and your wife. If San Diego is anything like Phoenix has been over the past couple years, then a 3-5% rent increase is modest compared to what the market rent appreciation has been. I don't think there is a right or wrong answer either way, just different opinions on strategy. Good luck!
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
@Zachary Jensen not raising rents is actually a disservice to your business and the tenant.
Price increases are really necessary as costs in a business always increase over time. Most people understand taxes and insurance go up every year, but the silent killers are Inflation and CAPEX. Inflation alone is impacting your costs by 2-3%. That means if your rent stays the same, your realized income is actually decreasing 2-3% every year due to inflation. The other reality is CAPEX expense are always happening, you just don't see it. An HVAC system may have a 20 year life and costs $9000 to replace. If your tenant lives there 10 years, they consumed $4500 of the cost of that HVAC system. When they moved into the property ten years ago, the HVAC system may have costed $7000 to replace. In this example, the HVAC system alone increased in cost by $200 per year. Rent increases capture all these expenses. CAPEX is most dangerous, because it happens in large chunks. You may go years without spending a dime, then you get hit with thousands of dollars in expenses. If you are not allocating these expenses over time, it can be crippling when the costs hit your bottom line.
Here is what happens over time when you don't raise rents. For the first year or two, you can easily avoid rent increases by just absorbing added costs. Over the course of years, the insurance and taxes start to increase to larger amounts. Then as time progresses, the property starts needing more repairs and updates. After a few years, you realize that raising rents is a necessity, but by this point you have gone years without doing it. This actually makes it worse, because you have trained the tenant to expect no rent increase. It is further compounded by the fact that when you do finally increase rents, it needs to be a big increase. By this point, the tenant is probably paying hundreds under market value, so they can't go anywhere and pay similar price. They get angry at you for the increase. You get angry at them for not appreciating all these years of no increase. Odds are good your generous wife will back down and any future attempt to raise rent will be impossible. Over time this will bleed thousands of dollars from your business.The point is annual increases are less disruptive to a tenant, because they can easily adjust to small increases over time. If you wait until rent increases are necessary, then both you and your tenant are mad at that point.
My suggestion is always increase some amount. Even if you target a smaller amount like 2%, it is better to get tenants used to annual increases. If you want to be "kind" you can still keep your rent below market value, just don't let it fall too far behind.
- Toronto, Canada · Member since 2018 · 20 posts · 12 votes5y
This is a great topic, as more landlords are going to be thinking about raising the rent as the economy resumes. Raising it on policy or for no other reason than profiteering might not be a good idea. Is the rent fairly priced now? However, consider the renters point of view, that if you are raising it, you won't be selling the house. Renters biggest fear these days is that you'll sell the house and they'll be out on the streets. When you raise, you might fix a few items in the unit/house or perhaps offer a new digital amenity if available. It doesn't matter whether it's San Diego or New York or Tampa, if you offer value, then you can raise the rent.
- Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes5y
If your tenants are used to each year it going up 3-5%, I'd say stick to what they are used to-- and just do the 3%.
In addition to it-- go talk to the tenants, tell them you want to upgrade it up ($200 is my normal). Maybe they want a new fan, or a motion detected security light-- show them you aren't just raising rent, but you're actively improving their homes. Make them feel valued and important. This way everyone wins-- you get the increase, it's on the lower side, and if the tenants get to pick the upgrade-- they will be happy knowing where the extra money is getting spent. Happy relationships making managing tenants easier, and if your wife is doing it-- make it a win/win.
- Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes5y
Originally posted by @Zachary Jensen:
I'm just about to close on my first rental property (house-hacking a duplex in a small town outside of San Diego, CA). The previous Landlord raised rents 3-5% every year on this property, so it is currently rented for market rent to some great tenants who have taken good care of the place. My wife is a wonderful person and very generous. As a result, she doesn't want to continue increasing the rents on a yearly basis. I could really use some help making the case for the importance of yearly rent increases. I understand that property taxes increase on a yearly basis and that any maintenance costs also go up on a yearly basis. What are some of the other reasons for maintaining regular annual rent increases?
You definitely married a smarter woman. Always good to marry up ! That's why I am still single.. LMAO..
I don't raise rents either.. I have so far raised rents only once in last 5 yrs on 1 tenant who is Section 8 tenant. Most of the rent increase was absorbed by the county. So essentially the tax payers footed the bill.. I footed the bill.
- Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes5y
@Account Closed and people wonder why landlords are one of the most hated professions on earth and why tenant friendly laws are slowly (or sometimes quickly) becoming the norm.....
As or the OP - I think there3 is no one size fits all answer and you need to spend some time going over all scenarios.... but for sure the threat of legislation capping rent increases on vacant units would have me doing 1-5% increases every single year. - Rental Property Investor · Luck, WI · Member since 2020 · 13 posts · 5 votes5y
@Zachary Jensen
I can certainly see both points of view here. If you have a good, long-term tenant who is taking care of your property and respecting your investment, it would be a shame to lose someone like that.
However, if you are managing a business and are trying to maintain your cash flow and adjust for inflation, increases at least over a set period of time are very necessary.
Don’t cripple yourself and your business over the possibility of an upset tenant. Have a face-to-face yearly and explain why the rent will be increasing and you’ll likely have an understanding conversation.
- Real Estate Agent · Los Angeles, CA · Member since 2019 · 49 posts · 42 votes5y
@Zachary Jensen another point I haven’t seen mentioned is if/when you go to sell the property you’re almost certainly guaranteeing these good tenants will get evicted/hit with a huge rent increase. Assuming because you haven’t been raising rents, you have had less reserves to continue maintenance on the property, it’ll become more of a value-add product and the buyer will need to raise the rents significantly to make their numbers work.
Also inflation is at like 6% right now!
- 5yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Originally posted by @Account Closed:
We raise the rents 3% to 5% every year to attempt to keep up with inflation. Every year, in California, your property taxes increase 1%, water doubled and tripled in the past few years., the prices for materials and contractors has more than doubled.
You are running a business and it is not about being generous. Every business that is operated like a business raises their prices every year to keep up with increased costs. One more important reason we raise rents every year is so tenants actually expect to get an increase notice. If you don't raise rents you will have serious problems making a good profit when you sell the property because buyers want properties with the highest rents, obviously.
One thing a very wise man told me 48 years ago was that if I wanted to have a good relationship with my wife I needed to keep her out and away from my business and since that day my wives (all 3 of them) never had a say in what I did. Sorry, but I don't understand why married people think they have to have their spouse's approval for everything they do. I own several apartment building in Los Angeles county, several homes in several states and I never ever asked my wife whether or not I should buy or sell a property and because I never involved my wife she already has the expectation that I don't involve her in my business affairs. I don't need my wife's input nor do I need her approval with the exception of during the night.
Maybe, your wife is putting up some of the cash, or you are pulling cash from the family's retirement money and you need your wife's approval. In that case, just agree with your wife for now, buy the property and send a few rent increase notices with you think it is appropriate and I can't understand why any woman on this planet would not like a little more free cash to spend at Nordstroms and that brings up another small subject about how my wife and I discuss money and other issues. We ride bicycles about 100 miles every week and almost every week we stop at Nordstroms so my wife can get bag loads of Shiseido makeup. My wife tries to tell me how much money she spends and I always tell her that I don't want to know. I know she spends about $500 to $700 every month on makeup and I don't want to know if she pays $3000 for a purse. I respect my wife's decisions in regards to her ability to avoid spending more that she should, or more than we can afford and my respect for her avoids arguments.
I buy properties without asking my wife and I don't want my wife to ask for my approval when she wants to buy something.
I've been married to my current wife for 23 years and only had maybe 2 or 3 minor issues that lasted less than a few minutes.
>One thing a very wise man told me 48 years ago was that if I wanted to have a good relationship with my wife I needed to keep her out and away from my business and since that day my wives (all 3 of them) never had a say in what I did. Sorry, but I don't understand why married people think they have to have their spouse's approval for everything they do.
This made me laugh. Starts off looking like sage advice to a happy wife then you indicate you have had 3 wives (not exactly a ideal relationship with each wife). I do recognize later you indicate wife #3 has lasted 23 years, but by the time I read that part I already had my laugh.
My wife and I are partners in our property investments. She does most of the interaction with the tenants. I do most of the interaction with the contractors. I also do most of the number analysis and she does most of the book keeping. It works well for us because we have complimentary strengths. We each agree on rent increases. It used to be that she advocated lower increases than I did, but now we are mostly in sync on the rent increases.
We both believe good tenants deserve to be a bit below market rents. We do not want any of these tenants to be able to move into a unit at similar price that has just had a tenant turn over flip (clean, etc). We recognize tenant turnover takes work and costs money. We also realize, regardless of how thoroughly we screen, that there is some risk placing a new tenant. So we believe financially we benefit from letting the better tenants be a little under market value. The pretty good tenants we keep at market rent. The poor tenants we raise their rent above market which typically results in the tenant giving notice and us replacing the poor tenants. We currently have zero poor tenants.
Note with rent control limiting the rent increase, the rent has to be near market rate for a legal rent increase to be able to raise the rent noticeably above market rent.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Inessa Stysis:
@Zachary Jensen another point I haven’t seen mentioned is if/when you go to sell the property you’re almost certainly guaranteeing these good tenants will get evicted/hit with a huge rent increase. Assuming because you haven’t been raising rents, you have had less reserves to continue maintenance on the property, it’ll become more of a value-add product and the buyer will need to raise the rents significantly to make their numbers work.
Also inflation is at like 6% right now!
This is exactly correct. A well meaning landlord doesn't raise rents for years. Then after 10, 15, 20 years they are underwater on rent and the property is in disrepair. They decide it is time to sell. A new investor buys the property at market value and is forced to raise rents due to the higher purchase price. They are forced to rehab due to years of neglect. The new tenant is forced to move because they can't afford the huge rent increase. Had the old landlord slowly raised rents over many years, it would be easy for the tenant to adjust. This hard shock could even force a tenant to be homeless. All because some well meaning landlord chose to not run their business as a business.
This is the hard thing for people to understand. Sometimes a well meaning and apparently compassionate action is actually doing harm. When the landlord sells the property at market rate, they are forcing the new landlord to raise rents.
- Member since 2021 · 237 posts · 153 votes5y
@Zachary Jensen
I didn’t spin through the entirety of this. This is how I do it:
Amazing tenants, think best ever, get an extension offer at either no increase if the market is HOT, or slight reduction ($50) if market is moderate as long as they sign significant (1+ year) extension.
Okay tenants get an extension offer usually around $50 -$100 ish if they sign a year extension. Based on market factors. Keep in mind most rents are $1,300-$2,000 in my units.
Not great tenants get the Reebok at term completion.
I love investing in an area where extension a term is 100% my choice
- New to Real Estate · San Diego · Member since 2019 · 45 posts · 12 votes5y
Originally posted by @Bryan Danger:
Time to get a property manager!
As much as it pained us early on to consider giving up profits by paying a property manager... it was the best business decision we made and it ensured that we didn't even have to have these conversations.
Save your differences of opinions for things that matter to your relationship and let the experts raise rents when the timing is right! ;)Hi Bryan,
A couple of questions,
Did you have +ve cashflow ( after PITI Vacancy, Expenses & CapEx) when you hired a PM ?
Would you say you were break even or slightly under after hiring a PM?
Thanks, Manraj
- 5yDaniel SmythPro MemberRental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
@Zachary Jensen
Your wife is correct!
Keep the tents the same, and inform your tenants that you ate doing so.
Don't tell tenants why, just inform them that you have decided not to do so at this time.
You are the good husband, and the great landlord!
Win Win!
By the way, if the deal you made was only a deal if you raise the rent, it's not really a deal.
Winning!
- Property Manager · Albany, OR · Member since 2016 · 58 posts · 23 votes5y
@Zachary Jensen
I agree with the wife to an extent.... I own a duplex in oregon with some great tenants. When we bought it one side was vacant and one side was way below market but he had been there for years and he does landscaping for the property. We renovated the vacant side and rented it at market. And I signed a month to month agreement with the existing tenant at a slight increase, which he was expecting. He knew he was getting a killer deal. He still is, but I'm not paying a landscaper. I haven't raised rents since. (It's been 2.5 years) That's not to say I won't, but the market hasn't increased that much, we had a pandemic year, so I knew my tenants were struggling. I am also not trying to be an ******* to them by raising rents every year, but I do intent to raise them occasionally. Basically I want to net a certain amount each month after all expenses are paid. I'll increase rents to do so. That's often less than 3%. So maybe a compromise could be increases every other year, to help resident retention or smaller increases each year.
- 5yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Another question for you.....is your wife really fine with you guys losing money? Inflation is quickly approaching 6% and that comes right out of your pocket. If she does not understand this basic concept, you may want to consider if this industry is right for you.....I just can't fathom why any intelligent person would start a business intending to lose money.....
- Investor · Rogers, AR · Member since 2018 · 62 posts · 27 votes5y
It's hard to make money in this business with a bleeding heart. I don't mind helping people out, but landlords cannot allow our emotions to blind us of the hard decisions that must be made. And increasing rents are a hard decision to make. However, the increase in taxes and insurance have to come from someone - if not your tenant, the landlord ends of paying.
- Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes5y
Originally posted by @Manraj Singh:
Originally posted by @Bryan Danger:
Time to get a property manager!
As much as it pained us early on to consider giving up profits by paying a property manager... it was the best business decision we made and it ensured that we didn't even have to have these conversations.
Save your differences of opinions for things that matter to your relationship and let the experts raise rents when the timing is right! ;)Hi Bryan,
A couple of questions,
Did you have +ve cashflow ( after PITI Vacancy, Expenses & CapEx) when you hired a PM ?
Would you say you were break even or slightly under after hiring a PM?
Thanks, Manraj
Fair question!
Easy answer is that it has changed over time and property by property.
I would say initially we were slightly under after factoring everything in, but didn't take long to move to slightly over, and better and better.
I would say two of our largest learnings in REI were around the PM:
- Our PM is far better at mandatory rent increases and making tenants pay utilities etc, as where we were often afraid to ask (to say nothing for their knowledge of other rules, regulations, trends that we know nothing about)... so i would say at the end of the day our PM probably makes us money rather than costing us money.
- For us, this is a long term game and all about lifestyle.
We certainly might be able to make more money by self managing, but we have been traveling full time (much of it internationally) for the past 10years and living out our dream lifestyles while our PM takes care of our portfolio back home. |
Without the PM we would have likely sold the properties long ago to create more freedom/flexibility, as where with the help of the PM we've been able to not only keep our portfolio but grow it from afar!
At least in terms of our REI, hiring a PM was the best decision we ever made!! - 5yRobert D DismukesPro MemberFlipper/Rehabber · Memphis, TN · Member since 2019 · 37 posts · 36 votes
@Zachary Jensen. You got on this business to increase your income and provide less taxable passive income . She needs to understand that this is a business. Taxes go up , insurance goes up , and materials and labor . Rents must go up. Make a deal with her , if you’re house not hoes up , the rents will have to go up. Theres no Mrs Nice gal , just Business Gal. Took my wife 3 months to figure it out. If you can’t convince her , your Landlord career may be short lived and left as a blah conversation at the bbq grill . Gltu
- Member since 2020 · 984 posts · 1k+ votes5y
Originally posted by @Dan H.:
Originally posted by @Account Closed:
We raise the rents 3% to 5% every year to attempt to keep up with inflation. Every year, in California, your property taxes increase 1%, water doubled and tripled in the past few years., the prices for materials and contractors has more than doubled.
You are running a business and it is not about being generous. Every business that is operated like a business raises their prices every year to keep up with increased costs. One more important reason we raise rents every year is so tenants actually expect to get an increase notice. If you don't raise rents you will have serious problems making a good profit when you sell the property because buyers want properties with the highest rents, obviously.
One thing a very wise man told me 48 years ago was that if I wanted to have a good relationship with my wife I needed to keep her out and away from my business and since that day my wives (all 3 of them) never had a say in what I did. Sorry, but I don't understand why married people think they have to have their spouse's approval for everything they do. I own several apartment building in Los Angeles county, several homes in several states and I never ever asked my wife whether or not I should buy or sell a property and because I never involved my wife she already has the expectation that I don't involve her in my business affairs. I don't need my wife's input nor do I need her approval with the exception of during the night.
Maybe, your wife is putting up some of the cash, or you are pulling cash from the family's retirement money and you need your wife's approval. In that case, just agree with your wife for now, buy the property and send a few rent increase notices with you think it is appropriate and I can't understand why any woman on this planet would not like a little more free cash to spend at Nordstroms and that brings up another small subject about how my wife and I discuss money and other issues. We ride bicycles about 100 miles every week and almost every week we stop at Nordstroms so my wife can get bag loads of Shiseido makeup. My wife tries to tell me how much money she spends and I always tell her that I don't want to know. I know she spends about $500 to $700 every month on makeup and I don't want to know if she pays $3000 for a purse. I respect my wife's decisions in regards to her ability to avoid spending more that she should, or more than we can afford and my respect for her avoids arguments.
I buy properties without asking my wife and I don't want my wife to ask for my approval when she wants to buy something.
I've been married to my current wife for 23 years and only had maybe 2 or 3 minor issues that lasted less than a few minutes.
>One thing a very wise man told me 48 years ago was that if I wanted to have a good relationship with my wife I needed to keep her out and away from my business and since that day my wives (all 3 of them) never had a say in what I did. Sorry, but I don't understand why married people think they have to have their spouse's approval for everything they do.
This made me laugh. Starts off looking like sage advice to a happy wife then you indicate you have had 3 wives (not exactly a ideal relationship with each wife). I do recognize later you indicate wife #3 has lasted 23 years, but by the time I read that part I already had my laugh.
My wife and I are partners in our property investments. She does most of the interaction with the tenants. I do most of the interaction with the contractors. I also do most of the number analysis and she does most of the book keeping. It works well for us because we have complimentary strengths. We each agree on rent increases. It used to be that she advocated lower increases than I did, but now we are mostly in sync on the rent increases.
We both believe good tenants deserve to be a bit below market rents. We do not want any of these tenants to be able to move into a unit at similar price that has just had a tenant turn over flip (clean, etc). We recognize tenant turnover takes work and costs money. We also realize, regardless of how thoroughly we screen, that there is some risk placing a new tenant. So we believe financially we benefit from letting the better tenants be a little under market value. The pretty good tenants we keep at market rent. The poor tenants we raise their rent above market which typically results in the tenant giving notice and us replacing the poor tenants. We currently have zero poor tenants.
Note with rent control limiting the rent increase, the rent has to be near market rate for a legal rent increase to be able to raise the rent noticeably above market rent.
Laugh all you want about being married three times. A high percent of people in this world don't have the jewels to say they made mistakes and they are so full of fear they would rather bear the pain of living with someone rather than bearing the pain of breaking up.
For my first wife, I will be a man and admit that I married her because I had sex with her and thought marriage was the right thing to do. So, I crossed my fingers and about 10 years later realized that I was deeply in love (or desired) a beautiful American-Japanese girl 10 years younger than myself. I went to shrinks to try to stay with my wife, but there was no way I wanted to live with her for another. I gave my wife two houses that were paid off, $800 per week for support for 10 years vs. the $400 for 5 years I was supposed to pay and 10 years ago purchased her a house in Idaho because she was broke.
Unfortunately, my gorgeous, sexy and fun 2nd wife was a drug addict and I sill love her as much today as the day I met her. For our divorce, her own attorney knew how bad her drug problem was and the court gave her only $240,000 in cash and I got every property. The court told me to keep her $240,000 and pay her a little at a time. So, invested her money into apartment buildings and because she got off drugs I gave her a house worth $900,000, today. So, today, she has $2.5 million in equity from the apartment building, a $900k house and because we manage the apartment buildings we pay her $7500 per month.
My third wife is a gorgeous Filipina, 22 years younger than myself, weighs only 85 pounds and looks like she is not one day older than 18-years old. She gets up at 5 am every morning and takes care of business until midnight on many nights.
I am not embarrassed about admitting that I would rather make changes when I have to vs. being afraid to make changes.
You have your wife do the books? That actually makes me sick. My father was totally nuts and he had my mother handle paying all the bills. One day he came home earlier than usual, received a few phone calls and found out he was $20,000 in debt when he thought he had tons of cash in the bank.
I was only about 5-years old at the time and can remember the fights and trauma. This is what I say about someone having their wife to the books. First, don't get upset when your wife makes serious mistakes, but since you don't do the books you will never find the mistakes. Second, there is nothing better than doing the books yourself so you can set up systems that work the best and so you have hands-on knowledge about everything that pertains to the business.
Here is a short story about wives should not do the books even when they claim that are bookkeepers when that are not. I purchase a 27-1/2 acres piece of land to build a house on and hired a grader to create a pad and a driveway. The orignal contract was for $30,000 and when the grader hit a solid rock hill the price increased to $60,000. The grader's wife sent invoices for progress payments and as I made payments I notice his wife wrote that I owned $5,000 less than I actually owed. I called his wife several times, sent several statements with my calculations and we argued so much she slammed the phone down on me as she kept telling me how educated she was and how arrogant and stupid I was. I called her husband and he was made at me. So, I went to the job, showed him the math and paid him his $5,000.
I own a fairly large plumbing company, construction company with licenses for 8 specialty trade, do large jobs like building hotels and underground utilities for many cities, own several apartment buildings, own real estate in several states, have no bookkeeper in my office, do all the books myself with the exception of payroll done by a part-time secretary, work in the field 6 days a week and the only thing my wife does is she manages the properties, collects rents and makes bank deposits.
A wife should be a wife and not a business partner. She should be free to help and not feel guilty if she wants to be a house mouse, stay home and polish her nails. A man should be able to handle everything without having to be told he is stupid and without putting himself in a position where he has to have his wife's permission to purchase a different and more-expensive roll of toilet paper.
Can't stand it when I do business with someone and after my sales pitch they tell me they have to talk with their wife. If her opinion was so important then why the ... didn't you have her at our meeting in the first place. I get phone calls where I quote $69 to clean a drain and a man, if you want to try to call him that, tells me he has to talk to his wife. That raises the hair on the back of my neck.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.