Real Estate Marketing Professional · Columbus, OH · Member since 2015 · 299 posts · 125 votes
10y
Hi, @Tony Gallina, we can relate. We manage properties in an area of town that's both old and new-hip, and some landlords have never increased rent for their tenants even as the market has supported it. So we've seen investors come in and buy multifamily properties using market rents to crunch their numbers, and are sometimes faced with this issue when there are older, fixed-income tenants in place.
It depends on who you are as a person and a property manager, but our take is that we wouldn't do a one-time significant rent increase for those tenants. It would have to be gradual. In terms of a general rent increase, we've found that most tenants won't bat an eye at a yearly $25/mo rent increase, but at $50 they do. We'd communicate with the tenants that a greater-than-normal yearly increase is coming, and tell them why.
At some point though there's the consideration of what the tenant's getting in return for an increase of a few hundred dollars a month over a few years. In the area I'm talking about, a lot of the units are very old, and we'd have a hard time justifying such a rate increase without updating the unit for them, or providing other amenities. Good luck!
Rental Property Investor · San Diego, CA · Member since 2015 · 96 posts · 59 votes
10y
Tony Gallina - It's tough, huh? That speaks well of you.
Every time I have do it, I have to remind myself that it is my responsibility. I'm responsible to my business partners. I'm responsible to my family. I'm responsible to my business itself.
Real Estate Marketing Professional · Columbus, OH · Member since 2015 · 299 posts · 125 votes
10y
Hi, @Tony Gallina, we can relate. We manage properties in an area of town that's both old and new-hip, and some landlords have never increased rent for their tenants even as the market has supported it. So we've seen investors come in and buy multifamily properties using market rents to crunch their numbers, and are sometimes faced with this issue when there are older, fixed-income tenants in place.
It depends on who you are as a person and a property manager, but our take is that we wouldn't do a one-time significant rent increase for those tenants. It would have to be gradual. In terms of a general rent increase, we've found that most tenants won't bat an eye at a yearly $25/mo rent increase, but at $50 they do. We'd communicate with the tenants that a greater-than-normal yearly increase is coming, and tell them why.
At some point though there's the consideration of what the tenant's getting in return for an increase of a few hundred dollars a month over a few years. In the area I'm talking about, a lot of the units are very old, and we'd have a hard time justifying such a rate increase without updating the unit for them, or providing other amenities. Good luck!
Multi-family Investor · Allendale, MI · Member since 2015 · 121 posts · 51 votes
10y
Tony Gallina we had this recently with a 4 unit that we purchased. The tenants had been in place between 2-7 years and none of them ever had their rent increased. They were paying between $600-$700 per month and market rent was $825-$850. They were all month to month leases. The first month we handed them back their trash service. They each had a cart, but previous landlord was paying for it. Only $15 per month for each of them, but $60 savings for us. Then we informed them in 3 months rent would be going up to $725. Still under market, but $350 more per month. That was 10 months ago and 3 of them have turned over and are at $825-$850 each. That's a total increase of $735 in 10 months just on that building.
Realtor · Omaha, NE · Member since 2011 · 110 posts · 25 votes
10y
I wouldnt even bother keeping them unless they are willing to pay. Give a 30 day notce to vacate (or whatever it is for you state) to a certain amount of tenants a month, and rent out at market rate until they are all at market.
I am a property manager full time so I am used to this unfortunately!