Have you raised rents due to property tax increases this year?

5 Replies | Seattle, Washington

Almost each of my properties went up by $100 a month more added to my mortgage payment due to rising property taxes (I pay my insurance and taxes through escrow).

As tempted as I am to pass the expense on to my tenants, I'm also wary of them moving out as a result which would cost me even more (vacancy, turn over repairs, time, hassle, etc.). 

At the same time, paying the extra few hundred bucks a month out of my own pocket doesn't exactly sound like a great option either. 

Option A: Leave rents the same...

Option B: Split the rent increase with them...

Option C: Or pass the full rent increase along to all of them? 

Option D: If any of them balk at the rent increase I could decide to back out of the rent increase as well by telling them I've decide to not increase the rent after all, etc. The concern here is I try to keep my hassle free pay on time tenants. If they decide to look as a result of the increase and find a better deal, I've lost even more money and time, not to mention added a lot more hassle to my life trying to turn the property again...

Originally posted by @Peter Nelson :

No.  We raise rents based solely on market conditions.  We maximize our rents based on what the market will bear.

I thought about that. Hence why I researched rents where my rentals are. Although a lot of properties have slightly higher prices, there are enough within the same price range that are available currently where a tenant could decide to move if they so choose. Perhaps this is an argument for not raising the rents THIS year.

Slightly, but not enough to absorb the tax increase.  So a little bit of a "split the difference".   But that is only a year 1 answer.  I don't need to slam my tenants immediately, rather instead make it up over time.   I like both of my tenants in the two properties we manage so I'm in no hurry to apply a shock to their system.

@Jack B. after comping property that is or will be available we look for a unique price point.  I am not talking $1,632.  We do it on a more global basis.  If there are comparable properties at $2,500, $2,100, and $2,000 then we might choose $2,300 or $2,200.  We round to the nearest $50 to find a unique price point.  

For renewals we give the tenants a discount on the SECOND renewal.  We do not so much on the first renewal.  We figure our average tenancy is 2.x years.  (We have not yet calculated the actual number unfortunately.)  So for us someone who is below average in their tenancy does not get a discount.  

On the second renewal we give them a small discount as a symbol of appreciation and also to help make their decision to stay easier.