How do I raise the rent???

Question

Payment, Taxes, Insurance = $905 + garbage $17.50 = Monthly expense $922.50

Rental Income $1000

My uninformed opinion was SHWEEEEET, cashflowing $77.50...

The BP rental calculator has shed some light on the subject.  I didn't account for a new water heater in 10 years, new roof in 15 years, misc cap expenses, vacancy % and maintenance. etc.

I have a friend living in my rental, how do I tell them I need another $50 a month just to break even on this place.  Do any of you BP's have ideas on how I can raise rents thru inexpensive value adds so I can justify raising the rent?

Aly W. · Answer

When I raise my tenants' rents (I raised 2 last year and 2 this year), I simply tell them that my property taxes and insurance have gone up, and I've done my best to keep the increase as low as possible - *only* $25, or $50, or whatever. Casually remind them that the market rent in your area is X amount.

Maybe you can ask if they'd like to sign an 18 month lease. That would guarantee there wouldn't be another increase for quite a while.

Or let them move, raise the rent to market rate for a property with all the appliances, and charge additionally for the next tenant with a pet.

Joshua Chen · Answer

A good idea is to add more value to the place and then say that the raised rent is fair given the increased value.

Bryan S. · Answer

I love my friends too..

Reality is this is a BUSINESS.

Politely explain that the cost of expenses has gone up. That YOU. YOU have to cover costs. As friends we need to share the expense to enjoy the home we "share"""

Drew Mim Mack · Answer

Yaaaaaaa... well they already have a dog without the added rent and deposit and I supplied a washer and dryer!!!  Where the hell was BP when I really needed it!?!  J/K.  I wish I knew about this site earlier.  sigh.  I think I'm gonna have to get tough with my friend and just raise the rent on em.  I'm below market rents.  There's an easy in.

Drew Mim Mack · Answer

Aly NA

I like your idea of raising the rent but add 18 months of security with a lease.  I'll definitely hold on to that idea.

Drew Mim Mack · Answer

@Max Tanenbaum

Buahahahahahahahaah!!!  Right!!!  Never again.

Drew Mim Mack · Answer

@Bryan S.

well put!

Mehran K. · Answer

The true cash flow when factoring in all the long term capex can be a reality check!

Things I've noticed in my rentals that were able to command some extra rent were:

1. Pet fee (something like $30-$50/month with a $300-$500 security deposit

2. Supplying appliances (Range, Fridge, Washer, dryer) and tacking on $40ish/month

Hope that helps some. How does your current rent  compare to the going market rent in the neighborhood?

How do I raise the rent???

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