Raising Rent Woes
Rental Property Investor · Hart, MI · Member since 2018 · 89 posts · 29 votes
I’m buying properties that were owned by tired landlords who never raised rents. For the most part, tenants aren't complaining about it because I do it slowly and give them lots of warning. Of course, I still get tenants who are barely making ends meet as it is and they can’t afford the increased rent, whether it’s 30 days from now or a year from now. What’s your strategy for raising rents? Do you tell them your plan or do you raise it over time, only giving them the minimum required time and they either deal with it or move? They expected the rent increases, but they were hounding me for what it would be. So, I gave it to them a curtesy. Since they are complaining anyway, I’m questioning how I should do it in the future.
Every time I raise rents I always give them some market data and then list a few bullet points of maintenace items/improvements I plan to do to the building in the coming year so it doesn’t looks like I’m pocketing all of the profits.
I’ve always found success in that approach with little to no complaints.
For your tenants that are struggling it may be worth while to see if they qualify for any aid.
I've recently jumped in to help a friend(read tired landlord) who had never raised the rents for a tenant in a side by side that was in the unit for over 10 years. Throughout the years the unit has been updated-new paint, new kitchen cabinets, new carpet, new furnace and water heater. We've been raising her rent $100 every year, it will take us 6 years to get to todays market rents. I'm sure it was a bit of a pill for her to swallow, but I told her the intention was to get her up to market rents over time and I've given her 4 months notice for the increases(we're on year 2 now). She's a great tenant who hasn't asked for anything and taken excellent care of the place- its worth while to keep her.
If it was just 1 tenant and we didn't have so much cash stuck in this deal, I probably would go that route. Some of these tenants are great and they totally get it. Most of them are a 2 person household as well. I just was there today fixing a water heater pump when one of the awesome tenants was so appreciative. She said the last owner never wanted to fix stuff and simply ignored the "little" requests. If it's due to their negligence, that's one thing. Many of the issues she has mentioned was due to the landlord doing too many projects himself and doing shoddy work. She and her husband would totally be willing to move into the renovated apartment and pay the higher rate to get a nicer apartment! Those are the tenants I want to nurture......
So great that you are getting in to get things up to snuff- if they had an absent landlord before you might just be the best thing that ever happened to them! Really though situation to be in, wishing you all the best!
Thanks, I appreciate the words of encouragement. One of the tenants complained about the water not getting hot last night because of the water heater is going out and I was already planning on getting it fixed next week. Well, I am the landlord that wouldn't be able to sleep well at night knowing that I had hot water while my tenants were suffering. So, I missed the RPOA Conference today so I could make sure it could get done asap instead. These same tenants who are complaining about all of these maintenance issues (that should've been addressed years ago) are the same ones who are complaining about the rent raises. It's going to be an interesting ride, that's for sure!
I would pick the worst unit and give the tenant a notice to vacate. Renovate that unit and bring to current rent and offer it to the other tenants first, then start on the next worst unit. The other tenants will see what's happening and know their turn is coming in the near future. Raise all the units at least $50 to $100 a month, as is, and let them know repairs will be handled, unlike the last landlord.
When I raise rents, I cite higher taxes, insurance and cost of repairs. If a tenant objects, I just tell them to put their intent to move in writing and give me 15 days notice and have never had one move yet.