Updated 11 months ago on . Most recent reply
Managing rent increases
Hi all - I own and manage three duplexes in the Boston area (Medford). I have been cautious about raising rents as I try to maintain goodwill with the tenants. It's been less of an issue with my first two properties which cashflow at 3% interest rates, but the latest unit is cash flow negative on a 7% interest rate. Given the cash flow loss on the 7% property, I think I need to remove the emotion and make the right business decision for my portfolio holistically. Medford also just voted to increase property taxes which is another reason to act.
What is a good system to create around standardizing rent increases where applicable / best way to communicate it to the tenants? Any feedback is welcome!
Looking forward to hearing back from the community.
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- Real Estate Broker
- Cody, WY
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One of the most common mistakes I see with amateur landlords: attempting to build goodwill with their tenants. They keep rent low, give gifts and homemade cookies for Christmas, make upgrades whenever the tenant requests, accept all the late rent excuses, etc.
The truth is, your tenant is not your friend. Despite all your efforts to buy them goodwill, they will give you the middle finger when it benefits them. I have some great examples in my book, including my father-in-law who lost tens of thousands from a single mother that he tried to help.
Stay at market rates. If you have a perfect tenant that you really want to retain/reward, keep their rent 5% below market. If they are smart, they will appreciate it.
- Nathan Gesner
