How much do I increase rent?

Question

I self manage 3 props in Winston Salem NC. We unexpectedly moved to Atlanta area, 18 months ago.

Got text from tenant (wife, who typically doesn't communicate with me), asking if I'll be raising the rent, in Oct (on 2 year lease). Current rent is $1550. Market rate is over $2k. Even in Oct or Nov, after I spend $4k on paint and replacing carpet with LVP (another $6-8k?) - all of which I'd prefer NOT to spend $ to do, I could easily get $2K. However, tenants ALWAYS pay on time and are easy to work it. They're okay on inside cleanliness (toilets haven't been done in a while) and landscapers have caused some damage to siding with their equipment. I'm sending SECOND notice about those, later today.

Esp since I'm not local, I'd prefer to keep them there, but don't see how I can go from $1550 to $2k, when I've not improved the prop for them.

I'm thinking of the following: informing them it'll be $1800 AND letting them get out of lease early, so that I can get it rented closer to summer months/ easier to rent, if they want out.

Thoughts? Thanks for your time & input. Truly!

BG Malamut · Answer

Hi,

Thanks for the input, feedback. Yeah, seems like $1800 is the best route to take.

Britton, I make take you up on that. I've had 2 pm's in the past, with mixed results. I might ping you about a few other scenarios/ possibilities. I'm also trying to decide where to buy next, again in the Traid area or closer to me, in the ATL area, or somewhere else where you can get closer to the 1% goal.

Marcus Auerbach · Answer

A corporate landlord just raises the rent, no questions asked, because they know their abilityity to lease up vacancies and have hard metrics on how long it wil take and how good their screening process is.

You are asking the question because you are weighing your ability to find a new tenant and the effort that will take. How much you had to spend on repairs is secondary (it would be an emotional justification). Its really about market rent and the compromise is to keep it slightly below. Moving costs money too.

Also, consider MTM rent vs 1 or 2 year lease. Longer leases only favor the tenant, as an owner MTM is better.

BG Malamut · Answer

K, that's what I thought, as well. Notify them early (soon) in the hopes they'll leave earlier so I can get it listed earlier/ not in fall/ closer to holidays?

Jaycee Greene · Answer

@BG Malamut This is a common concern among landlords (raising rent on good tenants), but there will be many other tenants out there that will be as good or better tenants AND pay you closer to market rent. It might take a month or 2 to find them, but they are out there!

BG Malamut · Answer

Hi Colleen,

Thanks for your input. The lease isn't up until October, so I can't do anything about current rent. I will touch base with them sooner than later about my raising the rent, so that if they want to move out, I can get it turned around during the summer/ high volume months and not (again) get stuck carrying it vacant through the holidays.

Thanks, again, for your time and input. Truly.

Colleen F. · Answer

@BG Malamut One move might be to increase the rent, inform them now and change the end date of the lease to summer or alternately go month to month. They may be know or soon be finding out when they look for a new place that they are getting a deal.

BG Malamut · Answer

Hmm. Thanks, Marcus. That's good food for thought! Truly

BG Malamut · Answer

Thanks. Yep. I've made some of those upgrades. Thx again!

Marcus R. · Answer

Come renewal time always offer flexible lease terms that work best for your schedule. I like the idea of $1800 and lease ending after 6-ish months.

Also explain the reason for the increase (taxes, insurance, maintenance, etc...).  If possible make a few small upgrades that you were going to make anyway so they may be more accepting.  Update lighting fixtures, install ceiling fans, ring cameras, etc...

Ophir Davidovitch · Answer

The tenant would likely stay through the summer, letting them out early with a rent around $1,800 seems like a fair plan. You keep the place rented during the busiest months, which lowers the chance of it sitting empty. Then, when they do leave, you can re-rent it in the fall when there’s still decent demand, especially if the rent is competitive. Plus, giving the tenant some flexibility helps keep the relationship between you both.You can even approach with the narrative that you plan to market it at 2,000 but since they have been great people and you want to retain their business, you hope 1,800 is acceptable for them. Based on that, I don't think its unreasonable.

How much do I increase rent?

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