Would you show a tenant your expenses to justify a rent increase?

Question

Posting this for the BiggerPockets Investor Brief, and the best replies might run in Thursday's edition.

On last week's BiggerPockets Podcast (episode 1347), Amelia McGee said her plan for raising the rent on one of her rentals is to "take them all of my expenses and say, look, I have to raise your rent." Henry Washington said he's shown tenants his numbers before: "I've literally never had a tenant be upset about it, not once."

Some landlords would rather eat a month of vacancy than open their books to a tenant.

Which camp are you in: show the numbers, or keep your books to yourself? And if you've tried it, how did the tenant take it?

JD Martin · Answer

Not in a million years. I run my rentals as an absolute dictator. I dictate the terms, you agree or you find alternative housing.

Chris Seveney · Answer

I don’t show tenants my books. None of their business

Joe Villeneuve · Answer

I can't believe anyone would answer yes to this. First, it's none of their business. Second, if your tenant can do basic math, by default, you are also telling them how much cashflow (profit) you are making on them. Why in the world would you do that?

Just have in your original lease agreement a potential minimum rent increase of 5% (you fill in your number here) per month upon their annual renewal. Notice the two most important words here are "potential" and "minimum". This sets them up for that increase before the fact.

Ayush Rustagi · Answer

I never had the experience to defend rent increases.

In my experience, one of my tenants(in Indiana) has lived for almost 5 years now and I have only increased rent once

There shouldn't be any need to increase the rent if the tenant stays and wants to keep renewing.

Long answer for a short question

Eric Gerakos · Answer

Never felt the need to defend rent increases. I buy where demand in high, not where it's cheap.

Jaron Walling · Answer

The only reason I'd share information like that is if you're renting to family. My brother's family rented for 5 years and raised his first child in our property so I felt obligated to share. We kept rent low which really helped my brother establish his career. It slowly killed our CF but no regrets.

Also, I wouldn't recommend renting to family. It's tricky and hurts relationships if managed wrong.

Would you show a tenant your expenses to justify a rent increase?

Would you show a tenant your expenses to justify a rent increase?

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