All Forum Posts by: Kar Sun
Kar Sun has started 20 posts and replied 364 times.
Post: Rent Increase Notice- owned property 4 months
- Posts 374
- Votes 273
Quote from @Matthew Keyes:
Closed on a property in march- 3-unit fully occupied. They were all midway through their leases which were transferred over, new leases were not signed. I just gave a tenant 60-day notice that I was raising rent as her lease ends 8/30/21. She informed me that she has been there 3 years and needed to notify her 90-days prior. I was aware of the 90-day period but was not aware she had been there for that length of time. Do I have any options, it is not feasible to allow her to renew the old lease as it is $400/month under market. I would be ok extending her lease an additional month if that is a legal option. Thanks in advance!
Best,
Matt
If they are in the middle of their leases then what are the terms of giving the notices are on their current leases?
Is it 60 days or 90?
You can turn them into month to month on a renewal.
Then get the rent you want and ask them if they want to sign up for another year.
Follow your state laws on notices.
I do not recommend an attorney unless you want to pay 3-5K to someone for the info you can look up yourself.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @David Mathews:
Question for those of you who have raised rent…
How did you do so? With a newly signed lease or an addendum to a current lease?
You cannot. You can raise it only when the current lease comes up for a renewal. Maybe you can consult with an attorney but I usually want to stay away from them because these vultures will leave you without anything in your pockets with their exorbitant and undeserved fees.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @David P.:
Quote from @Kar Sun:
I have a tenant that pays on time and keeps place clean.
I also offer him a desirable place to live that is being taken care of.
To me nice tenant is not the one who expects me to subsidize their rent.
I provide a service and a roof and that is why I have responsible tenants that I chose to have a professional relationship with.
The place has lot of very desirable amenities and has a great location..
He has been with me for 3 years and I have only raised rent $125 in all these years and last year there was no rate increase.
However, things have changed.
I have expenses, taxes and other costs that must be covered as otherwise I will be in negative..
Also, there is a lot of demand.
I sent a very nice letter to a tenant stating the data and a comparison rate with the market properties.
In my market rental properties went up 124%.
The hike is $400.
Small apartments in my area go for the same as my discounted rate for him.
But the place is spacious and is a townhouse.
He is highly unhappy.
He calls it is a money grab.
He is saying that he is under duress if he decides to stay as summer is a busy season for him.
Well, the contract ends end of summer and the rate increase letter went out prior to that.
There is no rent control in my state.
And in my state I do not even have to send rent increase letters.
This tenant makes 300K in income.
I have been nice responding to his texts but it makes me think if I actually want to keep dealing with him.
He states that my property is not worth the increase.
Well, my property is in such a location and condition that it is difficult to find anything similar.
It is also a business.
Any one wants to share a relevant experience?
Please do not bother to send me points on how to write letters to tenants; mine was very much to a point with all the data, comparison photos, prices....
I just think if as a business person himself he does not value my business why should I renew the contract especially now he says he is under duress.
I did something like this few years ago. I didn't raise rent for 7 years. Great tenants but I was just way under market. I wrote them a text explaining similar points you made and then a formal letter in mail. It was also a $400 increase. Both tenants in the duplex didn't hesitated and agreed to pay the new amount. The new amount I set was still lower than market by some so they knew it was still a good deal. If you can propose an increase but slightly below market that is the strategy I would try.
Thanks is exactly what I did. I prepared a nice clean letter with all the data supporting it, including 3 pages of properties with photos and amenities side by side comparison.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @David Krulac:
On Thursday, 2 days ago went to a REIA meeting where the speaker, Chad Gallagher spoke of his top ten biggest mistakes, one of which was not raising rent every year. He had a good tenant for five years and never raised the rent. In the sixth year seeing how far below market he was raised the rent by a drastic amount, the tenant was upset, moved out and did damage on the way out. He said he learned his lesson to raise rent every year, sometimes by a small amount maybe 1 or 2%, but keeping up with increased expenses.
David Krulac
Bigger Pockets Guest #82
Thank you. That is a great point that I will incorporate so that the tenants do not feel that because they are "great tenants" I somehow have to subsidize their rent. Great tenant is the only tenant expected based on a contract they sign. It is a tenant that plays by the rules. I am not expected to build up their savings while accumulating debt. A good client is not a client that expects deep discounts at my expense. There is not one person in USA that can be shocked at price increase nowadays unless they lived under a rock.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Noah P Bonds:
I think this speaks to a greater need to educate renters on the reality of how their rent is set. They don't see our side. I would consider adding something to your future leases that explains how your rents are set. Some of us like to go easy on the tenants and some see it more as a black and white business. There's a balance somewhere in there and I think it depends on your goals. If you're in a growth stage - it's black & white. If you're already financially free and not trying to grow so much you have the flexibility to give them a deal.
Excellent point. I will add this to my contract and I will now go over my contract. I used to do it but with the current situation and long term tenants I have neglected to go over the contract with them. Thanks.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Justin Fox:
This is kind of like trying to haggle with a sub contractor who is way out of line with their labor prices. I'm just going to move on. I don't want to win the negotiation and then have someone working on my property that thinks they're being underpaid or being taken advantage of, even though they agreed to a lower price. It results in rushed, sub-par work every time. In this scenario, the sub contractor eventually finds someone to pay his price and I find someone to initially agree to charge less labor by their own volition, or we don't and have to concede down the road. Everyone wins.
I would simply not renew this lease and re-list the property at the new rental price.
I've never understood the idea of a tenant respecting me or being grateful for a place I rent. I don't respect mortgage lenders, insurance brokers, the lawn guy or gas station owners. I'm not grateful for their products or services either. Gratitude is the result of actions or gestures of kindness, and profiting off of the scarcity of your abundance isn't kindness. If appreciation and gratitude are what you desire, don't raise the rent.
Well, I do want to respect people I work with or have any kind of relationship with. I am a small time landlord so I like to have the tenants that enjoy personal touch. That is a tenant I am looking for. I am sure there people who do not care for their tenants. I cannot do that. But it is a two way street. There is got to be a balance that everyone will accept. If not, we can go our separate ways. That is all. Being a landlord it is important to have a gift of working with people. It is easier if you have just few properties. I also do not mind when people want to get profit. After all we all need to live and feed our families. So a delivery is very important. I work with the mortgage broker and he is profiting off me but I do respect that guy. He is a good person and I like to give my business to him. I am grateful to have someone who can apply his knowledge to work on my loan while I have to do something else that earns me the money.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Bruce Woodruff:
Quote from @Wayne Woodson:
We, as Landlords, need to keep out rents at or above market rates in order to stay in business and provide quality housing for the renters out there. Almost 75% of the rental housing in this country is provided by smaller Landlords like most of us on this forum. Imagine the disastrous results if we were not able to make a profit on our investments and were forced to move our investment dollars elsewhere......?
Agreed. People hate on small landlords but they ignore large corporate tyrants. If there was no small landlords corporate sharks would hike the rates much higher.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Wayne Woodson:
Quote from @John Underwood:
I would not do a $400 increase to a good tenant. I'd do maybe $75 to $100 at most in one year.
I wish more landlords had this mentality.
You should start reading first, then commenting. If the landlords would do the opposite of what I will do they will be putting themselves in a legal risk, loss of income, financial trouble, forced property sale. In USA you have a choice. If something does not work you can move to the place you like more.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Bruce Woodruff:
Quote from @Jonathan R McLaughlin:
Guy gets big increase, complains, then says basically "fine...I'm not happy but I'll sign": end of story.
The tenant didn't actually say only that - when he threw in the 'under duress' crap, that made it a different matter (IMO)
Precisely. Being unhappy would be natural and expected behavior from a 55 yo man. Telling me that He is disgusted and that if he signs it will be under duress it is a totally another thing. Duress is a legal term and even if I wanted I would not be able to let him stay because he accused me of coercing him. If I let him stay I make a strategic mistake that can cost me more than any vacancy.
Post: Tenant is unhappy with the rent increase
- Posts 374
- Votes 273
Quote from @Jason Smith:
@Kar Sun if he is currently getting charged $750 less than comparables and is mad about about a $400 increase ($350 less than comparables) then just find another tenant and enjoy your extra $4200/year.
Yep, that is exactly what I am going to do. I knew the solution even before I posted here. I just wanted to get the feedback from others who have more experience than I do. I also wanted to make sure that my decision was not made in a haste and I was as objective as humanly possible when non-renewing. So gathering this feedback was helpful.