All Forum Posts by: Shane H.

@Luke Grogan That tailored approach may increase your income, but at some point I'd suggest stepping back to look at the bigger picture and decide how much more effort is the extra income worth? Do you want to track and calculate the daily fees every month on every rental for an extra $3-$15 per month per rental? I can't answer that for you, but the alternative of increasing rents by that amount and don't "haggle" with a tenant over a fairly minor (3%) rent increase.

First off, thank you EVERYONE for all of your suggestions and backing on this. There is an update to be had at the end here, but i wanted to address a few responses first.

@Jonathan R McLaughlin Thank you for such a detailed response, and very good point about the not apologizing aspect. It's hard stometimes to not "knee-jerk" react to giving bad news and throw an apology out with it.

@Thomas S. Thank you Thomas, I always look forward to your responses as you are one of the most "Give-it-to-me-straight" responders on here. That being said, i was pleasantly surprised at how easy you went on this post =p. You are absolutely right as usual though, I have definitely entered back into the "hobby investor" with this situation and I didn't evenrealize that until reading your post.

@Dennis M. You are correct, I find it very difficult to balance the tenant/neighbor relationship. It isn't a problem I didn't anticipate with living next to tenants, but i definitely did not anticipate the difficulty of the balance.

@Sam Shueh Another good point, I have been using active listings, market demand, and rentometer to determine rents. I didn't think about the aspect of the other tenants on the block likely STILL having their original low rents.

@Colleen F. That would be awkward... I hoping the unlikely combination of if they do actually move out and that coincidng with another unit on the block being available that those two things don't happen at the same time.

@Josh Jenkins I took that approach on my first rental and agree how much headache that has saved me. I didn't think i could successfully pull off the "non-owner" ruse with having to remodel the unit and updating the tenants on a regular basis. 

Okay, so for the update from the weekend. Their carpet hasn't been replaced since before they moved in and along with a few other needed updates it was on my list of repairs to make for them. 

Well they asked me to come over and take a look at a new tear spot on the stairs and asked if they put $1000 towards the carpet if they could get it replaced. I explained that the carpet wearing out is normal wear and tear and that while i appreciated the offer, I would replace it at my cost. However, the carpet that i'd be putting in would be standard carpet that i do in my rentals but if they wanted to use that $1000 to upgrade the carpet they could do so. 

I then went on to explain to them though that I did not want to throw a curve ball at them as come April their rent would be increasing again and I didn't want them putting $ into anything there if they were going to have to move with that increase. They were happy that i gave them the heads up now, and said the only reason they'd move would be if he were to buy a home. The conversation was a bit more detailed than that as i talked about market rent range etc and they had additional questions. But overrall it went smoothly so it remains to be seen whether they'll stay come April or if there is any fallout from the neighborhood.

But thanks to everyone here i was prepared to have that conversation when the opportunity arose.

I like that approach, I havent had this problem before but i should've incorporated that when i signed their lease in April. One thing that was a bit of a surprise is how drastically both home prices and rents have increased in our area (along with many others of course). 2 years ago the range for a 4/2 would've been 1000-1200.

$1600 is truly top end for a 4/2 right now, this unit would need updating before that would be possible. all the other tenants have also been in the neighborhood for 5+ years. Basically there were two owners that bought/built the whole street of duplexes in the 70's. Oddly enough, many of the residents on the street have been there since the 80's, but have changed which unit they lived in. 

How did you go from one to the next? I just purchased a duplex as owner occupied in December but in order to do it again i would need to refinance it out of the FHA program and into a conventional loan since I can only have 1 FHA loan out at a time. I would love to do this and get out of the PMI too but that is a bit wishful thinking unless i want to put down $30k to get below PMI threshholds.

That makes more sense. And yes it is to make money, but just as with everything else in life I need to balance money with happiness. I am leaning towards increasing the rent to $1200-$1250 instead of the more moderate $1125-$1150. And yes that $1200 a year will be a large help to the business model. 

The only reason this is coming up as questionable decision at all is the fact that I have to continue living there for now and need to ask myself if the added income is worth the possible added aggrevation from the neighborhood. Assuming i don't have expensive tools go missing and broken windows, then yes i'd say it's worth it. 

Ahh, my apologies. I saw that mentioned in your post but i didn't know if that was all or just some of your properties. 

@Nathan Gesner This is very true Nathan, and one of my other questions was how far in advance would you give the rent notice? I was actually planning on having the discussion with them about getting the unit up closer to market rents and what that would look like over the coming years and what to expect. last year i gave them a 90 day notice on the rent increase.

@Dennis M. Haha! oh man that's definitely NOT why i bought the duplex. But to reiterate, i have been keeping myself at arms length and NOT going over for beers and BBQ's when they've invited me. My question is not a "wow i got lucky and want to make new friends!" as opposed to being more of a "how do i keep from getting my home Tp'd/egg'd and daughters bike in the driveway if the neighborhood doesn't like that i've raised the rent on their friends". I honestly don't actually think those things would get THAT bad if i raised the rent, but anyone who's had a "bad neighbor" can tell you how miserable life can be with one. And right now i'm concerned that if i nab an extra $1200 a year out of this while living there that it could be the worst $1200 i've ever made.

This would be a moot point if i wasn't owner occupying the unit, or if they were already paying close to market rents and i only had to increase by 5% to stay current. But neither of those are the case.

Thank you for the input so far, I truly appreciate it! =)

Hi fellow BP'ers!

I recently purchased a duplex to owner occupy and have been living there since December 2017. I inherited the tenants on the other side who also happen to be excellent neighbors. 

They are long term tenants of 8 years, and their rent hasn't been increased in the last 6 of those. I increased their rent from $900 to $1050 in April, but the market rent in this area is $1200-$1600 for a 4/2.

The odd thing is almost the entire neighborhood is a collective group that have lived there and rented from the same two landlords for almost as long. It's one of those situations where everyone knows everything about everyone else and i was definitely not aware of this dynamic when i decided to buy and move in.

Getting back to my tenants/neighbors dilemma. I consider myself very fortunate as they truly are amazing neighbors. They'll text if i left my garage open, they've brought our runaway dog back, signed for deliveries, they don't make a ruckus on weekends, etc...

That being said, I would like to get their rent up to $1200-$1300 come lease renewal but that would be another significant increase. On the one hand this is a business and not one of charity. But on the other, i run the risk of having a whole neighborhood that's out to get the new landlord on the block. I caught a lot of grief for increasing it the first time, with of course the comments from the tenants that maybe they should move out. I explained at that time that i understood if they needed to go that route, but I explained that I couldn't maintain the rent that far below market.

Fast forward to now and as more time goes on, they are growing on me as neighbors and so not only would i not want the wrath of the neighborhood if they are forced to move, i also would like to keep tenants that i know are great neighbors while i reside there.

So all that being said, if you were in my shoes would you take an income hit and not increase the rent or only increase it by $75 or so in favor of maintaining a quality life with good neighbors? or would you go for the solid increase of $150-$200 and let the chips fall where they may?

If the latter, how would you approach an increase like that to someone you know on more than just a professional level? And as a side note to this, i have tried everything I can to remain respectful, but not become "buddy-buddy" with them. While they're great and have invited me over numerous times for a beer and BBQ, I don't want to blur the lines of our Tenant/Landlord relationship. But of course that position can only be maintained so far when living next to someone.

Any advice is appreciated! Thanks in advance BP! =)

If i may add another suggestion. If you list each property as a "Customer" then you can add the tenants as a "job". From there, i create an automatic invoice for each tenant that generates automatically to show that they are due. As that tenant pays, you just click on "Receive Payments" and apply it to the auto generated invoice. 

The benefit of this is that you can quickly at a glance see who is late, print a statement for a tenant, etc. Because the invoices are auto generated, i don't need to take the time to enter them each month, and they are auto classed. HUGE time saver and it reduces the need for property management software.

as to the breaking down your units into sub categories, this is mostly helpful if you want to pull more detailed reports. I encourage you do take the time to do it as once it's set up you have no extra time sink into keeping it going. 

Hope this helps!