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annual rent increase? new lease or month-to-month? by sue on October 5, 2005 @14:37

                              
Hi,
I've never had a tenant stay a whole year, we now have a great tenant and her year is up soon. Is it good practice to increase the rent nominally each year? I read that somewhere. I don't want to run her off. Current rent is $775, would I go up just $5-10 or more than that?

Is it best to ask her to sign another lease if she stays past a year or just go month to month?
TIA
[ Reply ] [ Return to forum ]

Re: annual rent increase? new lease or month-to-mo by Helen on October 5, 2005 @14:45 [ Reply ]
A 3 percent inflation increase would work out at $23.25, 2 percent is $15.50.

I've read in lardlording books that tenants don't like round figure increases, apparently feeling they're just made up. Inflation percentages show you what's going on in real terms and seem to go down better, even if they're higher!

If you think an increase will cause the tenant to leave, you have to think how much it will cost to turn the unit around, advertise, and include losses when vacant.

You should also look at what similar properties in that area are renting for. If the market is flat or declining, you may want to keep the rent the same.

You'll want a good tenant on an annual lease.

Re: annual rent increase? new lease or month-to-month? by Anonymous on October 5, 2005 @14:54 [ Reply ]
If I have a good tenant who pays on time and gives me no trouble, I donot raise the rent at the renewal, but I do send out a renewal for a yearly lease. If they go on the yearly again no increase, but if they decide to go M/M then there is a 5 % increase.
Re: Best Advice Part 1 by Phillip in Western New York on October 5, 2005 @15:05 [ Reply ]
First: Research, try to research what similar places are going for. Make appointments to see similar apartments in your area, as if you were a potential tenant, and find out how much they cost, the shape they are in. You could even go as far as asking a local real estate agent or marketing firm what the going rates are. Also, be sure to research any potential tax increases, inflation, and the cost of owner provided utilities (water, etc.)

Second: Judge what your apartment is worth in comparison to the market. If it is under market value, assess what the true value is (currently at $775, market is $850) use this knowledge to your advantage and make it seem like you are cutting the tenant a break. Be sure your research is well documented in case they decide to check up on your numbers. Tell them that market rates would be near a 10% increase, but you are only going to increase the rate 3%. If the property is worth less than what they are paying, I suggest using the tactic of increased property taxes, or inflation to at least get a 2-3% increase. That way if you find in the future, after renting to them for a few years, they won't be as hostile to a rent increase out of nowhere.

Re: Best Advice Part 2 by Phillip in Western New York on October 5, 2005 @15:05 [ Reply ]
Lastly: As stated earlier, document everything. I would also consider a conversation with the tenant on whether or not they plan on staying an entire year. A month-to-month tenancy might be a great way to make it easier for either of you to get out of the lease if say market values change, or the tenant is looking to purchase a home in the near future.

There are many options, but if the tenant is going to stay, I suggest some type of increase, even if it's something like a 1 year lease, $780 for the first three months, $785 for the next three, $790 for the next three, $795 for the last three, and then if they renew again, you will be at an even $800.

Re: annual rent increase? new lease or month-to-mo by JT on October 5, 2005 @17:10 [ Reply ]
Raising the rent every year would not be a bad idea, providing that you are not knocking yourself out of the market. If you don't, your taxes will continue to rise and you will end up losing in the long run. A 25.00 dollar increase will probably not send her out looking for a new apartment. In order to do so she would have to come up with a deposit and moving expenses. Go for it, unless you will end up renting above what others with comparable apts are renting at. All you need to do is check the local papers. No reason to go making it a thesis project. To compensate for the increase, do something nice like replace the light switches and light bulbs with energy saving ones.

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