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Should I raise the rent ? I have perfect tenants.. - Landlord Forum thread 226254

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Should I raise the rent ? I have perfect tenants.. by NYC landlord (Queens,NYC ) on June 19, 2011 @01:10

I'm a new landlord, I just rented my old apt to a great tenant a year ago because I got married and moved into my husbands house.

Their lease is about to expire at the end of this summer. They pay the rent on time and have been generally low maintenance. The rents in my area are all within the same range give or take $100-250. My building is one if the best in the area. I don't know whether to raise the rent. Here is a list of my pros and cons:

Pros for raising:

1. I am extremely underwater on my mortgage (I am short about $800/month because the market tanked right after I moved out and I never expected rental prices to drop so much)

2. I could really use the $ to reduce my expenses and the increase would only be .5. - 3%.

Cons :

1. Tenants are fantastic and pay on time.
2. They may move elsewhere in the area for cheaper rent (a building which isn't as nice but offers cheaper rent) because I increased the rent.

The area has a TON of apartments for rent, the unit they are renting is in the best ovation in terms of mass transit and grocery stores. The neighborhood is one of the best in the city. I could get another tenant easily but I would need to spend weeks screening them properly.

What would you do?

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Re: Should I raise the rent ? I have perfect tenan by Jake on June 19, 2011 @01:18 [ Reply ]
Most people who have excellent, long term tenants are not raising rents. I agree with Eric when he says a vacancy represents a landlords greatest and most avoidable income loss.
Re: Should I raise the rent ? I have perfect tenants.. by Katiekate (New York) on June 19, 2011 @05:21 [ Reply ]
Your expenses really have nothing to do with the rent.

The rent is only tied to what the local neighborhood is charging.

In this economy you should understand that having the "best in the area" doesn't translate into higher rent.. it means you have the opportunity to have low or zero vacancies.

If you raise the could lose the tenants, AND lose a month (or more of rent). This will cost you a year or more to make up the lost ground (still doesn't get you ahead).

Keep good tenants.

Re: Should I raise the rent ? I have perfect tenants.. by James Bond on June 19, 2011 @07:46 [ Reply ]
If you like the tenants, pay on time, and they are good to the property, I would not raise the rent.

The goal here is to keep good tenants. A few dollars given up in a potential rent increase may be money well spent.

Re: Should I raise the rent ? I have perfect tenants.. by Libby (Pa) on June 19, 2011 @08:52 [ Reply ]
I have good tenants too. I raise the rent at least $5.00 a year. My expenses go up also. The following year I don't want to hit them with a larger increase. My tenants understand and thank me that I didn't hit them with a huge increase.
Re: Should I raise the rent ? I have perfect tenants.. by Eric (MN) on June 19, 2011 @09:57 [ Reply ]
You expenses, and being underwater, have nothing to with what you charge for rent. Do you actually know they are staying for another year? Maybe they are looking for an excuse to move, and you are going to create one.

Whether or not you are at or under market value is really a question your tenants need to answer in their minds, not the market in general. Your market today is your tenants, not the entire 'market'.

You may be able to increase some, but if they are really good tenants, you want to have the golden handcuffs on them. The minute you lose them, you will have major additional expenses in terms of vacancy, maintenance, marketing, utilities, advertising, etc.

You want a situation where your tenants cannot move anywhere else and pay less for the same situation. Your building, being the best in the area, is good, but the next tenants may not understand that, or may not care.

Often, getting that extra few dollars cost more than it is worth. You can ask your tenants if their financial situation has improved. If it has improved, ask them what they could afford without too much sacrifice. If their financial situation has decreased, you are taking additional money from their mouths, and they may be looking for an excuse to move anyway.

Re: Should I raise the rent ? I have perfect tenants.. by will (oh) on June 19, 2011 @11:44 [ Reply ]
Exactly, eric. I have to explain this constantly to folks who are preparing to sell their houses - they always look at the prices of stuff that is for sale for comps. I have to explain to them that this stuff has been on the market and is not moving. If you want to move your house, look at prices of stuff that has sold. Harder to find, but worth it.

Same goes for apts.

That said, if you want to keep your tenants, leave the rent alone. Do you have any empty units? If so, worry about those, make them irresistible, fill them with great tenants and make your extra loot that way.

Tenant turnover is your #1 avoidable expense.

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