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how much rent increase by scott on September 2, 2020 @14:28

Is there a guideline for how much to increase rent?
I was going to hold of on a rent increase this year due to the virus. The tenants work, during the virus situation. there is no rent control. I am looking for a guideline to make sure rent increase is not overboard.

Also I installed a new roof on the building(i live on the second floor), new windows on the building, new toilet in the tenants unit, plus I am having a new HVAC unit installed for the tenant.
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Re: how much rent increase by lpadave on September 2, 2020 @18:48 [ Reply ]
know the comps in your market.

be objective as to where your property falls within those comps. your rent should be set accordingly.

long term, good tenants are valuable.
a one month of vacancy is 8.4 percent of a year

fixed expenses go up,...keep track of them as a part of your rent increases. these are hard costs that you have no control over and you can pass through with or without a bump up for handling / profit.

in normal times a 5 or 6 percent annual rent increase would be about mid range,.....but we are not in normal times.

while inflation is low now,... there's complete craziness now,... and my opinion is that a warm body who's paying on time in full (or the better part of ''full'') is way better than an empty asset and the task of trying to find a new tenant.

additionally it seems the quality of prospective tenants has declined significantly,....and you really have to ask yourself,....''why would anyone be looking to move of their own free will with things the way they are now ???""

I guess it works both ways !

New HVAC for tenants unit is an added value bump up .
the rest of the stuff is on you as ''maintainance' and capital improvements.

You can always raise the rent and defer or waive part or all of the increase for a set period of time then review.

I think many of us LL's are following that plan.
Re: how much rent increase by Jason on September 11, 2020 @08:53 [ Reply ]
I typically increase the rent $10-20 per month. The increase is low because I want to keep tenants, IF they are good tenants.

I also keep a spreadsheet on all mortgage/taxes/insurance, utilities, repairs - basically ALL expenses - that way you know exactly hot much expenses increases.

I would HIGHLY RECOMMEND increasing the rent every 12 months, even if expenses decrease. This is a good practice to follow because the tenants won't be shocked. For example, if you increase the rent $15/month in YEAR 2 and another $15/month in YEAR 3, they are more likely to stay versus if you didn't raise the rent in YEAR 2 but increased the rent $30/month in YEAR 3.

Now, there are always exceptions. For example if you have tenants who are good tenants and they wanted to move because of the rent increase, I would say forget about the increase or decrease it slightly in an attempt to keep them. If they are not able/willing to pay for any increase, I would waive the increase because they are good tenants. Besides, if they leave and the unit is only vacant for 1 month, you would need to calculate how much that will cost you in rental income. For example, I have a tenant who pays $865/month rent. If I increase her rent by $15/month to $880/month, she wants to move out to avoid the rental increase and the unit is only vacant for 30 days, you would have lost $865. If you spread that expense over 12-months, you would be losing roughly $72/month - and that is only calculating the rent loss.

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