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Karen-- or anyone else who owns rental property

Karen-- or anyone else who owns rental property

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  • 3Princes 03-26-08 | 02:25 PM
  • Have you ever raised the rent with the same tenant living there? If so, how much did you raise and how did you inform them?

    My mom has a rental property and I manage it. It's in an excellent school district, has its own garage, has been completely renovated, is probably about 1000 square feet, has its own entrance, own driveway, etc, and we're charging $500/month. The guy is supposed to shovel the driveway and mow the lawn (which he does on a case-by-case basis) so he only has to pay $420/month. I'd like to raise it, but i'm not sure how much and how to do it.
  • Dopey406 Dopey406's Avatar 03-26-08 | 02:38 PM
  • Holy moly!! That's CHEAP!!!!!!!!!!!!
     


    I'd definitely raise it. When we lived in an apartment complex, they raised the rent every year by some amount. Some years it was a larger increase than others.

    I think you DEFINITELY should raise it. How much is the mortgage on that house? Is your mother making any profit??
  • skyqueen skyqueen's Avatar 03-26-08 | 03:14 PM
  • raising rent is a tricky thing.

    If you like the tenant - and you are making a profit (or at least breaking even) with the rent you're currently getting. Then the sentiment among managers/owners is leave well enough alone.
    Its not worth risking a good tenant moving out because the rent has become too expensive.

    On the flip, if you don't raise the rent at all, and you have a long term tenant, when you finally do raise the rent, they have hissy fits. So it is a real fine line. You don't want to lose a tenant but you don't want to raise the rent just to raise the rent. Its sort of a reward for good tenants to not have their rent raised. But, again - you have to do what you have to do sometimes and if you're losing money, then you have to raise rent on a good tenant sometimes.


    I have raised rent for our tenants. We have 1 year leases and at the end of each lease, they have the option of just continuing month-to-month, or signing a lease extention.
    During a lease, you can't raise rent. Month-to-month, you can. So it's beneficial for both parties to have a lease rather than Month-to-month (as long as the tenant has no plans to move in the near future)

    My rent increase letter went like this:
    Quote
    Dear Tenants,

    Due to increased property taxes and insurance rates along with other costs associated to the property, the unpleasant matter of raising your rent must be addressed. We value your tenancy and in an effort to retain excellent tenants, we are working hard to make the impact to you minimal.

    As of October 1, 2007, your new monthly rental rate will increase $20 for a total monthly rental rate of $1770.00. All terms and conditions to the original lease agreement shall remain the same. If you would like to lock in this rental rate with another year lease, please sign and return the attached lease extention form. We will send you back a completed copy for your records.

    With kind regards,
    and the lease extention looked like:
    Quote
    LEASE EXTENSION
    THIS LEASE EXTENSION AGREEMENT (hereinafter referred to as the "Lease Extension") is made and entered into this 1st day of September, 2007, by and between xxxxx(hereinafter referred to as "Landlord") and xxxxxxxxxx(hereinafter referred to as “Tenant,” whether one or more, and each agreeing to be bound by and held jointly and severally liable under the terms and conditions of this Lease Extension).
    In consideration of the covenants and obligations contained herein and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
    1. PRIOR LEASE: The parties executed a Lease Agreement dated September 06 , 2006 (hereinafter “Lease Agreement”) with a term of lease commencing on the 24th day of September , 2006 , and which expires on the 30th day of September, 2007. All terms, conditions, and provisions of said Lease Agreement are hereby incorporated by reference.
    2. EXTENSION OF PRIOR LEASE TERM: The parties hereby agree to extend and continue the aforementioned Lease Agreement for an additional term, commencing on the 1st day of October, 2007, and expiring on the 30th day September, 2008.
    3. REVISED RENT PAYMENTS: The rent shall be payable in equal monthly installments of $1770.00, payable on the 1st day of each month as described in the Lease Agreement. The first full rent payment under this Lease Extension is due on the 1st day of October, 2007.


    LANDLORD (“LANDLORD”):

    Sign: _______________________________ Print: _______________________________ Date: ______________

    TENANT (“TENANT”):

    Sign: _______________________________ Print: _______________________________ Date: ______________

    Last edited by skyqueen; 03-26-08 at 03:16 PM..
  • skyqueen skyqueen's Avatar 03-26-08 | 03:19 PM
  • as for how much to raise rent - it really depends.

    you can do a comp analysis of other rentals in the area and figure out what the current going rate would be for your place... and then raise accordingly. (but I would suggest keeping it below the current rate a little to retain tenants)

    or you can just arbitrarily raise it a % (usually the % increased in inflation that year)

    or any other arbitrary number really
     
  • 3Princes 03-26-08 | 03:52 PM
  • Well... it's aweird circumstance because the rental property is attached to the back of the garage of her house. The lot is huge--- they have their own front and backyard, etc, but it was purchased all as one property. I'd guess the rent should probably be about $600/month. Our renters--- I could take them or leave them. I had to put them on a weekly payment plan because they'd spend the rent, but once I did that over a year ago, there have been few problems.

    I was thinking of raising the rent $20/month. This way it would be only $5/week added onto their rent. It would help my mom too.