How often does your landlord raise the rent (if ever), and if so, by how much (percentage)? Do you feel these increases are fair? Why or why not? Thanks for the input.
Every year at the signing of a new lease the price goes up for us.Usually it is only about 20 dollars more.I dont so much as have a problem with it,but after a few years seems like it all adds up and you have to move to get a deal again and go back to square one.
If the rent started off being reasonably priced (which where I live,they arent at all.A two bedroom is nearly what you'd pay for a house,like $1,200.00 a month) then I wouldnt mind the increase at all.But if the prices are already high,it can seem a little unfair,because you know the owners are simply getting more profit.
I'm not a renter but have owned rental property in the past and currently own 1 vacation rental. We raise rents every year simply because our costs such as property taxes, condo fees, cost of repairs, etc. are going up every year. The bottom line of our Schedule E where the income from the rental is reported on our Federal income tax return sure doesn't show that the increase in rent is going in my pocket.
Thanks for the comments. We are really small-time landlords (have one apartment that we rent out), and we're leaning toward not raising the rent right now, even though the market for rentals is really hot (NYC). Costs have not changed since last year, and the current tenant has been great. The rent as it is seems in line with that of similar apartments.
in NYC, the rent-stabilized apartments have rent increases according to set schedules. That could be one piece of info you put in the mix as you consider whether to raise your rent.
There can be significant costs associated with losing a tenant, esp. if you have to rely on a broker to find a new one (though often the renter pays the broker), so that would be an issue for me, were I in your shoes.
It would matter a lot to me to have the renter occupying that apt. be someone who feels invested in the space, etc., so that they'll take good care of it, and contact you promptly if it needs repairs, etc.
And, inflation is a cost as well--lots of people get at least a cost-of-living raise in their jobs, and a landlord is justified in wanting to make a little more money this year than last, just as a worker would be.
The more I think about it, the more it doesn't seem worth it to me to raise the rent a little bit and risk antagonizing this tenant in any way. She's very responsible, pays the rent on time, and is responsive when any problems come up. The one time we visited her at the apartment, it was clean and neat, and all looked well. I'm hoping she wants to stay for another year at least. If we get hit with any fee or tax increase, I'd consider it, but AFAIK nothing like that is coming up.
Jhug,for people like you I'm sure it isnt just all profit.But places like where I live and it's one big company that owns several different apartments in the state,it's a different story.
Another small landlord here (3 single family homes). Our county got hit with a whopping property tax increase due to an overhaul of the tax system several years ago, and there's no sign of the increases slowing down. I have tried my hardest not to raise rents that will force good tenants to move on. This year, realistically, I will have to raise them. Tough decision, because if you've got good tenants that pay on time and take care of the place, you don't want to drive them away. I've managed to keep a ceiling on rent for the past couple years but it's becoming quite burdensome. If we continue to absorb the brunt of the tax increases, at some point it's just unrealistic to even hold onto the properties any longer. I too would be curious what renters or landlords in other areas of the country experience as far as increases, and how much.
wh wouldn't the expenses go up for a big company that owns several different apartments? Property taxes aren't formulated differently for the big company than for the small--when they go up, they go up for everybody. Ditto insurance, etc.
And of course that company wants to make money--it's a business. AND, it has the added pressure of needing to make more money this year than last, otherwise it is actually LOSING money to inflation, and is not properly returning value to its shareholders.
If property taxes are going up, your renters can't be unaware of it. It's in the newspapers. If they owned their homes, they'd be paying it. It would be unfair of them to blame you for it. Of course, they might find that they now can't afford to live in your apartment and would need to find a not-as-nice one to keep to their budget, but that's not necessarily "blaming you" so much as "living within the realities of their life." I wish you for that your tenants are able to weather the economic realities, and stay in the apartments you own.
I will give you my thoughts from the tenants perspective on rent increases.
My husband and I are renting in a very high end apt complex in Southern IN. This is after years of homeownership. We are both very busy with full time commitments and I also homeschool, so right now we love renting and having all the upkeep and repairs to be someone else's responsibility. The thing is, we don't mind paying a $10 a month increase in rent provided the staff and grounds remain top notch quality, as they are now. The benefits of renting in a high end, well kept area that is safe, brand new, and has superior maintenance can keep good tenants, who appreciate the management and therefore will stay and pay the increase. As as tenant, if the increase came along with a decline in service, a new influx of the kind of tenants they let in and the property being let go, then an increase would cause me to consider moving. I think it goes both ways.
It is nice to read comments from landlords that express there are some out here that appreciate good, respectful tenants who just want a nice place to live where everything is taken care of.
I understand not wanting to upset good tenants with rent increases, but yearly increses should be expected by tenants. Prices of everything goes up every year.
It is not enough to merely charge rents to cover monthly expenses and taxes with a small profit.
I hope you are putting money aside for unforseen emergency repairs so you do not have to suddenly give your tenants a HUGE increase should something major happen to your properties. If that happens, they may all move, all at once.
My first apartment, after only living there for four months raised my rent from $100/mo to $190/mo. (Yikes!) Thats a 70% increase. I was only making $2.50/hr back then. I remember this well.......
One month I noticed on the mailboxes that half the tenant had moved out. I thought maybe they were all students or something? Then I got my rent increase notice. Everybody seemed to be moving out.
What had happened was that this was a very old, six story, apartment building, and the boiler bit the dust. It had to be replaced of course, and the owners did not have the thousands of dollars set aside to automatically cover this. They also needed to upgrade some of the other infrastructure, as this old building was suddenly needing a new roof too.
Had the owners raised the rents yearly in small $5.00 or $10.00/mo amounts, and kept a fund for these repairs, they wouldn't have found themselves in such a bind needing such a large amount of money suddenly.
They ended up selling the building to a local corporation who owned lots of properties, and they came in fixed up the building and rented it out at an even much higher rent.
I know its a tough business to stay ahead in.
I to am a landlord. I raise rents when I take over a property, or aquire to get them in line with the rest of town. I have never risen rent after a lease is signed by a good tenant. My avg stay seems to be around 3 years and the new tenant gets the increase. We have also had a decling market since 2001.
My thought is a $25 increase isn't worth it. On a 4-plex thats a whopping $1,200 a year. One vacant month and a lot of the profits would be gone. I've also seen to many bad tenants to drive away a good one for $25 a month.
I have risen rents on bad tenants as a way to get them to leave. I'm going to be increasing rent this year on a lady who has rented this apartment since the 70's and from me since 1999. In 99 it was risen to market and now 8 years later its due. She's a good tenant pays on time but complains WAY to much. I get calls once to twice a week about little items like here garage has fall leaves, the 24" of snow are plowed but there is still a little bit around garage, I saw a spider in the laundry room, the girls next door are very quiet but they have lots of BOYS over!
Raise it, even if its nominal amount.
NYC is very hot, so even if this tenant leaves, you should easily find another tenant without disrupting cash flow. I'm kind of suprised to hear that you think the rents will be in line with other apts w/o any increase since those other apts are going to increase their rents. This means either you were originally chargin a premium or now your rent will be below market.
At some point, you're going to need increase rents for something. By not raising rents, you're setting up a pattern where the tenants expect you not to increase rents and they'll be a lot negative when you raise rents suddenly, out of the blue, then if you had been increasing it every year. They're not going to think how lucky they were all those years when rent didn't increase. Instead, they'll complain about the year you finally increased rent.
We've only owned this apartment for a year and a half, and this is the second tenant. We raised the rent by $50 when the first tenant broke her lease and moved out a year ago. I've been keeping track of what similar apartments are renting for, and that's why I think this is still more or less in line with market rents. The building's financials are very good; there is a large surplus because they refinanced their loan last year, so I don't expect the maintenance to increase any time soon.
We have a positive cash flow with the current setup. I'm kind of with nfllifer; raising it when a new tenant comes in might be the best plan, unless the current tenant stays for many years (which I doubt she will; it's a small studio apartment, and I'm sure she'll move on at some point).
Anyway, it's interesting to hear different points of view.
Here in Orange County CA the property managers raised the rent by about 100.00 more per month and as a result it has been mass exodus from the complex. They raised it in December of 2006 and on a regular basis people have been leaving and nobody is moving in. Everytime I walk the dog I see another empty apartment. Currently we have at least 15 units vacant and some of those have been vacant since last year. I know that our current apartment used to be only 1140.00 per month, our neighbors are paying that amount in rent and when we moved in to the exact same floorplan as theirs a couple of months ago our rent is at 1230.00 per month. a 90.00 difference in just a few months.
All I can say is if the rent goes up any higher we will be moving for certain.
harriethomeowner, I don't know how your expenses have not gone up. I too have one rental apartment in NYC in a 2 family house where I live. My real estate taxes, insurance, heat/hot water, water and sewer and especially repairs/maintenance go up every year.
I raise them a little every year. Little enough that they are paying below market (and every year they stay it gets further below market) but high enough that they aren't so far below market that I resent having them live there.
I used to not raise the rent but I found that they didn't appreciate it and there was no benefit to me.
I have to agree with judeny. Nobody is saying that you jack up the rents so much that the tenant leaves. After all, cash flow from a rental that's slightly below market is better than a disruption of cash flow from a vacancy. Instead, we're suggesting that a nominal increase of $25 every year will end up working better than not making any increases over the years. In NYC, nobody is really going to leave a place, given all the money and time it takes to find a new one, over an increase of $25. Indeed, most people expect a increase.
Let's say 4 years passes, where the rent hasn't increased. Suddenly, you realize that you're rents have fallen behind the rest of the market more than you'd like and so you increase it to bring it up to par. Let's say, you suddenly increase it by $100. A renter is more likely going to move out over that amount than if you had been increasing it by $25 over the past four years, even though those smaller rent increases would have proved more costly to the renter.
judeny, all of those things you mention are either included in the monthly co-op maintenance or paid by the tenant, so no, we haven't had any increase in expenses since our tenant moved in.
Harriet you are so lucky not to have lost even one months rent when your first tenant broke the lease and moved out. If that tenant left the place neat and clean so the next tenant moved in with no work or expense thats great. Most of us have to budget in for those expenses and a reserve amount for the really awful tenants that trash the place.
Rental income is not a constant stream with no dry spells.
Marge, I realize we have had a good experience with both of these tenants. One reason is that it IS New York and this is a small co-op building, so there's a double layer of screening. The agent we used did a credit check, and the co-op board reviewed a lot of paperwork and did an interview. A co-op board can turn down anyone for any reason, so if they had felt uneasy I'm sure they'd have done so.
The apartment rented out last year in about two seconds :-)because it's about as inexpensive as you can get for that part of Manhattan and we didn't charge a fee to the tenant. It's in a safe, convenient neighborhood and though small, isn't a dark little cave.
I'm not sure how long we are going to be landlords. It's not our intention to do this indefinitely. We'd like to use the apartment ourselves at some point, but if it turns out we can't afford to do that, we'll just sell it if renting turns into a hassle.
.. all of those things you mention are either included in the monthly co-op maintenance or paid by the tenant ....
Ok, now I understand. I would still build up a little reserve to cover cleaning, painting, etc - the kinds of things you haven't encountered yet. As I said on another thread, I keep the rent below market and the longer they stay, the farther below market it is. But it does go up.
As a landlord, I agree with Marvelous Marvin. I've been in the business for 40 years and at one time had over 100 units. My leases run for one year. When the lease renews there is always some kind of an increase. I learned long ago that if I waited too long, then I had to have a large increase and the renters screamed. They don't seem to mind the small ones every year. Of course, it makes a huge difference on the demand for apts. in your area. I have one building left in a nice area. If I run an ad for an apt. I can expect a minimum of 10 calls per day and I've had as many as 60. My leases are set up to end at a time of year when there is a huge demand for apts....never in the dead of winter.
Another tenant's perspective:
How often does your landlord raise the rent (if ever):
In the current apt it went from $800 - $900 after we were here a couple of years (it's been just over 4 now). We have both been tenants of his together and separately for a good 9 - 11 years, have always been tenants at will and have always paid our rent on time. We're the first floor tenants of a triple decker and the second floor neighbor is not only loud but keeps her dog in a cage 23.5/7 and is gone for days at a time so there's howling and scratching which is heartbreaking and distressing.
Do you feel these increases are fair? Why or why not?
As long as he eventually deals with the noise/neglect issue it seems fair enough. But if he raises it another 100 I don't think it would be fair. Raises I receive do little to cover cost of living increases. I also know that he owns outright several houses in the area. No mortgages, just prop. taxes (which are some of the lowest in MA) etc. I know it's not the average situation but it's the one he's in. It would be fair for him to raise rent to keep it in line with the area but I think the idea of a little bit more frequently is less painful psychologically than a lump sum.
Thanks for the input.
Your're welcome. Thanks for being a landlord who appreciates a good tenant and can keep one more place affordable for those of us who aren't homeowners!