Raising Rent - Different monthly rates for inherited duplex tenants

[Tasha Smith]

Hi All, We plan to present the binder method to our inherited duplex tenants. Each unit currently pays the same amount ($1350). Question is if we have a conversation with each tenant about what they feel is a fair rent and one says $1375 and the other says $1400, and $1400 is our target - should we accept separate rent amounts? We do want to offer flexibility, our goal is to keep the tenants so if increasing only $25 a month the first year keeps them we are open to it. I believe they likely will talk, they share a back deck and am concerned the different rates may negatively impact the relationship if that scenario played out. Thanks in advance for any advice!

[Gino Barbaro]

@Tasha Smith

I would never engage the residents by asking them what fair rent is. Do we pull into a gas station and the attendant asks us what is fair? The price is posted, and it's the same with almost every other business.

I would go online and do a rent comp analysis on what current market rents for your type unit are getting, and if you're afraid of losing them, then you can give them a discount.

If a tenant has a larger space, more amenities, a parking space, then you can add additional rent. But, if the units and amenities are basically the same, then when the rent agreement comes due, propose the same rent structure.

As landlords, we need to continue to keep rents in alignment with the market. Some years, rents actually do go down, and we need to give concessions. And some months they go up, as your expenses do.

Please don't make the mistake I made in one of my units. I didn't raise rents for a few years.When it came time to renew, rent was 900, and market rent was around 1400. There is no way that resident can afford a 500 jump, and I ended up losing thousands of dollars.

Real estate is a business, collecting a future stream of revenue, and you need to be in control of the revenue and expenses

Gino