The Psychology of Increasing Rent/ Suggestions?

[Mike Terranova]

Hello fellow BP members!

I’ve got a tenant who is finishing their 2nd year living in the property. They’ve been amazing with very minimal problems. The landlord/ tenant relationship has been great and they even message me on holidays wishing us well. I’ve got approximately 60 days before their renewal.

I have two questions:

1) Rent is currently $1375/ month with yearly lease renewals. I’d like to increase rent and am considering $1400. The psychology of seeing $1300 vs $1400 could look massive….maybe…thoughts? I’m considering $1395 for this reason.

2) What are you tactics for rent increase?

-Certified mail

-text message

-phone call

-email

-notifying tenants when they first sign of a timeline and % the rent will increase before they even move in

-not increasing rent with amazing tenants

Much appreciated and all the best in 2022!

[Joe Splitrock]

@Mike Terranova given the highly inflationary environment, people are seeing groceries and other things increase 6-18%. You are proposing a 1.8% rent increase which is far below historic average inflation of 3%. I wouldn't even spend one more second worrying about how this will be received, but I would question if you should be increasing it more. My landlord insurance is going up 25% and most cities will increase taxes to match escalating property values. Make sure $25 is enough.

As far as how to send it, I would send via email and regular mail. I would follow it up with a text. Just notify them, don't ask if it is ok or approved. They have the option to give notice and move out. 

Just to be very clear NOBODY will move out over a $25 rent increase. The cost and time involved in moving would be more expensive than that. If they do move, they were planning to move anyways. Generally speaking people do not move when rent increases. They move for a nicer property, better location or because they are buying a home. Keeping rent low will not stop people from moving, unless you jack it up above fair market.