Increasing rent of nice tenants

[Ben Lin]

Hello BP community,

As I have good working relationships with most of my tenants, how do I increase their rents without them thinking I am a greedy landlord? On one hand I feel kind of bad raising rents but on the other hand my rents have not kept up with the current market rent. I would not care if I don't have good relationships with my tenants. Most of the time I try landlord-ing with love and care, but it has gotten me kind of soft. The difficult part is my tenants are nice, decent people and have been great so far. I know I am running a business, so maybe there is no other way around this?

Any advice?

[Nathan Gesner]

Quote from @Ben Lin:

Hello BP community,

As I have good working relationships with most of my tenants, how do I increase their rents without them thinking I am a greedy landlord? On one hand I feel kind of bad raising rents but on the other hand my rents have not kept up with the current market rent. I would not care if I don't have good relationships with my tenants. Most of the time I try landlord-ing with love and care, but it has gotten me kind of soft. The difficult part is my tenants are nice, decent people and have been great so far. I know I am running a business, so maybe there is no other way around this?

Any advice?

The price for a sheet of plywood increased about 60% in one year. Did your local Home Depot keep the price at $38 a sheet for you because you are a nice guy?

Prices increase with the market. Your taxes and insurance go up. Plumbers and electricians and cleaners and handymen are all increasing their prices because the cost of doing business has increased. Why do Landlords always feel guilty about increasing rates to keep up with the market?

If you want to soften the blow, I recommend you determine what market rate is by finding comparable homes that have recently rented. When they see they are $300 below market, they won't be upset to see a $100 increase. People are generally smart enough to shop around and see if they're getting a good deal. If they feel your rate hike is too much, they will move on and then you can find another nice renter that is happy to pay you market rate.

The best way to take care of your tenant? Small increases every single year. Even if you just increase 3%, the will still get behind market rates, but it prevents them from getting too far behind, they aren't caught by surprise, and the small increases are easy to fit into a budget.

Landlords often make the mistake of thinking Tenants are nice because rents are low. The truth is, the vast majority of my tenants are nice and the vast majority of them are paying market rates and accepting rent increases. You're more likely to get screwed by a tenant paying below-market.