Raising rents - renewing leases in Boston (West Newton)

[Melinda Ching]

My partner and I bought our first multifamily a year ago. We're house hacking and it's been great working on the property this last year. We are in the midst of deciding how much to raise the rent and we are looking for advice. We include utilities in our rent, and we're predicting that utilities will go up significantly next year. So on one hand, we need to raise the rent to cover those costs. On the other hand, we don't want to raise it so significantly that our tenants will leave.

Does anyone have recommendations on what we should do or look into? Our average monthly utility bill was insanely high this last year. I created a spreadsheet and increased utilities by a set percentage to see what the average per month utility bill might be if the average oil goes up 50%, electricity increases by 20%, gas goes up 30% and water up 10%. These are numbers I estimated based on the current trend from this site. https://www.theguardian.com/us-news/2022/mar/13/us-utility-bills-energy-prices-increase

This is our first year as landlords so we appreciate any honest feedback, as we know we have a lot to learn!

[Jon McCarron]

Hi @Melinda Ching

I would give plenty of notice of an increase (2 months before the current lease ends is fine). That way if they decide to not renew, you will have time to get prepared to look for new renters. It happens sometimes. If you don't want to lose them, you could try a small raise. Is the apartment at current market rates? There are a lot of people looking for apartments, so you could probably fill it quickly. Also, if they are currently paying below market rents, then they may want to stay in place (even with a rent raise) if they can't get a deal else where.

Is there any way to separate the utilities? Paying for all of those utilities seems like it would definitely affect your house hacking numbers. It might be worth it to see if you can separate any or all of the utilities (they will only go up if you decide to move out and rent the other unit).

Good luck!

Jon