Rent raise feedback please

[Joseph Schommer]

Hi BP Community.

I bought a 4-plex last year in which the rents are VERY under market AND I'm paying heat and hot water in Vermont.  The residents of this house have been here for 3 years, 8 years, 12 years and 25 years...so steady-long-term renters.

My plan, based on recent feedback at a local REI meetup, is to switch everyone to month-to-month for a few years and raise the rent every 6 months giving them an opportunity to either stay on, or find another place.  I should mention this is a VERY tight rental market, and they won't find anything even close to what they're paying now. 

Even with the rental increases I'm proposing, I don't think I'll meet market rate for a while and that rate will keep rising, but my reasoning is that they ARE long-term, responsible renters.  Another detail is that we live in the building (converted attic, all separate entrances) So, while I am running a business, making these decisions in a vacuum isn't possible.

Please take a look at my spreadsheet and offer some feedback if you have any.  Positive or negative.  Should I raise more?  Does that look like too much? What would you do?  

Thanks for the education!

[Nathan Gesner]

Your plan is to lose money, possibly create confusion and animosity, and eventually chase off the tenants that have been there the longest. I don't see how this is a good solution for you.

these tenants have had an easy ride for a long time and should be grateful for that. Instead, they are more likely to have a sense of ownership and entitlement. Any increase plan is going to upset them, not endear them to you. Meantime, you will continue to lose money hand over fist.

be kind by giving them three months to find other arrangements, then remove them from the property, renovate before summer, and rent at market rate to tenants that are willing and able to pay what it is worth. That is the right decision. You do you.