Is raising rent with a long term tenant a good idea?

[Eric McCusker]

I’ve had the same tenant in my single family home for 12 years and have never raised rent. They are great tenants that pay on time, never really complain, and generally take good care of the property. Since their fist signing they rent for $1595 but now market rent puts the house around $2100 (possibly more).

What are the thoughts on increasing rent? The lease renews this August.

Another data point is, I’m breaking even each month as is but building equity.

[Bill B.]

Why don’t you just write them a check for $72,000? That’s how much rent you missed out on. You’re going to wake up one day with a 5 or 10% rent increase cap and they will never move while you continue to lose $6,000/year. 

Do you really believe there are no other “good tenants” out there that would like a nice place to live at a fair rent? Raise the rent $400/mo and you’re still losing money. But either you get to keep your good tenants or you find out they weren’t really good tenants when they move out, just people who appreciate a 25% discount on rent. 

Ps. This is another case where a property manager would have done all the work AND given you $50,000 more rent in your pocket. You paid $50,000+ to be the property manager.