Raising rent again only a month after?

Question

I have a unit that is paying significantly below market rent. Let's say $800 in a $1000 market price area. I have it raised for $25 on 1/1.

There was a huge cost recently.

I want to raise it another $50 on 2/1. Not the best thing to do - I should have raised it originally for a higher amount. But price will still be significantly below market.

What are your thoughts on this?

Nathan Gesner · Answer

Stop playing around. Rent it for what it's worth. If the tenants can't afford it, let them move out and find a new renter willing to pay what it's worth.

Ned J. · Answer

Personally I would chalk this up to making a mistake not raising it more the first time...eat the mistake and maybe raise it again in 6-12 months. Cost of doing business and making a mistake...learning experience.

Be careful with what you consider "market rate".... I see a lot of LL compare their old unit that hasn't been remodeled in 15 years and has delayed maintenance to some newer units.... they create a vacancy but jumping to what they see as market and that vacancy and remodel costs them tons of $$ that takes YEARS to catch up on with that jump to market. You have to balance the cost of being below market with turnover costs. Yearly increases of 5-10% (based on the local market) vs big jumps when you fell way behind, keeps you on pace but helps keep turnover down

Corby Goade · Answer

You didn't say anything about whether the lease or local laws actaully allow you to do this.

Always charge market rents. No one will ever thank their landlord for doing them a favor- at some point, they'll have to pay market rents and you'll be the evil slumlord when that day comes, no matter how nice you've been up until that point.

Theresa Harris · Answer

I personally wouldn't do it.  Raise it once a year and raise it to market value (unless there are rental caps in your area).  The fact that there was a major expense happens, but you budget for that.

Chris Seveney · Answer

@Alex Silang

First I assume it’s a month to month lease as you cannot raise it if it’s a long term lease

For me that is not something I would do, If you want to raise it to market rent then do it, don’t adjust rent because you had an unexpected cost.

What if they turn around and walk? You go six months without a tenant is that $5000k in lost rent worth $600 a year?

Alan Asriants · Answer

You can only raise rent or change lease terms 30-60 days (Days notice) before your renewal term. This is not a great practice. Understand your costs and the value of your tenants before negotiating lease increases.

When you have high quality tenants you want to keep a balance between appropriate rental increases and tenant satisfaction. Increasing their rent 1 month after another is bad business practice and will cause a lot of issues.

Jake Knight · Answer

Is there a fixed-term lease on the property or are they month to month?  You can't raise the rents in a fixed term lease but if it's month to month you may have the ability to make a change with notice (30 days is fair in my market). That being said, there's no way your tenant will be happy with the increase so you may take that into consideration.

Mackaylee Beach · Answer

Raising rents on a monthly basis is likely to drive your tenants away. I recommend recalculating the increases and providing notice within the necessary timeframe.

Michael Smythe · Answer

@Alex Silang why don't you point out to the tenants what market rent is and then ask how much of an increase they can afford?

Bill B. · Answer

So you’re saying you’d be collecting more rent (92% of $1,000/mo or $920 instead of $800, or $825, or $875.) if you were using a property manager? Then why aren’t you using a property manager? You are literally paying to play property manager.

Call a couple local property managers (I’d suggest key property be one of the calls. But that is far from the point of this post.) first they’ll confirm your $1,000/mo “market rent” isn’t a) BS or b) still too low. Second, you’ll collect more money while doing less work Third you’ll stay legal with notices and operations. Fourth, tenants tend to “try more stuff” with mom and pop landlords than property managers. Fifth, you’ll get better screening the next time you have a fancy. And lastly. You’ll make more money today and in the future.

Raising rent again only a month after?

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