Locking in the Rent Price

[Sam B.]

Out of state landlord here.  Great property management in place.  I want to attract quality tenants that stay put.  I don't see rent rates increasing greatly in my area for the foreseeable future.

Any other landlords here experiment with locked rent prices for a pre-set duration?

I was speaking with a seller/landlord of a fourplex earlier this week and he mentioned that a couple of his tenants have been with him for 15+ years.  As I inquired further, he mentioned that he had setup an agreement to never increase rent prices as long as the tenants renewed their lease.  Interesting.

15+ years later, the tenants were renting about 20% under market.  However, these tenants cared for the place as if it was their own, rarely called for issues, when they called, the issues were quickly and easily mitigated.

While I'm not sure I would be willing to lock in rent prices indefinitely, I think a 3-5 year lock would:

1)  Allow me to pull in market/slightly above market rent immediately.

2)  Offer peace of mind to the tenant regarding future rent increases.

3)  Provide incentive for the tenant to stay put.

Being out of state, attracting long term tenants has more value vs squeezing out a couple of % in rent increases.

Feedback appreciated.

[Marcia Maynard]

We have some long term tenants.  Long term to me means more than 10 years. Two of our tenants have been with us for more than 20 years.  We do not do annual rent increases and we don't do regular rent increases, but we will increase rent when we experience a significant increase in expenses.  

I would not promise anything, but apprise your tenants of your values and your management style and your preference to keep rents reasonable.  Let them know you reward tenants who follow the terms of the rental agreement with stable rent, but if the tenant violates the terms of the rental agreement, extra fines and extra rent raises could result.  

One way to encourage non-performing tenants and rule breakers to move out, is to raise their rent.  Much cheaper and less stressful than going through the eviction process.  Don't give up that option by locking yourself in with a promise.   

Many tenants are experiencing rent hikes now and are seeking places that won't gouge them and won't raise rents every year. You could fill that niche. When you have a good tenant in place, listen to their needs and be flexible enough to accommodate reasonable requests. Keep your properties well maintained and your interactions with tenants respectful and kind. You should do well.