Raising Rent

[Sean Connolly]

Hello All,

Just looking for some input. I have recently purchased a single family home and a duplex right next door. I live in the single family now, and kept both tenants in the duplex. They both are very polite, keep to themselves for the most part, and have even helped me with a few things around the property. My dilemma is that one of the tenants rents is grossly under average rent in the area. ( Old owner was his parents ). The longer I am here, the more comfortable I get with the rent as is. Also the more I dread raising the rent. 

Currently, Unit A is rented for $575. Unit B is rented for $750. Both units are 1 bedroom apartments, with walkable attack, basement, private deck, private off street parking and a common yard approximately 1 acre. Both pay own utilities, and have trash pickup provided by me.

Average rent for a 1 bedroom in Westport, MA is $800. 

Just looking for suggestions on whether it is better to keep the rent low, with reliable easy tenants in place, or raise the rent and risk losing those tenants for an unknown future tenants. If so, how would you go about raising it? (They're really nice people!!)

Thanks in advance!

[Curtis Bidwell]

Don't let emotions get in the way of doing proper business.  You are way below market and the tenant knows it.  They will not be offended if you give a 30 Day Notice to increase rent.  I would NOT give 2-3 months notice.  That just gives time to stew over it.  Give the basic required notice and move on.  I would probably do an initial increase of about $40 to unit A.  It may be a stretch, but not near enough to cause him to move.  Perhaps leave unit B until their anniversary date comes up and then do a modest $10-15.  Doing an annual increase cares for your increase in costs and sets a pattern of expectation for the tenant.  

My standard (annual) notice basically says: "due to the increased cost of taxes, insurance and other factors beyond our control, your new rent will be $____, beginning ____.  At this time you may be contacted to do a health/safety inspection.  If you are aware of any issues we need to address please contact us... If you will be relocating in the near future remember that a 30 day notice is required prior to the end of the month..."  

I think the key is to keep it unemotional and professional.  It doesn't really matter if they can "afford an increase", -nobody can.  But they all adjust, just like we do to the new property tax or insurance rates.