Not going to raise rents: Smart or just Naïve on my part?

[Anna M.]

I really do not want to raise the rent, but am I being smart about this or just being a naïve newbie landlord?

I am a newbie at real estate, landlording and property management (going to be 1 year on May 4th 2016).  I have a multi-unit property in Lakewood Colorado.The lease on one of the units is due to expire in July 2016 and I have notified the tenants that they would need to notify me in writing of their intent to vacate at least 30 days before the lease expires.In the meantime I am working on doing my homework to figure out current market rents for a 2-bedroom basement Unit in Lakewood, Colorado.Unit has a 2 car parking and also comes with good-size garden space, washer and dryer.Current rent is $950 and I am thinking of keeping it at $950 as they have been great tenants that always pay on time, they have pets and pay a non-refundable annual pet fee of $450.Other than some damage to door and stair railing from dog chewing on both “suspected” (not confirmed) separation anxiety, they have kept the unit pretty clean.I like to reward good tenants and feel that I really would rather keep them than go out and get new tenants that may prove to be a nightmare.Do you think that keeping the rent at $950, requesting the annual non-refundable $450 is fair/reasonable?I am still in the process of researching current market rents, but thought I would reach out to BP for comment.Thank you.

[Thomas S.]

Not raising rent in the misguided belief that it somehow saves costs is a common misconception with new or hobby landlords. Reducing income to avoid operating your business is the amateur approach of potentially saving nickels and dimes and allowing the dollars to escape. The reality is that reducing income to "potentially" save costs does not save costs it only reduces the return on the property.

Once you graduate from a couple of doors to tens or hundreds a stricter business approach is necessary to insure maximum return, Vacancies are built into the expenses and the percentage of tenants leaving over a rent increase is very rare as professional landlords quickly learn.

Landlords are simply justifying their suplimenting of tenants rent out of a illogical fear that tenants will decide to disrupt their personal lives over having to pay market rent. It's a old landlords wives tale.