Rental increase letter

[David Boroughes]

I have a unit where I have let a fairly good tenant stay on month to month for a few years now. I haven't raised the rent because they tend to take care of all the minor issues which saves me time and money, now it's been about 4 years and I need to raise the rent. Does anyone have what they consider a good respectful letter they use in this situation to let the tenant know the rent will be increasing as of Sept 1? I'm only talking $50/month here, which is still a little below market, but the tenant is long term, so I have 0% vacancy on this unit for many many years, and I have no problem passing along that savings to this good tenant. Just looking for feedback on how some of you others ask/notify of rental increases on units where you have nice quality tenants and are actively involved in the property (I do see the tenant at lease a few times every couple months), so I'm looking for a more personalized approach here, 

Thank you, 

[Thomas S.]

Your state landlord tenant regulations may have a form that is to be used for annual rent increases. Normally a simple business letter with tenants name, address of unit, present rent, new rent and date effective. It is not a letter it is a notice, include the facts and try to avoid the excuses or reasons, tenants already know why rents increase and don't care about a landlords issues. 

The type or quality of a individual tenant should have nothing to do with their rental rate. It is a misconception that raising rents causes tenants to leave. It is rare. In fact raising rents a fair amount every year is expected by tenants and raising rents only every few years by a larger amount is more likely to cause a vacancy. $50 now could cause your tenant to leave where as a $25/year increase would likely not have. Your policy based on fear could result in what you did not want to happen. Very poor business planning. Illogical, irrational and not based on any known facts to support the theory that supplementing tenants rents retains them longer. It does not.

Every tenant leaves eventually, given proper notice this should not result in lost rent.

If you do not give a tenant a rent increase of $25 dollars that costs you $300 every year and at some point they leave and for conversation sake lets say it costs you a months rent. In three years not raising the rent $25 per year you lose $300 + $600 + $900 = $1800 over three years plus a months rent. This is not a small amount and only increases as tenants stay longer.

The likely hood of a reasonable rent increase causing a tenant to leave is practically zero.  Giving a increase each year makes you $1800 and at three years if they leave the rent loss is the same.

Given the fact that your tenant may leave I would increase the rent fully to market rent, If she stays win/win you get a good tenant and full rent. If she were to leave at a $50 increase you might as well have gone to full market anyway rather than risking keeping a tenant at below market.

There is zero reasoning or proof that giving a tenant a rent supplement will determine if they stay or go.Tenants move for many reasons but being a good tenant does not justify a rent supplement it just means you are OK with them staying as long as they wish.

Rent increase does not equal vacancy. Not increasing rent equals income loss and property devaluation. The term market rent is intended to reflect what tenants are paying for comparable accommodations and tenants know that. They know moving over a rent increase is a stupid idea and not financially wise. Not raising rents annually is financially ______?