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Updated about 7 years ago on . Most recent reply

User Stats

10
Posts
9
Votes
Amber Matas
  • Investor
  • Fullerton, CA
9
Votes |
10
Posts

Should we Raise the rent?

Amber Matas
  • Investor
  • Fullerton, CA
Posted
Hey there! Looking for some thoughts on raising the rent. Here is my particular scenario: We have a property in Orange County, Ca. It’s in an extremely desirable, historic area, in an A+ school district. Homes rent in a few days at most in this neighborhood. The house is a 3 br/1 ba Craftsman, with a pool, pool house, and outdoor bath for the pool. The family that rents has been there two years and pays on time, takes excellent care of the house, and are all around good people. They have said they will stay as long as we let them. Right now, the rent covers all the expenses, maintenance, etc, plus we have a nominal cash flow of $75. Two years ago, the rent was just right for the market, but it was on the high end for the tenants. It was our primary residence and we moved due to job relo so we were more concerned about maintaining a place to live in OC if the move didn’t work. We don’t want to sell, and all the other properties we own are longer term, buy and hold situations. Now the home is under market, by $350 at least. I would never raise it that much unless it went vacant, but we were considering nominally raising the rent this third year, maybe $25 or $50. I know the tenants love the house and they want to stay long term (their last rental they were in for 7 years) but I also don’t want to lose great tenants over a few bucks. Thoughts? How do you determine raising the rent?

Most Popular Reply

User Stats

10
Posts
9
Votes
Amber Matas
  • Investor
  • Fullerton, CA
9
Votes |
10
Posts
Amber Matas
  • Investor
  • Fullerton, CA
Replied

thanks for all the input. This particular home rents for $2700 a month. The $75 is after we have put money away for repairs, paid taxes, etc. As I stated but probably not very clearly, this wasn’t an investment property to begin with. The homes we purchased and own as investment properties we have a very different outlook on. We raise the rent yearly. 

This particular house was our primary residence and we rented it out inItially because we didn’t know if the relo was long term or not. So we weren’t super concerned other than covering the expenses and having good folks who took care of it in case we moved back in a year or two. 

Now  that we know we are settled in our new area, we are looking at it as it’s now an investment property since  we aren’t moving back into it. It just seemed like a big jump for one year to bump it that much. That’s why I thought bringing up to market over two years or so would be easier. If they moved out of course I would list at market. 

I’m not offended at being called a “hobby” landlord, but I am not sure why that was really mentioned. I am not some big time investor. I own three other properties and I run those as a business that all cash flow more than $500 a month and as I acquire more I will run those as a business as well. This isn’t my full time job. We all start some where. 😊

I appreciate all the input and I’m thinking  that the tiered option of one or two years at different rates might be a good way to go. 

Thanks all!

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