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Updated almost 7 years ago on . Most recent reply

User Stats

118
Posts
108
Votes
Joe Hines
  • Investor
  • San Jose, CA
108
Votes |
118
Posts

Does anyone include automatic rent increases in leases?

Joe Hines
  • Investor
  • San Jose, CA
Posted

I invest primarily in SFH in North Florida and my average tenant stays in place over 3 years. I love the stability, but it does mean I slowly fall behind on NOI as costs for landscaping, taxes, etc slowly creep up. It also sets the stage for difficult conversations when we have to talk about rent increases with clients.

This has led me to explore the idea of including an automatic 1% to 2% rent increase in my leases.  It seems low enough that clients wouldn't balk and enough to cover the inflation-driven increases.  It is also easier to understand than trying to explain a lease tied to a Cost of Living index.  Lastly, and certainly not of least importance, I don't think it would be unfair to the client, since moving out and into another rental would already have a similar increase built in.  

Does anyone else include an increase in their leases?  What has been your experience?    

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