Upgrades Menu for Higher Rent

[Joel Ray Cotton]

I am looking to raise the rent on some tenants that are underneath market by about $200 but also are in units that are fairly outdated. I am planning on raising the rent by $50 on their lease renewal.

Currently trying to put together a menu of upgrades to offer the tenants. Therefore I can weed out the people that are here because they want the cheapest apartment and the people that wouldnt mind LVP flooring, upgraded counters, appliances, bathroom fixtures. (Each option being different cost) The cost to the tenant is determined by taking amount it will cost me and add 20% profit and then divide by 36 and that is their rent number. 

Moving is a pain but if I can offer to upgrades to the units I feel like tenants are more likely to stay because they can justify customizing to their liking. 

Ultimately the goal would be to stay under the Safe Harbor Rule so I can write it all off in that tax year but they are paying for it either way so I am good.

Any ideas on where to find possible upgrade menus that have been developed already?

[Greg M.]

If I were a tenant and you brought me a list of upgrade options and a price list, I'd be insulted. You want me to pay more so you can upgrade your property? I just can't see a tenant saying, I'll pay $28/month more for LVP flooring and $17/month more for a granite countertop and I'll pass on the rest. Chances are they are happy as is or they would have left. 

Don't put the upgrades and the rent increases in the hands of your tenants. You're the landlord, do your job. If you can get $200 more per month by updating the units, doesn't it seem like a no-brainer to do that? You didn't give any info on location, current rent, type of unit, so I have to guess. What is it going to cost you to put LVP flooring, upgraded counters, appliances, bathroom fixtures, paint the place, put new window screens, etc in each unit? $5,000-$7,500? At +$200/month you break even in 2-3 years and from then on it's pure profit. Non-renew the tenants and fully update each unit. It's your most profitable solution without the headache of dealing with all the tenants and their design choices.