"Shouldn't Landlords Feel Guilty about raising rent?"

General Landlording & Rental Properties
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"Shouldn't Landlords Feel Guilty about raising rent?"

Tyler RowlandBusiness Member
Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes

I was talking about Real Estate Investing with some people at Home Show event, and as I was talking about getting rents up to market rates. A lady in the conversation asked me if I felt guilty about that (raising rents to market value).  Almost as if rents should stay the same forever.  

I told her "of course I don't feel guilty, because I try to do everything in the correct way.  And as someone that provides housing and services to people that need them, I feel quite the opposite."  But the thing that really got me about the question she posed was that potentially, there are a lot of people out there that feel it is shameful to raise rents and therefore something to feel guilty about.  How have/would you answer her question.  And how does that perception get corrected?  How do Landlords/ Property Management Companies help your tenants understand incremental rent increases, especially when rents are well below market averages?  

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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
6y

Just ask , " Does the government feel guilty when they raise taxes?"

39Reply
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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y
    Originally posted by @Jeff Ronningen:

    @Joe Splitrock. You raise a good point. Many times I see a multi family listing which advertises “room to raise rents” or “rents below market” as if this makes the property more attractive. Of course they want a sales price based on market rents. Have cake, eat too.

     I see the same thing. "Room to raise rents" is a joke. If the property supported those rents, then the landlord would be charging those rents. To your point, it is just a trick to try to get higher valuation. If the rents are below market, then the price needs to be below market.

    2Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y

    @Joe Splitrock  Thank you so much for that perspective.  You are absolutely right.  I have always wondered how people in New York and California could afford so much with astronomical prices on everything.  But they do adjust and make it work.  Thanks for that Joe!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
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  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y
    Originally posted by @Todd Kruger:

    @Tyler Rowland

    For a young family of 3, I was just notified my health insurance will be going up another 30% beginning January 1. Fortunately, we have never used our insurance other than our annual flu shots and having our son 7 years ago.

    Life does not balance out like a simple accounting equation and most expenses will always be growing more expensive than the rate of inflation. Rent however is not one of those astronomical, out of this world growing expenses compared to the rest of our society.

    I suggest the next time you have the same type of conversation you simply smile and move on. Many people are naive and have no idea what lengths many owners go to for the benefit of their tenants.

    Create the best product you can for your investment and don’t sweat the small stuff.

    Best of luck!

    Thank you so much.  That really is what it comes down to is ignorance, and really it seems like that is a widespread issue.  If we could walk in another's shoes we would have a great widening of perspective.  I will do my best, thank you!

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
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    0Reply
  • Tyler RowlandBusiness Member
    OP
    Lender · Cedar City, UT · Member since 2017 · 88 posts · 64 votes
    6y
    Originally posted by @Corby Goade:

    This is an easy one for me- many lifelong renters feel victimized by their landlords- helpless that they are living at the whim of the rent increases and invconveninces that renting comes with. There are two simple responses:

    1. What is stopping any tenant from either buying their own home or becoming a landlord themselves? Absolutely nothing- that is true for every person in the US. If they have no money, poor credit, etc, they can start working to fix that and take control of their destiny, just like every person on this forum is trying to do. The victim mentality destroys lives, we all have control of our destiny, it's a matter of whether we harness that or let things "happen to us."

    2. In general, especially the last five years, it's difficult to keep up with annual property tax increases, let alone create better cash flow on a rental. I've found renters tend to vote for and support tax increases on landlords, levies for public improvements (that come from property taxes) etc, because they think they don't have to pay for them since they don't own property. OF COURSE they have to pay for them- through rent increases because they voted for property taxes to go us. It's silly to think that a property owner will just eat those increases indefinitely- voting to increase taxes is the same thing as voting for your own rent increase. 

    Thank you for the reply Corby.  Honestly, increasing property taxes has been on my mind as ours just went up another $100 this Year.  Thank you for the advice it was much appreciated.  

    [email protected]435-592-4002
    Tyler Rowland with Intercap Lending 554 Reviews
    WebsiteView Page
    0Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y
    Originally posted by @Chris Kdjdfjb:

    @Greg M. Many voters are stupid, many politicians are evil, and yes many landlords are greedy. Bad apples in all of the barrels.

     As a landlord, please tell me how I can be greedy. My units are around market rates and if I raise them much higher, the tenants will move out. There must be some trick to being a greedy landlord that allows higher than market rents without the tenants leaving. 🤞

    2Reply
  • Aisha M.
    Rental Property Investor · NY · Member since 2017 · 43 posts · 18 votes
    6y

    @Pat L. im in upstate NY also. Buffalo to be exact. Where about are you?

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Greg M. There's nothing wrong with charging market price. The ethical problem is when market price becomes ruinously expensive, which it is for large swaths of the population and especially in California. Maybe you didn't create the situation, maybe you charge what you have to to stay in business, but do you at least feel empathy you are benefiting from a seller's market that is crushing most buyers? The landlords who don't feel the empathy are evil.

    Also why does every response to my posts try to make it about them personally?

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Tyler Rowland Being a landlord is somewhat of a pyramid scheme. Anyone can do it, but by definition not everyone can do it. Also, is skyrocketing property value not also a cause of rising property taxes? If construction kept up with demand and prices remained stable, taxes wouldn't increase much*.

    *Obligatory disclaimer: in most places.

    0Reply
  • Peter Sanchez
    Real Estate Investor · Washington, DC · Member since 2014 · 236 posts · 328 votes
    6y
    Originally posted by @Chris Kdjdfjb:

    The landlords who don't feel the empathy are evil.

    Also why does every response to my posts try to make it about them personally?

    Maybe people wouldn't take your posts personally if you weren't calling them evil and doing it behind an anonymous handle.  Since you have so much empathy, do you feel bad when they raise property taxes on your landlord?  Do you offer to voluntarily pay them above market rents because it's the "fair" thing to do?  I don't blame you if you don't. It's just that people who feel that way are evil.  Nothing personal, of course. 

    2Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Tim Rostro You do know that not all renters are like the wasteful deadbeats who live in Apache Junction, AZ, right? I've been there. That town sucks.

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Peter Sanchez Dude you brought yourself into the conversation, not me. Learn to deal with an opposing viewpoint.

    0Reply
  • Daren H.
    Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
    6y

    Even God raises rent! That 10% he is asking for is on gross. If your gross grows, he stills wants that 10%. He doesn't say, nahh dog, you good at 10% on that $100K you were making even though you at $1M now.

    2Reply
  • Clifford Paul
    Rental Property Investor · Member since 2018 · 483 posts · 956 votes
    6y

    This reminds me of a parent telling their kids to eat all the food on the plate because there are starving children in China. 

    Well mom are you gonna box up the leftovers and send them to China?

    2Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    Come to a crocodile infested river and go swimming...

    Personally I used to emphasize with tenants and the struggle against increasing rents. I come from no money at all. I've worked hard my entire life for nothing. And no one has ever rewarded me for having nothing. Now, in my late 40's, I've managed to accumulate a small portfolio through very hard work. I haven't done it for me, but for my kids. Every dollar I leave on the tenant's kitchen table not only does it not go to my kids' future, but I actually have to take money out of their future due to rising property taxes, maintenance deferred by previous owners, and whatever else decides to come after the pie. 

    Two of my tenants were rewarded/enticed to enter long term leases of 2 years; and I reduced the rent to facilitate that (massive rookie mistake). There's some empathy for you. Now, I found out one of those a$$holes has been smoking in my brand new house, contrary to the lease, and the other one thinks it's his job to bypass the air handler on the AC because he won't buy a cheap air filter, and dismantle the heater to clean parts of it when it's not lighting for him. I just had to send an AC company on the weekend to fix it. 

    So, how's my empathy worked out for me? If you want empathy, go set up a tent outside Nancy Pelosi's house. 

    Empathy = charity = bankrupt. I'm coming after my empathy, I want it back.

    1Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y
    Originally posted by @Chris Kdjdfjb:

    @Greg M. There's nothing wrong with charging market price. The ethical problem is when market price becomes ruinously expensive, which it is for large swaths of the population and especially in California. Maybe you didn't create the situation, maybe you charge what you have to to stay in business, but do you at least feel empathy you are benefiting from a seller's market that is crushing most buyers? The landlords who don't feel the empathy are evil.

    I really don't care who can afford it and who can't. And Vice can quote me on that! Let me let you in on a little secret about life: It's not fair. You can't have everything you want in life. Others will always have more than you. Now the sooner you accept this, the sooner you can set your path in life to try and achieve your dreams. 

    If the buyers can't afford something, then they shouldn't be buying it. Unfortunately, too many people feel entitled to have stuff that they can't afford and look at others as the guilty party. I'm so lucky to live in this trendy area (and pay 60% of my income for rent). Let me snap a picture of my $22 avocado toast and post it on instagram (and eat nothing else for the day as I have no money left). Let me drive this shiny new car (that I had to get a 7 year loan on to get the payments to a level that won't crush me). Come on people, give me likes!!!

    Can't afford rent? Boo hoo. Move! Feet aren't planted in cement. People confuse want with need. They don't need to live in the some of the most expensive cities in the world. They want to live there. Why should I or anyone feel bad for them that they refuse to move to an area they can afford? There is a reason that 1/3 of the people in this country are renters. It has a lot to do with (lack of) personal responsibility. People need to make better financial decisions for themselves and not blame others. I'm not evil for wanting as much money as possible. You're evil for blaming me that you don't have enough money.

    5Reply
  • Sergio AltomarePro Member
    Rental Property Investor · Greater Philadelphia · Member since 2012 · 135 posts · 60 votes
    6y

    @Tyler Rowland had this guilt trip put on us from an inherited tenant. She wanted to stay in the apartment because of the school district for her kid. Simply letting her know that it's the school tax increase that is being passed on nipped that real quick.

    Podcast Guest on Show #545
    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y

    @Tyler Rowland Guilty? No. Sympathetic yes, because I'm smart enough to understand the effects of income inequality and a disappearing middle class, and I've been in a similar position before: no savings, thought I'd never own property myself which is how many tenants still living hand to mouth feel. That's why I lived like a monk, worked super hard and saved up money to make my first down payment. It's not easy but most anyone can do it. Now if I don't raise rent a bare minimum of 3%, I'm not even keeping up with inflation and on top of that insurance, property taxes, cost of materials and labor to make repairs, utility rates, HOA fees, tax preparation expenses, etc. all go up every year. All-in, I bet rent increases need to be 7-10% minimum just to keep from sliding backwards, and if I don't budget properly for those increases in order to make the mortgage payments, we're all homeless together. I do feel bad when I see a family struggling to make rent though, as that financial strain often manifests itself in substance abuse and violence, which is terrible to witness. However we're all subject to the same market forces, expenses increase every year across all economic strata it just effects those without any savings a lot more as they're one stroke of bad luck away from missing a rent payment, then subject to late fees, getting behind on bills and subsequent homelessness. It's unfortunate for sure but it's part of the business and I knew that going in. I do what I can to help families but rent increases are absolutely necessary so I keep them reasonable and my tenants almost always understand (if not they're just stuck moving somewhere else as the market rent is what it is).

    0Reply
  • Yaldho Manoj
    Dallas, TX · Member since 2019 · 20 posts · 2 votes
    6y

    @Tyler Rowland Why do people ask for raises every year at work? If you are not keeping up with the market, ur loosing money.

    0Reply
  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    6y

    @Chris Kdjdfjb

    Market price is market price. The landlord doesn’t set the market price, the buyers do. Guess what happens if I set my rent at $1,500 and nobody applies? I need

    To lower rent or lose money on that vacancy.

    And calling landlording a pyramid scheme is comical at best, and grossly ignorant in reality.

    Who takes 100% of the risk in this situation? The landlord. The investor. You think my tenant that just decided to break her lease cares about mortgages, taxes, insurance, utilities.....or ME??! Nope. I try to be a great landlord, but my number 1 concern will always be me and my family over tenants. Always.

    2Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Greg M. Ok boomer.

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Anthony Wick Imagine if all the tenants you look down upon decided to copy your alleged success by getting in to real estate. Anyone can do it, but by definition not everyone can do it. Land is scarce. How would you draw that as a diagram if not as a big pointy pyramid? Steve K. gets what I'm saying, scroll up to his post.

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Michael King Steve K. gets it. Scroll over over to his post.

    0Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y
    Originally posted by @Chris Kdjdfjb:

    @Michael King Steve K. gets it. Scroll over over to his post.

     What's your point?

    0Reply
  • Chris Kdjdfjb
    Member since 2019 · 20 posts · 7 votes
    6y

    @Michael King Steve K. gets it. Scroll over to his post.

    0Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y
    Originally posted by @Chris Kdjdfjb:

    @Greg M. Ok boomer.

     Ahh, the clueless retort of the clueless. 

    Take some advice that will suit you well in life. Go take some community college economic classes. If you open your ears, you'll learn why your currently held beliefs are wrong. This will give you a big step up on others who repeat the party line. Also consider some finance classes. You may just learn how to properly handle money and one day no longer be a renter. 

    1Reply
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