Should I ask my tenant what would be a reasonable Rent Increase

Question

First time Landlord here.

My first tenant's 1-year Lease is ending soon. Property was rented at Market Value ($2500) a year ago. They have been good tenants, very communicative and have kept the property up well (per my inspection recently). They also chimed that they like the Schools (2 kids) and the neighborhood.

I am debating if I can/should check with the Tenant about what's a reasonable Rent increase.

My current thoughts: the rent increase that I am considering (for another year-long renewal on Lease) is $50 more... (intention is to keep the tenants in the property as long as they want to...).

JD Martin · Answer

No.You are responsible for managing your property. It's unconscionable to put that burden on your tenants. Considering everything going on right now you might just want to hold steady for a while.

Marlen Weber · Answer

@Susmitha Pranitha while I wouldn't negotiate with them present, I would offer them an option that benefits you both. Negotiation back and forth could lead to misunderstandings that could harm the relationship. Best of luck.

Bjorn Ahlblad · Answer

@Susmitha Pranitha I say NEVER ask the tenant. You are the LL make a decision. Right now I am not even thinking about rent raises. All my tenants paid April and want that to happen again in May. Partly because it is business and partly because I want them to be able to keep their lives together in this disastrous climate.

Greg M. · Answer

Sounds like you are wanting to raise the rent just because you can as you know they won't move for a little amount. That's how a greedy landlord operates, not a good landlord.

Bryan Devitt · Answer

@Susmitha Pranitha tell them due to the current issues with the economy you wouldn't feel right raising their rent so you won't raise the rent this year. This tells them to expect one next year. If you don't raise it for too long though, some tenants will develop an entitlement mentality and get pissed when you raise the rent and go all Greta on you "How dare you! I've been here for 5 years, you can't raise my rent"

Kenneth Garrett · Answer

@Susmitha PranithaI would check the market rent today. Last year was 2500 I would check this year. Although you are proposing only a 2% increase, confirm the market rent. You don’t want to negotiate the rent. Make your own decision and offer a new lease. The cost of losing your tenant will cost much more than 600 dollars. Take all of these factors into consideration.

Account Closed · Answer

Let them go month to month, don't bring it up with the tenant. Wait until this virus blows over, assess the market, raise the rent but only to the point where when they look for other comparable rentals, they will see that they're better off staying put.I do understand your thinking as far as asking the tenant. That can sometimes work out nicely in other situations, especially when a tenant is complaining about something. Sometimes asking them what they think the best solution would be can work out okay. But, with regard to raising rents, what worked for me was doing my own research as if I was the tenant. As soon as you give a tenant a notice of a rent increase, they will go online and check to see if they can get a better deal. So, it's your job to know what they will see - and that they will see that they're better off staying put, that what you've asked for is fair.They'll still grumble and hate it, but if they are happy with you otherwise and the unit, they'll usually stay. Especially in your case where they like the schools, etc.You do have to be aware that if the rent gets to a certain point, they may decide they'd rather buy than keep renting from you. And, keep in mind the cost of a turnover. We pretty much figured 30 days to get the place in great condition, then show it and get a tenant who had to give notice first, rather than someone ready to move in tomorrow (usually a red flag).Congrats on having a great tenant, by the way.

Patrick Pierre · Answer

Yep, I'm with most of the folks here. I would not raise the rent. Can you go another year without the extra $50 a month? If the answer is yes then there you go.

Brad Hammond · Answer

Whenever there is a lease renewal I always do rental comps. Check out Rentometer, Zillow, Facebook Marketplace, Craigslist, etc for comparables. Don't ask a barber if you need a haircut. I understand wanting to keep the current residents so keep it reasonable (especially these days). I would recommend a 2-3% rent increase.

Diane Dono · Answer

I'm in the, "don't raise the rent on a good tenant, until times are better" camp.... ;-)