rent increase during the pandemic?

Question

My tenants have not missed a payment despite COVID-19 and their lease is up in a couple months. I will be asking them to renew. For awhile, I was planning to raise rent a little because costs for the unit have gone up a lot for a couple years, and I did not raise rent last year. At the same time, I am thinking I should keep rent the same considering the pandemic. Any advice?

Dick Rosen · Answer

Don't judge your rent based on your cost, judge your rent based on market rent. And don't be afraid to raise during the pandemic, it's business as usual for

John Warren · Answer

@Alex Scotte I think this is an incredibly location specific question, so take my advice with a grain of salt. I am not raising rents here in the Chicago area on my properties, but I am looking to get top of market rents when I have a vacancy. With my current tenant base, I want to make sure I don't rock the boat. A few of them are working through job reductions and job losses, and it makes sense to not mess things up for them. In addition, most of the rents would only go up $10-20 per month. That is normally worth it, but in today's environment I wouldn't mess with it.

How much more rent do you think you can get? Are you close to the top of the market, or are you a few hundred under market?

How much more rent do you think you can get? Are you close to the top of the market, or are you a few hundred under market?

Alex Scotte · Answer

@John Warren I wouldn't spend it but use it offset the increasing costs of maintaining the place. I spoke with them today and they were affected by the pandemic but now getting back to normal. I realize it looks bad to raise rent during a crisis but I never thought "because it looks bad" is a good reason, especially if they are on their feet financially.

@Dick Rosen "Don't judge your rent based on your cost, judge your rent based on market rent." I noticed that!

John Warren · Answer

@Alex Scotte $50 probably isn't worth effort. I am guessing that your rent is substantial in your area, so $50 probably isn't worth your time chasing. Also, where would you spend it with the quarantine going on?!

Matt Ziegler · Answer

We sent all of our tenants a letter stating that due to the uncertain times, we would not be increasing any rents. Also that we would not be renewing any leases, instead leaving everything in place with the same terms for this year.

Our plan is to revisit this arrangement the first of the year and evaluate then. The thought was to keep them on the same schedule so we don't have all the renewals at the same time.

John Teachout · Answer

If the property was due for a rent increase, and since you didn't raise it last year, I would raise it. You could make some variations such as if the increase was going to be $30, you could defer it but still put it in the contract. ie, the rent is going up $30 but you don't need to start paying the increase until Aug 1st. Or something like that. When we inherit tenants that are paying under market (way under market) we usually give them a tiered increase. Such as $25 in 60 days and then 6 months later another $25.00. That way they can prepare for it and it's not a big increase all at once.

Sarita Scherpereel · Answer

Right now, with COVID I would recommended keeping rent the same. I don't think we are going to see the fully economic picture until later summer/fall. It's possible any movement in rent could hurt them financially and create a vacancy. Which no one needs right now.  I would show them some mercury but not increasing the rent. And even say, why you're not doing it. So that next year if you can increase more than you looked like the good guy this year.

Alex Scotte · Answer

@Yoni Benimetzky and @John Warren I am $50-$75 / mo under comparable condo rentals (which is what I have). More than that compared to comparable apartment homes.

Wesley W. · Answer

Here's what I am doing. I usually increase my rents a few % each spring to keep pace with my operating expenses, however I thought it would be extremely poor timing to do that this year.  Instead, I'm going to wait until we're past "shutdown" model a bit before raising rents.  In order to keep my % in line with cost increases, I will keep the annualized increase the same as intended, but since the increase is later this year it will be a slightly higher %.

This is messing me up a bit, because this will now move all of my increase notices to the same month (as opposed to staggered throughout the spring/summer).  The fair weather months are the easiest time to find tenants here, so I would like any dust to settle from the increases before the cold weather hits.  But, I figure if this is the worst problem I have to deal with this year, I have it pretty good compared to others.

All of my leases are M2M, but you could let yours expire and revert to M2M, then sign a new lease with a higher rate once you feel your area has turned the corner.

Patrick M. · Answer

I am raising rent on my 2 rent controls, the rest I am leaving in place. These are my most vulnerable tenants.

If I do not raise rent on my 2 rent controls I lose it forever as any future increases are built on a percentage of the prior years rent. I am putting the increase in place at the start of the lease but waiving payment for 6 months.

rent increase during the pandemic?

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