Are you increasing rents in 2021?

Question

Hey BP community!

While the answer to this question is likely - it depends, I thought I'll get the forum's sentiment as the lease renewal season is coming up.

Are you planning to increase rents in 2021 when renewing your tenants? Why yes/no?

What are the things you are factoring in for this decision and how are you weighting in COVID-related sentiments? (e.g., tenants working form home = higher maintenance and bills vs tenants' income likely staying flat)

Nathan Gesner · Answer

In most cases, yes.

My lease has a built-in, automatic 3% increase for tenants that renew. If the market is really weak, then we can always waive the increase. As long as the market is strong, we charge that small increase to prevent them from getting too far behind on market rates.

For turnovers, we're raising rents to keep up with market demand. Houses in particular are few and far between so we're taking advantage of that and raising rates. In some cases, we're raising 10% or more because the market is so hot.

Kyle J. · Answer

I evaluate the comps in my market for all of my rentals every year and raise the rent accordingly. I do it every single year. I did it last year (2020), and I expect to do it again this year. I don’t raise rents for things like people working from home, fluctuations in a tenant’s income, etc. It’s strictly based on an analysis of the fair market rent for the areas where my rentals are located.

And in my area, rents have been climbing every year quite substantially. So I raise the rents each year to keep up, and to avoid falling too far behind.

Cathy Malmrose · Answer

@Carlos Ptriawan Same here. Not a single one of my units will be increased this year and I'm proud of it. I won't have any turnover either. My tenants know they're lucky to have a place & its super tight out there. (My last open unit had over 300 applicants in under 72 hours.) My tenants pay their rent, communicate well, and take good care of the homes. I'm happy.

Carlos Ptriawan · Answer

I decided not to increase any rent due to covid and sometimes I feel bad to the tenant. Increasing $100 doesn't mean too much to me but it has an impact on my tenant especially at this time of year.

Jay P. · Answer

@Fedor Volkov

Yes, I will be raising my rents. The reason- my tenants have not been affected by Covid and I have spent a great deal in renovations/updating last year and this year also. When it comes time for the leases to renew, I will sit down with them and we will chat about it, but most likely the answer is yes.

JD Martin · Answer

I'm generally kind of lazy with existing tenants. Turnovers always reset to market rates. Eventually even long-term tenants get some kind of increase. But I bought my properties back when I was getting them dirt cheap so I have a lot of runway, much more than many other people on here.

Joe Splitrock · Answer

It depends on three things. The property, market and tenant. We look at all three and decide what increase to push. I like to push some type of increase every year, even if it is small. Ultimately my costs go up every year, between insurance and taxes. If I am not increasing rent, I am reducing take home. I am not greedy and I try to retain good tenants.

Filipe Pereira · Answer

On average, we are raising our rates across our CT and western MA portfolio around 2-2.5% for lease renewals and around 3-5% for any turnovers. Of course there are exceptions and by no means is that a "rule" but it's what we've been able to do with little to no pushback fortunately. All of our tenants are paying at this time, so that really helps. We would be inclined to not increase rent on a good tenant if we know they have been hit hard by covid. It's a fine line because we know we don't have the leverage due to eviction moratoriums.

Good question @Fedor Volkov

Matt Leber · Answer

@Fedor Volkov I am $50/unit for the ones that have upside. Figured $50 won’t make anyone move and I have been right this far as all have renewed. I have one house where the tenants have been struggling through Covid times so I turned them MTM and won’t be raising them as long as they continue to pay and communicate.

Karl B. · Answer

Depends on which market. I don't typically raise rents unless I have tenant turnover as my PA market is soft. I have one 8 month lease in my 4-plex that's getting me very good rent and so when I fill that vacancy I won't be asking more for that unit. (currently $610 and the previous tenant was $525 - new flooring and some improvements were completed prior to the $610 tenant but I don't think a new tenant would pay that high - we shall see as I'll run comps at that time).

I don't expect any other vacancies - I'm house hacking a duplex here in MO and perhaps the tenants on the other side will move - if they did I would raise the rent as it's under market (the lease was signed from the prior owner and they're month-to-month).

Are you increasing rents in 2021?

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