rent increases help

[Linda Thomas]

Good evening all,

So I have a long term tenant that's been with me for about 7 yrs. I have NEVER raised her rent since she moved in. She's been a fairly good tenant for the most part. Now due to general cost increases such as, property tax increases, insurance premium increases, and maintenance costs, I really need to raise her rent and in addition rents are going a lot more than what she is paying in the area. She is about $200-300 under market rate now. I want to raise her rent between 40-60 a month more but I feel bad (not sure why I do - I know it's a business) I think I feel bad doing it now because of the pandemic. Would a $50 monthly increase been seen as drastic? thoughts? I'd like her to stay on but I'm afraid she might end up wanting to move now but again after possibly checking other prices in the area that might help her stay. 

[Jessica Pearl]

Sounds like you are still being very generous. One piece of advice I came across early on was to always raise the rent every year, even if it was a a token amount, because it gets the tenant used to annual increases and avoids the uncomfortable situation you are in (because you are a compassionate person). You definitely need to be charging enough to cover the costs of the property and then some. I agree with the other poster that if you are still charging below market rates as a courtesy to the tenant for being a good tenant, they will likely end up staying (rent for similar place plus moving costs and hassles). If not, it will give you an opportunity to make a full market adjustment on your rent.