How much to increase rent by?

[Joseph Matarazzo]

Hello BP community,

I have a 3 unit property.  The first floor has not been renovated, has a month to month tenant who has been there for years.  It is rented for 1350. The second floor is renovated and rents with a lease for 2100. The third floor is renovated and is rented with a lease for 1900. 

Last year I did not raise the rent on the first floor tenant due to covid and the tenant being a good tenant. 

My question is, how much would you raise the rent on the first floor tenant? There is no limit on how much rent can be raised in my area. I also know to value a tenant who pays and doesn't cause issues. But the comparable rents in the area are around 1800 to 2300. So I'm leaving a lot on the table at the current 1350. 

Any advice is welcome. 

[Bill B.]

Don’t forget. If you are under market. One day they’ll flip a switch like they did in MPLS and St. Paul last night and you will be prevented from raising rents more than 3% per year. This means you will lock in $10k a year plus inflation losses for the rest of the properties life. Plus the $10’s of thousands less the property will be worth.