All Forum Posts by: Kar Sun

There are a few issues here. The first is that your expenses have no bearing on the rent. Whether you need $1000 or $5000 a month in rent to break even is meaningless. The marketplace sets the rent level and many times that is below people's break even point. It is also irrelevant as to what the tenant makes. Lots of people making REALLY good money live paycheck-to-paycheck. 

It kind of sounds like you're a little thin skinned and allowed their whining and unkind words to get to you. This is a business and you need to approach it like a business. Who cares what they think of you or your place. They're not your friend, they're your customer, and if your customer wants to think you're an a-hole, so be it as long as the rent check arrives on time. 

Just be professional with the tenant. "I'm sorry you're not happy with the increase, but the new rate is in-line with the market. If you have proof that my numbers are wrong, I'm willing to listen. Otherwise please let me know your intentions no later than 30 days before end of lease". This puts the ball in their court. If they can prove your numbers were wrong then you honestly should take another look. Otherwise, they need to say yes or no and that is the end of it.

When he sees the current rent prices, his duress will turn into happiness because It sounds like even with the rent increase you are not charging current market rents for that unit.  We do not have to subsidize tenants.  I don't care how long they are living there. They can move on if they don't like the rent amount. 

Hello Kar,

I have been experiencing the same thing! Recently, I had a tenant of 10 years move out because of a rental increase. She was a great tenant, was super clean and never complained. But as unfortunate as it is, I had to do it because the market in my area demanded it. I would give your current tenant the option to resign, even if he is unhappy, because he has been living there for so long and it seems that he could afford it. But as you said, there is a lot of demand in your area so it shouldn't be a problem to find new tenants. I think its important to have a good relationships with your tenants, but both parties have to understand this is a business transaction, nothing is personal. 

I meant the lease may say he has to notify you in writing if he plans to pay the higher rent and stay 60 days prior to the end of the lease term.  

Per your lease, does he have 60 days to notify you in writing if he is staying with the new rent increase.  Email that to him so he is aware.   

Exactly. Then situation #2 occurs. The tenant finds out you are still being generous with your rates. And either they pay it because they love their standard of living and hate moving. Or realize they can no longer afford their same standard of living. I assume you wouldn’t write your tenant a check every month for $400. That’s basically what you’d doing when charging under market.  PLUS, if the “saviors” ever come in and pass rent control you’re screwed because you were nice. 

GL. 

IF you are charging too much, they will move. And you’ll find out you were wrong about market rates. But maybe they’ll look around and find out everything else is waay more. And they’ll either have to admit they were wrong or that they can no longer to live as nicely as they could before. 

If gasoline is up 250% what percent rent increase do they think is justified? My smallest rent increase in the last 2 years was 10%, the average is just over 20% and several we’re over 30%. 

You didn’t include the previous and current rent amounts so we can’t determine what percent you’re raising rent. But I’m going to assume your $125 over 3 years was part of the problem. You set expectations very low and you were probably under charging.

People are strange that way. If you charged someone $1.000/mo for 10 years and then doubled it to $2,000 they would have a COW. But, if you raised it $100/mo for each of those 10 years you would have collected $60,000 more in rent and they would be fine with the increase to $2,000 (from $1900). 

 Agreed. 

Personally I would rather he moved after his whining.

He makes enough money and this is not about someone being on the street.

He is also a business person himself.

If he has disregard for my business I am uncertain I want him.

The biggest issue is that he stated he will be under duress to stay because he is too busy to move, yet I do not want him now.

So what's the problem?  Your rent increase is based on cost increase.  That means you MUST increase the rent to cover it...with profit (please don't forget that...or stop investing).  IF the tenant doesn't like it, they can leave.  Whining tenants over a rent increase isn't anything new.  If they leave, so what. If the property is as desirable as you say it is, then you should be able to replace the tenant without a problem.

Just make sure you follow the landlord/tenant laws (as you seem to be doing) and also make sure the end result of that rent increase is right inline with the area.

In the future, don't deal directly with you tenants as the landlord.

I would not do a $400 increase to a good tenant. I'd do maybe $75 to $100 at most in one year.