All Forum Posts by: Wesley W.

I do what @Rick Bassettand @Rex T.do.  None of that "check is in the mail" dialogue, and those without bank accounts can pay in cash (or wampum, for all I care just so long as it clears the float!).  I have a separate bank account for each building, and each unit has a slightly different monthly rent so I can tell who's paid.  I can view the deposits online, and know if I payment is past the grace period where a late charge would be levied.  (All of my current tenants are excellent at paying on time, and if they are late they make arrangements with me ahead of time as to the date of their rent + late fee deposit.

I charge a $200 non-refundable fee per pet.  Almost no one bats an eye at paying. It's a bargain to the tenant whom considers the pet as a member of the family.

The animal needs to be spayed/neutered and have current shots and registered with the municipality.  I accept most dogs (except for dangerous breeds per insurance carrier) and cats.  In our market, a lot of landlords don't accept pets, so this gives me a competitive advantage - just make sure you screen the tenants well.  What's worse than a problem tenant?  A problem tenant with a problem pet!

My rents are all MTM, so the one-time charge incentivizes the tenants to stay longer to amortize the cost.

Al Williamson is passionate about leveraging additional income streams from rental properties.  Perhaps he could weigh in...

One of the referenced units is about $75 under market, but they are extremely long-term (inherited) tenants and have "worn out" their unit and live kinda messy; it would take about $7000 to turn it over.  Last year, I raised their rent $30; I was considering doing something similar this year.  These tenants sometimes pay late, but always with a late fee.

The other unit has model tenants.  They keep their place neat and clean, and always pay on time.  They get a significant discount because of shared utilities with a common area, which amounts to considerable savings over and above their additional expense.  They would be pretty close to market if they were paying full price.  It's weird, though, because market price fluctuates quite a bit with the seasons;  in 2 or 3 months, all the market rents across the city will be higher.  In February, they are near the bottom of the annual local cycle.

My gut tells me the first tenant needs to get an increase, but like a few of you said, it's a balancing act.  If they move, it will trigger a big cap ex, but then I can raise rent by about $100 (we have the reserves, but a long recapture period).  Our expenses are about $30/month higher at this property than they were last year (see OP), and this unit is by far the lowest under market.

@Jeff B.

Thanks for your input, guys.  I've read dozens of each your posts, and I respect your opinions.  Although I was looking for more of a consensus, I guess what this tells me is "to each his own" and there is no preferred way.

Hello all,

We have a few units in our small multi-family portfolio that we are considering raising rents outside of tenant turnover.  I'm interesting in hearing from the collective experience on here if it's more palatable to the typical tenant to have their rent raised by say $5 or $10 each year, or at least double that every other year?

In other words, are small, more frequent increases met with less resistance than larger jumps at longer intervals?

Here in NY, our taxes and insurance (as well as other expenses) go up by a not insignificant amount every year, and we have to be mindful of this on our long-term tenants, lest our cash flow erode away.  I know the cost of tenant turnover is a cash flow killer, but if we neglect minor rent increases to keep up with expenses, will the "sticker shock" of a big hike every other year create more turnover than a minor yearly increase?

Locally, it's not uncommon for landlords of C properties (like ours) to not raise rents on tenants during their occupancy, and to hike rates only upon turnover.  All our tenants are on month-to-month agreements.  

Thanks in advance!

I think even trying to mediate AT ALL sets a bad precedent and expectation that that is your role as the landlord.  

I had this same question last year and my mentor gave me some advice that I presume to pass on now.  Tell them "from jump" in a diplomatic but firm manner - they are all good people ("otherwise we wouldn't have selected you to live here"), and they need to be able to work out these issues amongst themselves.  "If I have to get involved, it wouldn't be good for anybody."  This last phrase, depending exactly how you deliver it, we convey all kinds of subcommunication to your tenants.

@Reid Schieler

Congrats on starting on your RE investing so young!  If we all knew then what we know now...*sigh*

This is NOT legal advice and is just my opinion based on my experience and research. I was told by my attorney and CPA to hold assets in an LLC for liability protection, so we formed a few LLCs with that intent.

Since "banks don't loan to LLCs, they loan to people," the plan was to transfer title after closing to one of the entities. The concern is always the "due on sale clause", but my attorney assured me this was a very low chance of happening on a performing loan unless the interest rates started to get ridiculously high and the lender could see a way to get a better return. Also, he said he could argue the bank doesn't have any damages, and since the LLC members were the same people as the owners (whom personally guaranteed the loan), it should not be a great concern. He also said if the bank still pushed the "due on sale" issue, we could simply move it back into our own personal names as a cure. In our market, I know of no one who has ever had an issue with the strategy, nor has our attorney. However...

...we chose ultimately to keep the properties in our own personal names. Aside from the possible legal fees associated with the above, as I shopped for insurance I found that the premiums were higher (sometimes TRIPLE!) for LLC-held properties, and that would eat in to our cash flow significantly.

After consulting several investors with large buy-and-hold portfolios in our REIA, we decided to get a large commercial umbrella policy at this point. In the future, we may revisit the LLC model.

Hope this helps!  Good luck!

I big "NO."  Remember, an empty unit is better than an occupied unit with a bad tenant.  Tenants are supposed to be on their "best behavior" during the application process, putting themselves in the most positive light possible.  It only gets worse from here.

It sounds a bit like you are trying to rationalize the situation in order to fill your vacancy.  Remember, you are running a business, and there are prospective tenants out there that deserve a clean, well-maintained place to live.  They're just not always the first person through your door at a showing.  

Thanks for the input, everyone.  I'm leaning towards Option #1 after I talk to the case manager and utilities company.