Have you raised rent in last 3 years? (landlords, location, afford)
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Also NEVER do such long contracts. You’re painting yourself in a corner If you want to you can do a month to month with a written guarantee of no rent raise for say 12 months. I would never tie myself down to that much timeline as two or three years. I would be willing to do a year or 6 months extensions with a promise to revisit at the maturity. I can easily extend every six months with no rent raise.
I did have to do a rent raise this year. If they had three years of no rent raise I would bring it closer to going rate. How good were they in paying and keeping the house clean. What kind of tenants are they.
They are good tenants. I only visit the property once a year for annual inspection and contract sign. Pay is deposited by 7th of every month, sometimes on the 7th but they never missed any payment. When I took them in, it was a big gamble because they had eviction in their record but that was from 2009 (heart of recession). But I went with my gut feeling and the fact that they have changed their life since then. Haven't been an issue.
It would depend on market... places like the SF Bay Area have had double digit housing cost increases... in my own city... added assessments plus mandatory garbage and the cost of water and sewer continue to increase a lot...
Then there is the cost of maintenance... both materials, labor and permits...
If rents are going up, the best way to deal with that is to give a small raise every year. That's much better than never raising rent for years until you realize that the rent is $500 below market and trying to get it raised closer to market with such a gap to overcome.
Sadly, you cannot expect any gratitude from your tenants for leaving rents low. All you will get is anger and entitlement when you try to get rents closer to market rate.
^^^my feeling exactly. I raise the rent every year.
So general consensus is to raise rent. I think next year if the tenant wants to stay I will raise a little. The reason I did not want to raise every year is because
1) I have a friend who is renting in high COL area and she expressed the stress she goes thru because their rent goes up every year. I want the tenant to feel at home and not be constantly reminded that they are renting. I wouldn't want to be stressed every year even if it is minimal. But her experience really put me off and made me not be like her landlord. Of course she lives in apartment and her rent went up $100/yr.
2) my tenant initially wanted a 3 year contract. We pushed for 1 year and then renewed it for 2 years because we wanted to make sure they were good tenant. So technically if we gave them 3 year contract to start off with then we would only have 1 renew chance. But that time difference is done so next year. I have to, market is too good and it will help pay off my house faster
You can do a multi-year contract and build in annual rent increases; I would NEVER do a 3-year lease and keep the rent the same for the 3 years. I hope you are earning at least a 7% annual profit on your property after all your expenses. Otherwise, sell it and buy a CD. You have too many funds tied into an non-liquid asset to take such an amateur approach to an investment property.
^^^my feeling exactly. I raise the rent every year.
I must be going against the grain because I have lowered rents for the best tenants back in the early 80's... rough neighborhood, record unemployment... etc... a vacant home was simply a target and insurance no good if vacant for an extended period...
When the economy tanked I had no problem offering a 2% discount for resigning a lease and it worked to keep my best tenants that had plenty of options.
The market determines rent collected... the landlord determines the rent requested unless rent control which is a real possibility in California Statewide in November...
I must be going against the grain because I have lowered rents for the best tenants back in the early 80's... rough neighborhood, record unemployment... etc... a vacant home was simply a target and insurance no good if vacant for an extended period...
When the economy tanked I had no problem offering a 2% discount for resigning a lease and it worked to keep my best tenants that had plenty of options.
The market determines rent collected... the landlord determines the rent requested unless rent control which is a real possibility in California Statewide in November...
Agree that market drives rent and if the market softened my rents (and property taxes) would also decline
I start my rent higher than other landlords in the area. But our houses are pristine, look new, so I know I can get the rent I want, then I leave the rent alone, most tenants stay 4 years. Then I raise the rent again to the highest amount. It usually balances out over the 4 years, where I am in the middle of the asking price. I don't want a new tenant every year it costs too much for painting, cleaning and getting it in ready condition. Even the best tenants can break or dent things on move out. So far this strategy has worked. I normally have tenants from 4-5 years. I just got a new tenant who says she wants to stay for as long as we let her. I may after the 2nd year raise 25.00 a month and every other year. We will see. There is one landlord in my neighborhood who raises rent every year 50.00-100 and every year the tenants move out.
She is a realtor so I guess she doesn't mind. But I pay a realtor so I don't have to deal with people applying, checking credit, its something I hate. I only accept people with credit scores over 700, no bankruptcies, foreclosures, etc. My realtor does the work I look at the reports then decide. She knows not to waste their time or money, if they have a lower credit score. It usually takes me a week 2 at the most to get a new tenant.
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