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My tenants are lagging behind fair marker rent because rents have skyrocketed and I don't want to lose my good tenants. But they are getting their rents raised by the rate of inflation every year.
One thing to keep in mind is that both federal and local governments have been giving tenants a lot of free rent since covid started and there is a very real possibility of rent control being out into effect, either locally or nationally. It would be a sad thing to be stuck forever at half the market rate because you were too nice to raise rent on your tenants and then the government decided that whatever your rent is, it can't be raised.
My tenants are lagging behind fair marker rent because rents have skyrocketed and I don't want to lose my good tenants. But they are getting their rents raised by the rate of inflation every year.
One thing to keep in mind is that both federal and local governments have been giving tenants a lot of free rent since covid started and there is a very real possibility of rent control being out into effect, either locally or nationally. It would be a sad thing to be stuck forever at half the market rate because you were too nice to raise rent on your tenants and then the government decided that whatever your rent is, it can't be raised.
Valid points...and I might add, there is obviously a downside to having 10 or 20 year tenants, in case you haven't figured it out. You could also be holding down the local values..the investors and buyers want to see yields, and not stories about your personal relationship with lifelong charity cases.
Then you'll understand that the greatest asset besides the real estate is the responsible tenent.
I was a landlord and had some business ethics of not screwing people over. This included raising prices. My mortgage payment was consistent . It wasn't raised . Why fleece a good tenent. Simply because you can?
I'm in it 100% for the MONEY! We don't have to worry about responsible tenants as our vetting process ensures we have them from the start. Maybe in the world of traditional rentals turnover and responsible tenants are a concern, but when you're operating in the luxury high rise arena in the hottest markets, it's nothing personal against the tenants, it's just business.
I'm in it 100% for the MONEY! We don't have to worry about responsible tenants as our vetting process ensures we have them from the start. Maybe in the world of traditional rentals turnover and responsible tenants are a concern, but when you're operating in the luxury high rise arena in the hottest markets, it's nothing personal against the tenants, it's just business.
I do agree that the kind of rental (e.g. geared towards people of different income levels) can and does play a role, but even that's not foolproof and even wealthier tenants can cause headaches, trouble, and financial loss. This includes tenants who screened favorably. Still, I'd be more willing to have your attitude in such a luxury market than if I was renting to lower-income tenants, as the risk of you getting such a hellish tenant probably goes down by a lot in my experience.
And even in the hottest markets, certain increases can cause a tenant to pack up and leave for elsewhere, which would likely mean some period without getting rent as you get the apartment ready in between moves. That said, I'll reiterate that this may be a risk worth taking for many in such markets.
It's the federal government who has brought us this high inflation and some local governments have contributed to the housing shortage. It is not the responsibility of the landlord to rectify the government mishandling of the economy by taking money out of his own pocket in order to provide for lower income people.
The landlord is already paying some expenses for lower income people with his various income taxes and his local property taxes.
How many of those lower income workers are turning down pay raises because they don't want to be perceived as greedy? When everyone else is getting $15 an hour, you stay at $10 an hour? No? That rent is the landlord's paycheck, or at least what is left of it after all the expenses are paid.
My property taxes went up this year and the insurance went up about 30%, The repair costs have doubled. My handyman is not charging $80 an hour to do repairs. Sorry, tenants, you don't get to have all of that for free. Rent goes up to cover it.
One thing to keep in mind is that both federal and local governments have been giving tenants a lot of free rent since covid started and there is a very real possibility of rent control being out into effect, either locally or nationally. It would be a sad thing to be stuck forever at half the market rate because you were too nice to raise rent on your tenants and then the government decided that whatever your rent is, it can't be raised.
I am in California so there's already a state wide rent control in place. It limits an annual increase to 5% + CPI, so technically I could increase it by 12% this year. But the PM recommended a 5% increase and I agreed for several reasons that was brought up previously.
The most obvious one is if I have a tenant turnover I'd loss a month rent, that's enough to wipe out the additional increase plus more.
I am in California so there's already a state wide rent control in place. It limits an annual increase to 5% + CPI, so technically I could increase it by 12% this year. But the PM recommended a 5% increase and I agreed for several reasons that was brought up previously.
The most obvious one is if I have a tenant turnover I'd loss a month rent, that's enough to wipe out the additional increase plus more.
I am in California so there's already a state wide rent control in place. It limits an annual increase to 5% + CPI, so technically I could increase it by 12% this year. But the PM recommended a 5% increase and I agreed for several reasons that was brought up previously.
The most obvious one is if I have a tenant turnover I'd loss a month rent, that's enough to wipe out the additional increase plus more.
And a landlord there could rise rent 5% every year or they could leave the rent the same for 15 years in a row for a good tenant and then when he moves out, they could raise rent 5% and be 60% under fair market rent for the next tenant.
Many landlords leave rent at pretty much the rate rented for but then between tenants they raise rent to fair market rent and the new tenant starts from there. You can't do that in California and other states with rent control.
It is better in the long run to keep up with market rates as a yearly and gradual process when living in a rent control state. The worry here is that the entire country might be turned into a rent control state and that has to be watched out for.
(and yes, I am taking my chances and not raising my own good tenants to full market rate, but they are getting an increase at the official rate of inflation)
Thank you for the update and congratulation on your first post!
Properties that are exempt from rent control
In general, California rent increase law is aimed at multi-family apartment complexes and provides a number of exemptions, including the following:
SFRs (single family residences)
Condominiums
Owner-occupied duplexes
Mobile homes
School, college, and university dormitories
Hotels
Rental properties built within 15 years prior to the Act, including ADUs (accessory dwelling units)
Properties that are not owned by a corporation, REIT (real estate investment trust) or LLC where one member is a corporation
Property provided by non-profit organizations
Property that is subject to pre-existing local ordinances
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