Question about rent increase (lease, tenant, inspections, landlords)

[farmermac]

I just signed a 3 year lease with solid tenants. They had excellent references, earn the income necessary and recommendations from past 7 years worth of landlords. I signed them for $1600 a month and as an incentive for the longer lease I did not put in a cost of living increase clause. My taxes will be fixed for next 2 years. What's other landlords take on it? My net cash flow is over $800 and I'm not generally greedy so I thought I'd be fine but another buddy of mine thought I was nuts for not putting even a token $20 increase.

[Squirl]

If you are comfortable with the amount, no biggie. A $20 increase is a mere $240 and that is such a nominal amount compared to costs involved with tenant turnover. I hope they are really great tenants, because 3 years is a long time. Do conduct semi-annual inspections do be sure the property is kept in acceptable shape.....we tend to get complacent when we have long term tenants.

[STT Resident]

Once the lease is signed you can't add anything else unless both parties agree so you're pretty much stuck. As Squirl says, it's not a big deal. However, I'm just curious as to why you'd offer a three year lease rather than a standard one year with the usual renewal options? I'm not sure what benefit is gained from a longer fixed term.

[MrRational]

Originally Posted by farmermac

I signed them for $1600 a month...

How does that number relate to the market as whole?

another buddy of mine thought I was nuts for not putting even a token $20 increase.

The issue is the longevity of occupancy that you should get. ($1600 /35 = $45)