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I think I know how most will respond but I just wanted some advice...
I have been blessed with the best tenants. They have lived in my 2BR/1.5BA property for 5 years and have always paid their rent on time. However, rent in my area is drastically increasing.
I really don't want to increase the rent on this couple as 1. they are retired and 2. if I increase it too much then they could leave and I could get horrible tenants.
What would you do in my shoes? They pay $625/month (I just increased it from $600 last year) and there are hardly any rentals you can get in my area that cost that. Honestly, I could rent that unit for $750-$800.
Is there a reason for raising rent? Have your taxes gone up? Are utility costs included (and gone up)? If so - just talk to them.
If not... and you just raised your rent last year... I guess you can raise it another $25 this year, and then another $25 next year and so on, but make sure you're constantly at least $50 below the low end of the market rate. And maybe you can talk to your tenants, tell them how much you love them, but "your costs went up, and other rents going higher at much faster rate, and so on...". Be ready to cancel the increase immediately if your tenants indicate they won't accept it.
Is there a reason for raising rent? Have your taxes gone up? Are utility costs included (and gone up)? If so - just talk to them.
If not... and you just raised your rent last year... I guess you can raise it another $25 this year, and then another $25 next year and so on, but make sure you're constantly at least $50 below the low end of the market rate. And maybe you can talk to your tenants, tell them how much you love them, but "your costs went up, and other rents going higher at much faster rate, and so on...". Be ready to cancel the increase immediately if your tenants indicate they won't accept it.
There's not really a reason for increasing rent this year, but my taxes have gone up. Also, I provide lawn care and that gets expensive. I do have a 15 year mortgage, so their rent doesn't cover my entire mortgage. My thing is that they have a set income because of SS. I just don't know if I should play nice or think that this is a business and to not let my emotions get the best of me.
But what's the norm for increasing rent? If they live there another 5 years, there's noway I will keep the $625/month rent in place.
You are asking a national audience what the norm is for a very specific location [presumably South Carolina]. At the very least, annual increases should keep pace with the cost of living. At the opposite end of the spectrum will probably be average increases in NYC, LA, San Fran, Dallas, etc. There is a distinct benefit to having great tenants, but not at the cost of being unable to carry the property. Only you can answer that question.
I think it also depends on what the tenant pool is like in your area. If you are in a rural area or one where rentals are not in demand it may be difficult to attract good tenants.
Also you live in the adjoining unit? That would be a big factor in my decision. Perhaps there is some value to a quiet, older couple. Do you want a noisy family with kids who is willing to pay more? Or younger people who might have overnight guests, etc. Don't be penny wise and pound foolish.
You can use https://www.padmapper.com to see what comparable rents are in your area. You should raise the rent at minimum to cover your additional expenses such as property taxes, insurance, maintenance fee increases, etc.
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