Tenant Question

Here is some background;

We have a tenant and she has rented from us for 3.5 years. She is a great tenant, pays on time and is clean and quiet.

We found her from a broker and at the time I felt the broker listed our apt at a lower price then what it should have been (market price), but I went along with it.

It is in an awesome area, super desirable, two bedrooms (she lives alone), and you cannot find anything similar without paying $200-$500 more.

DH and I used to live downstairs (2 family house) until we moved, that apt is only a one bedroom, but a bit bigger, nicer, with a w/d. We get $550 more a month from that new tenant.

Both tenants pay their own utilities.

So now the question. We haven't raised her rent one time in 3.5 years, this Febuary we found out our taxes and home owners went up $200 more a month, so it is harder for us especially since we are in a new house with a new mortgage.

I would like to raise her rent, but my questions are; Is this fair? How much do I raise it by? If I raise by $100 she is still underpaying and getting an awesome deal (I wouldn't raise it more than $100). Do I mention it's because of taxes going up? And finally how long of a notice do I give her, 30 days? 60 days?

If she chose to leave over the rent increase I honestly would probably be happy in a way because I know we can get a way higher rent by a new person.

fyi - when we posted our other apt we had 4 full price offers in 3 days. One person didn't even come see it, it just happens to be a desirable area and the house is beautiful on the outside and inside.

What should I do? Thanks and sorry soooo long! DH is scared she'll leave, but I feel we need the extra money.

Re: Tenant Question

I would raise the rent especially since you have not raised it all. I think a raise of 3-5% is acceptable.

Remember even if you are in a desirable area you can get stuck with a horrible tenant and an easy tenant is always worth the discount for piece of mind. So be gentle with the increase.

Good Luck it is tough being a landlord

Re: Tenant Question

Re: Tenant Question

I would raise it. I rent and my landlady raised it after being there for 2 years. It was raised by $100. She's still getting a deal!

Re: Tenant Question

It's acceptable to raise the rent. If she has been a good tenant for you then take that into consideration.

And give her plenty of notice. I would do 60 days to be on the safe side.

Re: Tenant Question

i would raise it, chances are she knows shes getting a great deal and isnt going to leave. and like you said, if she does you can find someone who will pay more.

Re: Tenant Question

Is it appropriate to mention that "due to a tax increase" or no?

Re: Tenant Question

Do you have a lease? Usually its a 2yr lease with the rent locked in for those 2 yrs. After that time is up you can raise it for whatever you feel fit & lock in for another 2yrs .. so on and so on (this was what I did when I rented).
If no lease I would give her 2 mnts notice that you will be raising the rent $*** for next year (so when next yr comes you can raise if need be). You might want to have her sign a lease so your both on same page and avoid a dispute later on.
She sounds a lilke a good tenant and they are hard to come by but you also shl'dnt feel bad raising rent.

Re: Tenant Question

Re: Tenant Question

I would raise it $100 and mention that your taxes went up. I don't really think you have to give an explanation but if you want to, then that is fine. And I would give 30 days notice.

Re: Tenant Question

I would raise it $100 like you said you can always get more for the apt. The only thing is finding a good tenant.

Re: Tenant Question

I told my tenants that the taxes had gone up, and by how much (it was over $2500).

I explained that I'd raise the rent by $100 this year, and gave them 60 days notice. At the same time, I told them that the rent would again increase by another $100 in 12 months.

Gave them time to plan, they understood the situation, and they appreciated my transparency. They stayed - and it's been 5 years since then and I've subsequently raised it again.

Re: Tenant Question

Re: Tenant Question

1) definately metnion that you've tried to hold the rent stable for the past 3.5 years since she is such a good tenant.

2) Mention that the taxes went up, but if you tie your only increase too much to 1 thing happening, are you ever going to be able to raise again? Maybe something like "taxes and insurance have been going up gradually and I haven't beeen passing on the additonal expense but this year it happened even moreso, we're going to raise the rent to X.

3) Don't ever wait 3.5 years to have a rent increase unless that rental market really sucks. The incerase you're going to get at that point won't be enough for you to cover yourself. You want to raise it 400, but know that there is no way you can. if you raised it 25-100 each year depending on how much below market, she wouldn't have felt it sting much. or for that matter raise every other year 75-100.

costs go up gradually and eventually when you figure out that you are getting a bad deal b/c you're undercharging her, you can't fix it without dumping your great tenant to get a real market value adjustment.

Message edited 3/29/2012 8:21:49 PM.

Re: Tenant Question

I don't know your financial situation but honestly in this situation I would just let her be, especially since you have more than one tenant.

When she decides to move, then raise the rent appropriately for the new tenant.

A good paying, no problems tenant is worth a discount (as PP said). And unless you have a legal two family with the proper permits filed with the town, you want to stay under the radar as much as you can. All it takes is one tenant (or neighbor) to make a phone call and that could lead to big issues.

Re: Tenant Question

Re: Tenant Question