| This month, some of the properties I own will be | | | | eventually move out. For rent to increase a |
| going vacant. The process of selecting what rent | | | | percent or two each year when the lease renews |
| to ask for them reminded me of something I | | | | is not usually going to make someone move out |
| have been meaning to write about for a while | | | | UNLESS you have not been keeping the house in |
| now. Should you raise rents with large, infrequent | | | | great condition and have not been responsive to |
| hikes or gradual increases every year? | | | | your tenant to begin with. |
| Some landlords raise rents when their tenants | | | | Most tenants realize that things go up in price |
| move out and it is usually a big change. If your | | | | over time and that rents are going to go up. Most |
| tenant has been a "good tenant," then there is a | | | | tenants would rather have a small increase every |
| tendency to keep rents steady to avoid rocking | | | | year instead of being stuck with a 10% increase |
| the boat, lest your tenant move out. However, | | | | every couple of years. If you ease them into it, |
| this is a mistake. | | | | they can adjust their budgets less painfully. This |
| I think you should open a dialog with your tenants | | | | reminds me of the story about how to boil a |
| to let them know that taxes, insurance and other | | | | frog. Not that I have ever done this, but the |
| expenses have gone up, and while they have | | | | story goes, if you throw a frog into a pot of |
| been great tenants, you will need to raise the | | | | boiling water, it will jump out. If you throw a frog |
| rent... a little. Jeffrey Taylor, also known as Mr. | | | | into a pot of room temperature water and then |
| Landlord, talks about raising rents and offering the | | | | slowly bring it to a boil, that's the end of the frog. |
| tenants a chance to tell you if the increase was | | | | To summarize, small incremental changes in rents |
| too much and to suggest what they can afford. | | | | will help you keep pace with rents in your market |
| If that works for you, great. | | | | and will help you maintain positive cash flow even |
| For me, increasing rents slightly--what I call a | | | | as taxes, insurance and maintenance expenses |
| nuisance increase--will keep you from having to | | | | creep up over time - all while still keeping your |
| raise rents by huge amounts when your tenants | | | | tenants happy. |