Rental Property Owners: What's a reasonable rent increase?
 

Rent right now is slightly undervalued at $1700 / month in the Curtis Park neighborhood in Sacramento 95818. Property is 1080 sq feet, 2br / 1ba, Jennair dishwasher, Jennair refrigerator, Jennair range, renovated hardwood floors. Brand new high end dual-pane windows. Rinnai tankless water heater. SureWest Fiber 25 megabit u/d internet. Washer & dryer. Pretty high end stuff. Perfectly manicured yards, etc. Single car garage. Really a beautiful home.

If we were to raise the rent, what's a fair increase? Lease is about to be renewed.

We don't want to piss off the tenant.

if its a good tenant, keep it the same..

annual 5% they won't notice

13.56 percent usually.

2k a month..if they don't like it ,hit the bricks

1080 sq feet for $2,000? Better be a gated community. I guess we have some pretty strict laws about rent increases in Ontario. The 2011 guideline is 0.7 per cent.

NYC rent stabilized annual increases are 4% on 1 year leases with the option of locking in year 2 at a 6% increase. Or at least that's what it was a few years ago

This must be a nice area... Apparently the Mayor of Sacramento and former NBA star Kevin Johnson lives there. Lots of State officials live there too...

So perhaps making it $1850 and see how the economy is next year.

But to put it into perspective...

My rent is $1600 and I have a huge backyard, 4 bedrooms (one is more of a play area for grandson), @ 1,400 sqft, 2 car garage, all new windows in a great neighborhood...

And mine is expensive compared to the shit I see in other stats... so want to move... once the last kid flies the coop we are out of here!

Finding $800 3bd +basement, 25,000 sqft lot, 1600sqft homes all over the place... Many in places where you can hunt right out your back door.

Ask a local Realtor.

Keep in mind, if the existing tenants move, you might be looking at a few months of vacancy. Plus, you'll have to freshen it up with new paint, and ready it by re-pinning the locks, etc..

If they are good tenants, do what you can do to keep them happy.

Xenigo...

Being you're in cali, you gotta follow all of the tenants rights rules.. This is direct from the consumer affairs division in cali... you should check that out..

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How much advance notice must the landlord give the tenant?

If you have a month-to-month (or shorter) periodic rental agreement, the landlord must give you at least 30 days’ advance written notice of a rent increase.

The landlord must give you at least 30 days’ advance notice if the rent increase is 10 percent (or less) of the rent charged at any time during the 12 months before the rent increase takes effect.
The landlord must give you at least 60 days’ advance notice if the rent increase is greater than 10 percent of the rent charged at any time during the 12 months before the rent increase takes effect.
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Given that fact there, you should take into account your raise in rent and the notice you must give the tenant before that increase..

Also.. the law adds 5 days for mailed notices of change of terms of tenancy. A mailed 30-day notice is effective 35 days later; a mailed 60-day notice is effective 65 days later.

Hope that helps in your decision..

Yeah, that's unnecessary in this situation. Tenant makes $110k, no kids, no husband, no boyfriend. There won't be crayon on the wall. I did a repair to the house a few months ago and the house is exactly as I left it. There are no paint issues.

The lease signs within 1 day of posting photos of it on CL.

This is not a "rental property", and this is not exactly a "rental tenant". It is a super high-end property that is being rented. It has every amenity, and every detail is immaculate.

Does the tenant offer to pay the rent in other meaningful ways.

At one time rent increases and other COL expenses were tied to our GDP but if you go that route today you?re talking a rent decrease. Try the CPI, I think it?s 3.5%

Out of question it should be the same. GAP pants have been in the same price range before and after recession, and they produce those pants. What's your production? Zero, I'd certainly move out off that crib if the owner was this bitchy as you are trying to be.

Fuck rent.. period

Pick up a copy of the Cali Landlord Tenant law.

If they're nice people and you want to keep them, 2.5 to 3% sounds absolutely reasonable for a yearly increase.

there are laws in many places that state you can only raise rent a certain % per year. you might want to look into that.

Agreed. My old business partner owned a lot of rentals, and he said that is the best policy.

You basically wait to raise the rent after a tenant moves out. Before I had bought my house, I lived in my old apartment the better part of 10 years. My rent was around $500.00 for a 2BR, 900 sq foot place. The neighbor had lived there 14+ years, and was still paying $450.00. It wasn't the best, but was in a nice area of the city. New tenants moving in were paying $700-750.00 which is more on par for this area by comparison.

leave it the same and keep the tenant. the economy is shitty right now, at 1700 a month they could easily just say fuck this i'll just go buy a $250k how as put 1500 a month in mortgage. now you're left trying to find a tenant that wants to pay 1700. i say leave it, do you really need the extra $300-500 a year?

10% per 3 years if your head is screwed on straight.

Yep, if you have a renter that is non destructive, pays their rent on time all the time, keep it the same. You run the risk of having them leave. Having to find a replacement is a lot of work, also, you could end up getting the renter from hell after that. For the slight increase in revenue its really not worth it.

As someone else mentioned, only raise it after they leave. Great tenants are hard to find.

what he said, long term renters is key when renting out a property
I learned that the hard way :thumbsup

persective: 4500sqf, 5 bedroom, 4.5 baths, pool, tennis court, 6 acers, 3 miles from town, $4300

i would say 5% is more than fair. My old apt would raise the rent every 7 months by 15%.. fuckers :disgust

depending on the area you live and the availability of apartments, its your call. When I was in LA, finding a nice apartment right near the beach was difficult. My rent started at $1650/mo and few years later I called it quits and moved back to PA when I got my notice that my rent was now over $3,000. This is for the SAME fucking apartment too, in about 3 or 4 years time.

They knew they had the tenants by the balls and it was sad. what are you going to do? move?? nope, just keep paying.

Thats why I <3 my fixed rate mortgage... payment stays the same while I will make more overtime instead of the other

If rents are going up then raise it. If the vacancy in your area is really high then site tight. I do not agree with the zero raise policy. If you miss out on 50-100 per month per year for 3 years then the cost of a turnover is pretty cheap.
Make sure to do it legal and also have a chat with the tenant about how this and that went up etc. You are sorry but this is why.

I used to rent an apartment from a lady a long time ago. Each year she would raise the rent by 50$. I was there for 4 years. when I moved out and the apartment was returned to her she gave me 150$ back plus the deposit.


Just go up 50.

Yep, and if the current amount is covering the payment to the bank plus.
You got lucky with such a good renter if you think the price is low, since it rented in one day!

If it is not Broke, don't fix it!

yup, you don't want to give them an excuse to leave... :thumbsup

IF they end up leaving, you are out of at least 2 grand... 1 month rent + have to repaint, clean up, etc the place... + that doesn't even count the time and drama involved in finding a new tenant...

I guess it depends on your risk tolerance + what the place is really worth, but I would probably take the easy drama free $1700/month...

unless you think you can get $2k easily for it from the next tenant, then if they leave, fuck 'em, and collect $2k/month from next tenant...

If I have really good tenants, I don't raise the rent as it doesn't seem worth it to risk them cancelling their lease sooner rather than later & getting tenants that aren't so great. So far it's paid off. At one rental property when the tenants did decide to go buy their own home, they found me new tenants that moved in the same day they moved out and they left the home so clean that the new tenants declined needing any cleaning services.

I think if I wasn't super accommodating with them, they would have just moved out and not referred anyone & I would have been out more like 1 month's rent and the time to find a new tenant.

Sounds like a rental property to me :1orglaugh Look we get it, you think it's worth more but in reality it sounds like you have the ideal tenant... If you have the tenant you say you do, keep her happy.

What he said. If you have a great tenant, keep them. You have also to follow local laws and what the market is doing. If rents are going down and you go up, she may go. Someone smart enough to make 110k probably wont pay an increase if it is substantial and if market is down, amenities or not.

You'd think there would be a direct correlation between intelligence and income, but I saw no sign of it while working in NYC real estate for a few years. If anything, I think those in her income bracket and age would be more likely to just pay the extra rent bc they are busy, work a shitload of hours, and don't want to deal with the hassle of finding a new place and then actually having to move.

Generally, as far as figuring out the perfect amount to charge for rent, the sweet spot is when both the tenant and owner feel as if they are getting just slightly fucked over.

This is correct. :2 cents:

Every month we lose right around $800.

A successful negotiation. So they say.

Four generations of rental real estate business in my family, and our rule has always been to never adjust rent on a tenant unless you just want the tenant to fuck off and die. A good tenant who pays the bills on time and doesn't fuck things up is worth more than you can get for almost any rent increase that is unlikely to drive the tenant away. Keep her around, and when she leaves adjust the rent to the current market. Obviously, if she stays there 15 years that's another story, but relatively few renters are that kind of long-term. When you're talking 1-5 year turnovers, happy tenants are the best kind.


Frank

Is this for the property you acquired less than 6 months ago? https://gfy.com/showthread.php?t=1012404 If so, that would mean the tenant has been in there less than 5 months which would be kinda quick to be asking for a rent increase.

Thanks Frank. Good advice. She's super reliable.

Interesting story on that property, actually. A few days before closing of escrow, we received word that the bank wouldn't fund the loan. Ironically it was a bank owned property, and they apparently didn't know this needed to be a "cash only" sale.

The situation was back around the burst of the RE bubble, the builder couldn't sell all the units. So they took possession of the remaining 50+% of them, and made them available as rentals. Well, I guess Fanny & Freddie have some stipulation in which they won't fund loans in buildings where there's not a high enough percentage of owner-occupied units.

But we weren't told this until the very last second. So we never ended up acquiring that unit.

Agreed, Franks advice is the best.

:2 cents:

I don't know how the rental market is where you are but i rented a 3+ bed last year for $4,900 and we got $6,000 for it this year :) A small bump of $50 wont bother her at all.

The Shemp hath spoken, and by far the best post in this thread.

It all depends on the location and the local market.

and less than one line, too ...:thumbsup

In a really bad economy with few jobs, a rent DECREASE may be appropriate.

$50...... :)