Posted by Ronald * Starr(in No CA) on July 18, 2003 at 20:07:28:
Rich-----------
Read my reply to Wilkinson down below.
Good InvestingRon Starr***
Why do I feel bad to raise my rents? - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on July 18, 2003 at 02:26:35:
My propane company did not feel badly about charging me $100 to move a propane tank.
The county did not feel badly about increasing the property taxes.
So why do I feel badly about increasing my rents? I have just finished spending $43,000 rehabbing 2 rentals and buying 2 older mobile homes and fixing them up. Yet I feel badly raising rents more than $5-10. I know the tenants are getting a good deal on the rents.
I think I need to adopt a regular program of raising the rents every year. Do other landlords raise the rents on a regular basis?
My house payment went up every year nt - Posted by philip
Posted by philip on July 18, 2003 at 14:46:54:
nt
Re: Why do I feel bad to raise my rents? - Posted by Dee-Texas
Posted by Dee-Texas on July 18, 2003 at 13:57:13:
In my rent-to-own contract AND in my rental contract I state that at each anniversary date the rent will increase $25.00 per month for the extension of the next lease.
I explain that with taxes and insurance I can’t afford to not go up…so at the begining of the contract they KNOW in advance that the next year will bring a $25.00 a month rent increase…
Great $uccess,
Dee-Texas
Re: Why do I feel bad to raise my rents? - Posted by Mark
Posted by Mark on July 18, 2003 at 11:37:04:
I wouldn’t feel bad about it. I just can’t get the math to work. I assume at least a 1-month vacancy if the tenant leaves. I can’t justify losing 1 month’s rent, say $800, to try to gain $15 more per month.
You will get over it, eventually. - Posted by GL - ON
Posted by GL - ON on July 18, 2003 at 10:22:48:
Eventually after you have gone several years with no increases you will find you are not collecting enough rent to cover your expenses. If you keep on, you will have to deny yourself and your family in order to subsidise your tenants. At some point you will have to raise the rent or go bankrupt.
At this point you will look around and find that your tenants are getting a terriffic bargain, and have been for years, compared to the going rate everyone else charges.
So you will raise the rent about half what you should.
Some of your tenants will give you h#ll and call you every name in the book, even though you have been giving them a break for years and still are, and can’t do any more for them without going bankrupt.
This will make you mad. You will think “why was I so worried about doing favors for these ingrates?”.
Then you will realise to your sorrow that you are running a business and your tenants regard you as a business. And that you have been doing things wrong because of some funny idea you had in your head.
Eventually you will learn that your rentals are a business and a business should be run in a businesslike way.
You will monitor the rents charged in newspaper ads and by checking with other landlords. Every year you will raise the rent even if it is only $5 or $10. That way your tenants will take it as a matter of course and never complain. They will be happier than if you never raised the rent for years then had to have a big increase to avoid bankruptcy.
So the lesson is, business is business and you are entitled to the same rent as everyone else is getting. In a free market you can’t charge more but there is no reason to charge less.
Re: Why do I feel bad to raise my rents? - Posted by Anne_ND
Posted by Anne_ND on July 18, 2003 at 10:01:13:
Hi Gavin,
Conflict avoidance is human nature. With practice you’ll see that raising rents doesn’t need to be about conflict. I found it very hard when I started out too- but you have to treat this as a business and watch the bottom line.
We raise rents regularly every year. One exception: I have a rural house that has a good tenant who has lots of cats. They will never be able to move unless the cats disappear. The tenant always pays on time, he also pays for costs that I would normally take care of such as furnace repairs, etc. I charge him a very high rental rate- about $100/month higher than I’d get from anyone else. He’s coming up on his 2nd anniversary and I probably will not raise his rent as he’s already paying so much above market rate.
Good luck,
ANne
Vacancy Rate - Posted by Dave in NOLA
Posted by Dave in NOLA on July 18, 2003 at 08:41:41:
The national turnover rate on rentals is around 43%, meaning that the average tenant stays in one dwelling for 26 months.
Of course its a judgement call, but strictly by the numbers…
If your properties aren’t turning over every 26 months, you aren’t charging enough rent. The key is to continue raising rents till you are turning over every 26 months (or 20 months, or 13 months, or whatever duration you personally can live with). Obviously, the higher turnover rate the more money you are putting in your pocket each month with higher rents.
The national average vacancy duration is 23 days. That is the amount of time the average property is vacant during clean-up and re-leasing to a new tenant. A lot shorter than most people think. The question becomes can you afford 23 days of vacancy every 26 months to know that you are charging the highest rent your property will allow within those parameters? I know I can!
In case anyone is wondering, the figures come from the latest edition of Landlording by Leigh Robinson.
Good Luck,
Dave
Re: Why do I feel bad to raise my rents? - Posted by RichV(FL)
Posted by RichV(FL) on July 18, 2003 at 08:09:26:
Gavin,
For me it depends on the tenant. Some tenants never cost me a dime, and some call me about every little thing.
I have found that a 10-15 dollar raise will keep them in place. I’d say over $25 they may leave.
Keep your rents at or slightly under market and you should be able to keep your good tenants in place.
Just some thoughts,
RichV(FL)
Re: Why do I feel bad to raise my rents? - Posted by KK
Posted by KK on July 18, 2003 at 08:02:01:
I felt the same way. I have tenants that are great and I didn’t want to lose them, but I raised their rent $60/month. They didn’t bat an eye! I find out after the fact, they were thankful I was renewing, because they fell in love with the area.
Because you are afraid. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 18, 2003 at 06:58:38:
Gavin Wilkinson-----------------
Nice to meet you.
You probably are afraid that they will move out.
There was a study done that showed that 93% of renters stayed after a rent raise, as long as the new rent was at market rate.
Does that make you feel better?
Good Investing*******Ron Starr***********
Re: Why do I feel bad to raise my rents? - Posted by Larry
Posted by Larry on July 18, 2003 at 06:49:01:
Depending upon local economic conditions, I raise my rents annually. There’s an excellent chapter in The Florida Landlord’s Manual that covers exactly how, why and when to raise rents to include an excellent rental rate increase letter.
Re: Why do I feel bad to raise my rents? - Posted by BrokerScott (Mich)
Posted by BrokerScott (Mich) on July 18, 2003 at 05:15:00:
It’s a judgement call, the most important criteria for me is: Do they deserve it? I’ve had some tenants for going on 5 years and each year I comtemplate whether it is worth another $20 a month or so to risk losing the valued ones who constantly pay on time and never call. Conversely I have no qualms about giving a “pain” an increase every year. Also my leases are somewhat self policing, as I have both an early discount (on or before the 1st with no calls for service) plus a late fee after the 10th. The combined effect is that the constantly late ones usually leave (volentarly or not)after a short while. Best, Scott
Re: Why do I feel bad to raise my rents? - Posted by Rich
Posted by Rich on July 18, 2003 at 17:53:57:
Mark,
Depending on what your rates are compared to other rentals in the immediate area, do you really think most tenants are going to move simply because their rent increased by $15? If you are competitively priced or lower than your competition, they would soon realize they are getting a fair deal and stay put. It would cost them far more to move, not to mention the hassel.
Just my thoughts.
Take care,
Rich
Well said… - Posted by Ben (NJ)
Posted by Ben (NJ) on July 18, 2003 at 10:34:02:
eventually you will tire of tenants who consider their money as sacred as an Indian cow, but accord no respect whatsoever to YOUR property, efforts, money or time.