How to Raise Rents the RIGHT WAY | For Small Landlords
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- Опубликовано: 31 май 2024
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🎙️ Episode 336 - Ever heard of the BINDER strategy? This is how landlords can raise rents while maintaining positive tenant relationships, fostering transparency, collaboration, and mutual respect. Maximize your rental income without compromising tenant satisfaction!
📄 Show Notes: www.coachcarson.com/raiserents/
▶️ Next Video: Tenant Screening 101 For Landlords
• Tenant Screening 101 F...
🎬 Timestamps:
0:00 - Keep Good Tenants Happy
1:37 - Transparency with Your Tenants: The Binder Method
10:19 - How Dion's Approach Increased his Cash Flow
13:43 - Dion's Steps Towards Financial Freedom
15:02 - Getting Cash for the Next Deal
16:29 - From Being in Debt to Enjoying Early Retirement
19:54 - Where to Find Dion
20:16 - Tenant Screening 101 For Landlords
🔗 Connect with Dion:
• Dion's RUclips: / @diontalkfinancialfreedom
• Free course: How to Get Your Tenants to Ask for a Rent Raise: www.diontalk.com/optin1686773...
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Thank you so much for having me on. Was great to meet you. 😀
Good to meet you, too Dion! First of many conversations I hope.
When I rent a property, I tell the tenants that I do a 3 to 5 percent annual cost of living increase of rents based on the current market. This way they know ahead of time and no one is blind sided.
Smart.
single dad, three kids... hero. I love his personal original take on so many things. Godspeed to him and his kids.
Thank you so much.
One of my goals was to make sure I didn’t become a financial burden to my kids when I got too old to retire.
The BAH and Section 8 info being sent to tenants is golden I was sending zillows rent analysis with two options 12 or 24 months lease options will try this next time
Thank you. I hope the info helps. 😀
good luck! Thanks for watching.
Thank you for the great interview and information. My first implementable take away is learning section 8 amounts are published. Second, the binder method will be very helpful. I have bought a few properties with long term tenants (32 years for one) where the previous landlord never raised the rent. I want to keep the tenants as long as I can, but the rent is 1/3 of market value. The binder method will help me educate the tenant and get a fair market rate for the unit.
Glad it was helpful! Good luck and let me know how it goes, Dean!
Thank you.
This exact situation is how I like to buy properties. And why I came up with the binder.
Dion is the man! Love the binder strategy!
Thank you so much 😀
Wow some excellent advice! We have 2 rentals on the same property that we feel we need to raise the rent on, both are good tenants and don't want to lose them. We also have room to expand on the same property to ad a lot more units so trying to figure that out as well. Thanks for the great episode!
Awesome video! I might try this binder method, it has a more professional feel then how I have been doing it. I just purchased a duplex two months ago. Both side were paying $675, and market rent is around $1,200. In NYS if a tenant has lived there for more then 2 years you have to give them a 90 day notice to increase rent, and both tenant were there for multiple years. I wrote them a letter last week and explained that If they move out I will be updating the unit and renting it for $1,200. I told them I was setting rent at $1,000 if they want to stay, effective in 90 days, but if they signed my lease now then Rent would be $900 effective next month. Both tenants were a little bummed, but they both hopped on signing the lease now because they know its still a good deal. Now every year going forward they will get a little rent increase until closer to Market rent, and my deal is now cash flowing!
Congrats. The binder course is free. Let me know how it goes.
Smart !
Coach is the only real estate podcaster that interviews the operators that asks the tough questions 🙏👏🏿❤️👍🙌🏾🔥 we don’t want to look like greedy landlords 👍🙏💪🏾🙌🏾👏🏿❤️ even bigger pockets woke out the hard questions of increasing rents 💔
Coach is amazing.
I love the focus on slow and wise, with so many pushing fast with massive risk!
thanks! Just feels more comfortable to me (and apparently a lot of others too!)
Thank you. 😀
Want to thank Dion and Coach for sharing this. Great to see 2 teachers discuss. Hope to see more in the future! Amazing collab!
Thank you so much 😀
Thank you! Dion's great and I look forward to more collabs.
A lot of golden nuggets in this one. Thanks for sharing.
Thank you. I hope the info helps. 😀
Glad it was helpful! Thanks for watching.
Thank you both. As a former LEO and new to owning rentals this was spot on.
Thank you. 😀
I hope the info helps.
@@DionTalkFinancialFreedom it sure does. Still looking for another rental here in central Ohio. Tough market right now.
Glad it was helpful! thanks for watching.
I used the binder strategy a couple weeks ago on a legacy tenant. 32% increase.
wow. Thanks for sharing!
Thank you. Congrats. 😀
When our customers are part of the decision making process the ROI sure will be greater. A gem of an episode for any Mighty Landlord!!
Thank you so much. 😀
Gracias Roldan! Agree 100%
Gosh, this Dion fella is smart!
😀😂🤣
🙌😆
Great stuff! I can see how this "binder" strategy could also work in other capacities.
Thank you. Totally agree 😀
Very true! Transparency, collaboration, having difficult conversations. Great principles.
Very helpful Thank you for sharing
Thank you. 😀
Thank you. Very realistic!!
Thank you 😀
Great to see you together, you both have very similar approaches and are teachers at heart. I've been following both of you for quite a while; looking forward to more collaborations.
Awesome! Thank you for watching and commenting.
Thank you so much 😀
Time for Dion's "Why I'll never BRRR again!" video.
Hahahaha I need to make that.
Very informative. Thanks
Thank you. 😀
Awesome; Great suggestions.
Thank you. 😀
I put it in the lease that the rent will increase a minimum of 2.5% /yr and must be initialed. That way everyone knows in advance. It’s nobody’s business where the number comes from, that might raise too many questions or debate. I keep my properties in good repair. If you’re suddenly going up multiple hundreds of dollars, that’s a landlord that waited too long to raise rent.
I'm sure 2.5% is not a random number you chose. This number is also the FED inflation target they try to achieve per year. That's a good strategy on your end and one I've been using myself.
My tenants asked me for a 28% month increase last year. And are happy when I said yes.
Financial Freedom. Awesome video
Thank you. 😀
Great show guys. Also, love the BS (binder strategy)
Dion is the best at BS!
Thank you. 😀
Dionism for the win
yep! He owns this keyword:)
Haha. Thank you.
I can definitely vouch from the tennant end you're always thinking about being bought up and priced out. The largest issue is that home values go up and livable stock does not. At a medium income you can't beat the investors, you can't afford the flips, and the higher the montages get the more rents go up. Its a rock and a hard place situation. And half of it isn’t even in the landlord's control. Aging rentals need maintenance and repairs that are expensive. If cities would eat the cost to remove decaying and unlivable housing at least there'd be space to build more housing.
Thank you. I agree. Building more is the answer.
How do you navigate around the rent control cap (5% + CPI, 10% max)?
I would think you'd have to meet those laws. But @diontalkfinancialfreedom might be able to say more.
I know many people in California have to pay cash for keys to existing tenants. Or just use that challenge to negotiate with the existing owners.
Know the local laws.
Example: in CA. Single family homes or duplex in your name is not rent controlled. (In a LLC it is)
In Oregon a house hacked small multifamily is not rent controlled.
And if you have rent control I use the binder to explain why I’m doing the maximum allowable increase and keep tenants happy.
I will double check. I hope I'm wrong, but I believe duplexes are under rent control in CA. I read in the bill that if a parcel has more than one unit it's under rent control unless it's a duplex where the owner has lived in one side since the tenant moved in. I hope you're right, though, because I have 3 duplexes and would love to use your binder approach since 2 of my renters are at 50% of market rate. Great show! I always tell my tenants if they would only watch your show they wouldn't need me.
I don't know about going through all that with the tenant. If you just tell them your increase still puts them under market rent, they'll know because they have been looking. Tenants know what market rent it.
In ten years with 16 rentals I’ve had 5 tenant turnovers total.
I was raised by three kids. Working full time (with overtime)
A ten minute conversation to make thousands more a month was the best use of my time.
My rental will be paid off in Aug 2024 $2595 is plenty don't need to raise rent when they pay everything but Property taxes. FyI rent has never been a day late.
Until rent control hits you and insurance and taxes triple. (I have insurance that just went from 1300 a year up to 3500 a year as an example)
Lost a million by paying off a property? Also 200K income on 5 duplex to 4plexes? Unless I misunderstood something along the way. Loved the episode and curious about the binder strategy.
There are a few reasons why I make what I do.
First. I don’t recycle capital.
No heloc. No cash out refinance. No sale for 1031.
Second I invest in a HCOL area.
I retired in 2022. With 16 units on 7 properties.
Profit (not income. Actual profit after PITI, and setting aside for repairs and vacancy) was 204k.
Since then I added another duplex and increased cash flow.
A lot of people want to invest where properties are cheaper. Making a larger portfolio more likely if that person wants cash flow like mine.
So what’s the status quo ? Do we just have tenants expect an annual rent increase? Coach doesn’t dance around this sensitive environment? Coach is the 💣 bomb 🙏💪🏾👏🏿🙌🏾❤️🇺🇸coach prepares elementary investors of the hard lifestyle of being a landlord 🙏❤️🔥🇺🇸👏🏿💪🏾
Normally I do 5% every other year.
But I use the binder strategy once after closing on a new property.
I did it again in 2021 because of the pandemic.
And again in 2024 because rent control was threatened in my state. But usually after doing the strategy once I tell the tenants we will do 5% every other year.
How many persons have an EIN or LLC and active bank to receive funds
Let my long list of reasons for no llc. (For me)
❤
Thank you. 😀
Dont waste time negotiating rent. Huge waste of time and you will go back and forth forever . Tenants aren't stupid, they can do the comps. You can make justification for rnet increases based on current economic environment and if tuey dont agree they are free to move.
Enjoy tenant turnover then. The latest expense a landlord often has.
I agree that the strategy is fair to the tenants, however, leaving $200 a month on the table doesn’t make sense when it would cost less than $10,000 to turn the unit and get market rent.
It makes sense if you push for the extra 200 and the spiteful tenant trashes your place and disappears. Or calls your bluff and decides to not pay anything and force eviction. Like Dion said, this is about treating your tenant like a human and inviting them to participate in the process.
The trade off is the time of t takes to rehab the unit. The 8-10k spent and displacing a tenant.
I buy properties that don’t make sense at current rents. But do make sense but under area average rents.
How did you lose a million from paying off a house
I purchased a fourplex at the same time I was paying off the rental.
My down payment was 109k. I paid off 121k.
I could have purchased another fourplex.
My fourplex has gone up in value alive over a million.
I don’t regret paying off a rental. But I recognize gnome it was a mistake.
Helping to solve housing undersupply and raising rents annually are opposed to each other. You should know this so you don't confuse the viewers into thinking that you are actually helping the market. When in fact it is the opposite.
Way too much scamming in the housing market, many are unable to tell because these scams come with a smile plus a side of value. However the value offered is 'how to scam others better so that they agree to be scammed repeatedly on a monthly basis or better yet a yearly basis'
Lesson here is do not get into housing investments if you have to use a mortgage because a mortgage itself is a scam
A mortgage allows us to have levered appreciation. Levered depreciation. Asset protection. And financial freedom decades sooner than if we saved money to buy real estate.
This is possibly the worst advice I have ever heard.
I love Dions advice but Dion would be a master at selling cars !!!! NO JOKE !!!! LOL !!!! He's got some excellent angles. I know how lucky you feel when a landlord negotiates with you so he's spot on !!!!! One day I was lucky enough to have my car lot land lady that we rent from brought up a rent increase right in front of me and after 10 years renting from her to I said how about $20 more a month, she said $50 and I hesitated for a second and said sure that sounds fair. THAT measly $50 WAS A STEAL !!!! LOL !!!!!
Love it.
HAHA !!!! @@DionTalkFinancialFreedom
Don’t kill your equity with the BRRRR crap!
Agreed. This is why I’ve never done a heloc, cash 💵 it refinance or sold to 1031.
And each unit cash flows over $1k
Ah yes the age old trade of farming humans. I bet all these rentals are filled with “essential” workers.
I rent to 1/3 section 8. 1/3 military and 1:4 working or retired.
But feel free to have a negative outlook.
Deon isn’t black!??? What!??
Hahahahah. People are often shocked I’m a guy too. 🤣
Im always surprised that Landlords always say to raise the rent to increase cash-flow !!!!! LOL !!!!! Its fine to raise a little here and there but use the lack of cashflow to motivate you TO KILL THAT DAMN DEBT FOR THE DISEASE THAT IT IS !!!! LOL !!!! GET THEM THERE BANKSTERS OUTTA YOUR POCKETS !!!! LOL !!!!!
If it wasn’t for debt I would have to work.
Wish I had more.
Levered appreciation.
Levered depreciation.
Inflation based debt destruction.
The last thing I want is a paid off property.
I paid one off and it cost me over a million. (Paying off 131k instead of putting that 121k down on another fourplex.)
LOL !!!! Wouldn't you want a paid off property to get some REAL cashflow instead of tiny cashflow ???? @@DionTalkFinancialFreedom
@DionTalkFinancialFreedom I see for now it has worked for you but tell me, how has that worked out for the rest of the economy?
Coach is such a genuine and good hearted human being 🙏🙌🏾👏🏿💪🏾❤️🇺🇸🔥🪴
Totally agree