How To Raise Rent And Keep Tenants Happy
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- Опубликовано: 27 май 2021
- Raising rent the wrong way can drive tenants out. The best way to raise rent on an existing tenant is GRADUALLY. Often it helps to provide a reasonable explanation for your tenant. A list of of other techniques are found in this video. Have you heard of another technique not mentioned? Leave a comment down below.
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In Canada it’s 90 day notice so 3 months. Any rent increase must be handed to the tenet by written document and explain the increase and date when the increase begins.
Rent increases are business period. You must increase rent every year because catching up is a bear. If you leave the "good" tenant alone you will lose them when you eventually get nearer to market. All the rent discounted can not be recovered and if rents decrease you do not want to be way below market going into a rental bear market. Give them the inside cabin on the mini cruise to nowhere; not the balcony suite or heaven forbid the suite.
I look at the payment history and condition of the property. If rent is paid on time and no damage to the property, I will often wait 2-3 years before an increase
You appear to value a quality tenant. That can work well. -Keith
I’ve seen rent prices with a 12 month discount, that way after a year rent will go up to the “normal” price. For example rent is 1,000 but for the first 12 month is discounted to 900. After that, it goes up automatically
Hi Luciana, Yes, that can be another wise technique! That way, the tenant feels like they're getting a "deal". Great perspective! -Keith
Interesting vid. As a tenant for many years, honesty is worth t's weight in gold. Receving market-based return on investment (as landlord) is necessary in most every situation (with a few caveats). Your method comes across as dishonest (making up a reason) / has a used-car salesman "vibe" lol. This would be a major turn-off to most anyone. Tenants understand that their landlord / property manager is managing an investment - just be straightforward with reasoning, and leave room for negotiation if it is warranted.
Also, "tenants aren't reading FOMC minutes, aware of inflation, etc." Quite the assumption lol. I was a tenant in a medium to medium-low income building (I'm in Canada) for many years. Me, and two other residents lived and breathed CPI/PPI release dates, FOMC announcements, volatility term structure, yield curves, Jackson Hole, etc. I would imagine just as many high income earners wouldn't understand the meaning of 'volatility term structure'. Took this one personally lol, as I live and breathe the markets (and have my own biases lol). Cheers
Hi there,
I think that your second paragraph brings up some good points.
Of course, I'm making some generalizations. But yes, tenants could be following the FOMC.
When this video published, inflation was low and relatively unnoticeable.
Since that time, inflation has been high and everyone has noticed.
I really appreciate both your viewership and your valid thoughts!
-Keith
I've been charging my long term tenant below market rate for quite a while as he treats the place well and is never late on rent. Now I read Los Angeles Country (where my rental is) is requiring me to pay potentially up to $20k in relocation assistance if I want to move back into my property (which I plan to do eventually). I've now increased the rent 23% to cover this, although it is still 10% below market value.
Thank you for the comment!
That's interesting. California is known for being a more "tenant-friendly" state than "landlord-friendly" state.
-Keith
Thanks for your advice looking to increase rents this year to match market rate.
Indeed! Like I explain early in the video, small increases help an investor's cash flow more than one realizes. You're appreciated! -Keith
I just closed on a fourplex and I need to raise rents. This video came at the perfect time!
Oh beautiful - congratulations! Few understand the outsized impact that a small rent increase can have on your cash flow. -Keith
@@GetRichEducation Yes indeed. I watched a lot of your videos and I was able to get a fourplex using my VA loan with 0 down. The seller paid closing costs. No money out of pocket at all!
@@BravoBline Fantastic! Since you have no money into the deal, if you achieve any return, it's an infinite ROI. Congrats! -Keith
“Although rent is a normal incident of the landlord-tenant relationship, the relationship may be created without any duty on the part of the tenant to pay for the possession and use of the premises if such is the express intent of the parties. Restatement (Second) of Property, Landlord & Tenant §12.1 (1977), comment b (“Effect if no rent reserved in the lease”). If no rent is reserved in the lease, the tenant is not under any obligation to pay rent.”
I have been a terrible LL - I have had the same tenents in the house now for 10 years. never raised the rate. 1265 per month. Going rate according to Rent cast is $2116. Going to elevate them to 1665 in monthly increments and then keep them at 1665 until their anniversary date. then they will be raised again...until i get to market rate.
Thanks for the comment.
Of course, the best way to get an increase to market rent is to find a new tenant.
It is difficult for an existing tenant to pay substantially more than they do now.
We both know that turnover is costly. But the landlord often has a choice between the two.
-Keith
I’m in same situation, 10 year tenant and kept the rent low at expense of my bills. I didn’t increase for the last two years but will be increasing 20% next year.
@@Ada-cm4qu You'll Pay The Price. I told my tenants that they need to leave. I gave them a 6 week notice....They stopped paying rent b/c they said they needed the $$$ because all the other rents in the area where at least $500 more per month. So i screwed myself in the rent and they screwed me going out the door. Don't forget to raise the security deposit.
Rents average 5% increase annually. Increasing by 4% you'll never catch up to market. Just raise to market. If they leave they leave. Will lose some money on turnover, but it will be less than taking years to get to market, or never getting there
When tenants move out is the best time to adjust rents back to market.
@@GetRichEducation Unless and until your state or local draconian rent control locks-in your rent at the current amount, regardless of turnover. CA is trying to implement this.
Agreed 100%
@@paulk9985 of course Ca a socialist state in the U S unbelievable ☹️☹️
I wanted to ask, If I put in brand new appliances,and maybe new carpet, will this raise the rent potential income? no matter the location of the property. thanks
No. It's location-dependent.
Upgrades have the best chance of raising the overall rent income if it's a lesser property in a better neighborhood.
Overimproving relative to the neighborhood quality would not help as much.
I raised my tenants rent from 600-700 in one swoop. They stayed because even so it was still below market.
Oh, that's substantial. Congratulations! -Keith
Even getting $700 a month, that sounds really low.Must be a really small rental.
The apartments I'm staying at want to raise my rent up $459 when my lease ends, I've been living there for 10 years, they did not offer any upgrades to my apartment.
Hi Phillip,
Though I don't know the percentage of the rent hike, that really sounds substantial.
Thank you for sharing this with us for perspective.
-Keith
You've been getting below-market rent for 10 years. Be happy and don't complain.
@@paulk9985 who are you to tell me something like that, if raises at work at are barely going up or not, that's a lot to pay all at once. Are you a landlord?
@@RaiderGannon12 LOL... that's real cute. Time to wake up and live in reality. It's only gonna get worse.
@@paulk9985 everyone has different life’s maybe moneys tight for that guy.
Hi can you me? I have a tent who pays 1,000.00 can i do $101.00 the pays 2,550.00 can i 200.00 and do have issue please help me
It's a doggy dog world. My rent goes up every year without a beat. Now I don't mind 3% or 5% but 10% 😩
Inflation hasn't been this real for 40 years.
Yogi Berra said, "A nickel ain't worth a dime anymore."
Rented for 5 years my landlord only increased my rent by 100 dollars in 5 years. First 3 years it’s stayed at 700 last 2 years it increased by 50 dollars to 800 my last year with them i paid 800. I know for a fact the place I lived in could easily have been rented for 900 to 1k so I was being charged below market value
@@ryans413 I think there is a difference between private and a corporate rentals
Tenants do need to pay high rents regardless, because there will be expensive wear and tear to the property that will cost a lot more than the deposit that they put in before they move in. I've rent to tenants that said only a family of 3 in the rental agreement and as time goes by there are really about 6 or 7 people living in there. Yes, I will raise rent a few times per year at least 10% each if the rent is too far below market value, not afraid of them moving out at all, and vacancies are extremely low at this time in my area.
With the rental market being so tight, this gives landlords leverage to request a higher security deposit. Thanks for the comment! -Keith
Raise the rent and you get a better quality tenant - how patronising. You will find that people really appreciate transparency. I’ve always wondered why tenants are forced to expose their finances and demonstrate their financial capacity to pay but owners do not. Tenants would make different choices if they knew the intention was to implement ongoing rent rises or to take the property back after 12 months. Moving is odious and extremely expensive.
Hi Melissa,
Thank you for the comment.
Income property owners are forced to expose their finances and demonstrate their financial capacity to pay to mortgage lenders.
We suggest that landlords let tenants know upfront that rent increases occur regularly to meet rising operating expenses like property tax, property insurance, and utilities.
You're right. Moving is expensive.
-Keith
Some who die deserved to live, while some who live deserve death. But who could give it to them?
There is a frozen war occurring whether you recognize it or not. There is a class conflict occurring whether you accept it or not.
The parasitic rentier class should be destroyed.
In war it is necessary to dehumanize the enemy, but you landlords do this to yourselves with no need for supplement, by truly believing in your entitlement to exploit your fellow man, your neighbors, the people in front of you at the market,
you prove you are mere vampires by your very behaviors, practices, and beliefs; to extract from your hosts in order to strengthen yourselves.
Landlords have fallen victim to a mass psychosis; the learned behavior of excused & sanctioned greed: the folly of neoliberal capitalism.
As your tenants expect no mercy from your parasitic extraction of their wealth, it is absurd to assume that you will receive mercy upon the arrival of some unknown catalyst.
Enjoy it while it lasts. Teach your culture to your trustfunded spawn. Pass your dungheep down to them with pride. And in the end there will always be more oppressed than privileged, more disenfranchised than included.
Why? Because this is the economic system that you choose to perpetuate, where a tiny minority arrogantly believes in themselves and their fragile state systems with greater faith than the Jonestown Kool-Aid drinkers.
You need to increase the dosage on your meds and decrease your pot ration.
raise rent and tenants will never be happy stop convincing landlord that raising rent is great for both parties let the middle-class flourish and stop being delusional
How about landlords try to get a job instead of burdening their tenants?
Remember what the bible says about greed?
I know about home ownership and it's not as expensive as rent so don't even come with that excuse.
In California, most new purchases are cash negative with rents which is why rents have gone up so much. Landlords need to raise rents so that they are not losing excessive money from the debt and sky high inflation. If they can’t even make it cash neutral, they will sell the house and tenants will need to be evicted.
Exactly! Pure greed.
@@rubytuesday863 Lol, unless your landlord is underwater because their mortgage is way higher than rents as in CA. Struggling here, so don’t pigeonhole and make judgements. We are struggling too and just trying to bring up rents so we can remain neutral - nothing to do with greed.
Totally understand your perspective but understand our situation. If I bought investment property 10 yrs ago, I wouldn’t raise rents and would be sitting pretty but I just bought new investment property and home prices have risen so much. So this is why new landlords struggle, we just don’t want to go into foreclosure in CA. Would you rather have us sell to new owners because unprofitable and then have to evict tenants? This is tough on both sides.
I’m a landlord. Still have a full time job, because I’ve invested in areas where at purchase, properties are negative cash flow for 3-5 years. Meaning, I’ve been subsidizing rentals for many years to be in the position to actually benefit (and maybe someday retire) from higher Fair-Market-Value rents later. If I and other investors hadn’t been there with money earlier, builders would have given up building here for lack of profitable building.