WatchI have a rental property where the tenants are paying around $3k per month in rent. Which was a bit high when they signed a year ago but now based on my research of going market rents it's actually a bit low! I'm fairly confident that I could increase the rent 10% and have it rented in a month.
They are good tenants
I'm not trying to be greedy just need to stabilize my cashflow.
It's a good area generally so finding good tenants is not a problem.
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47 male
Lafayette, CA
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I try to couple rent increases with property improvements.
The last one I did was a brand new patio in exchange for a $100 rent increase. The patio will increase the value of the home so it's a wash, and the tenant thinks he's getting value for paying more.
You don't even need to spend very much. If you've got an old worn out appliance, just send them a good news bad news letter:
Bad news: Market conditions mean I'm going to have to increase your rent.
Good news: I've decided to replace your yucky stove top and dishwasher.
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Oakland, CA
good idea making them feel like they're getting something in return.
But I'm tempted to just raise it. If they move out I can easily replace with someone new who feels like they're getting a good deal.
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Mountain View, CA
bmwman91's website
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In the end it is your property. If you are willing to risk losing known good tenants for some that might not be as good, then you can go for it. It would be nice to give them plenty of notice so they can find somewhere else if they don't like it...don't be a dick and give the minimum notice about the increase in hopes of keeping them trapped.
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Pleasanton, CA
This is why inverters should not be allowed to by homes. They will take, take, take, away money from families with children and grow fat and rich. Now the family has to pick up and find another home in the same school district or take three hundred dollars from their budget. This is a perfect example of wealth redistribution.
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47 male
Lafayette, CA
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Carolyn C says
I agree, but until people stop voting for Republicans, this is the way things are.
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Oakland, CA
and what about the $300 being taken from my budget each month?
like I said I'm not trying be greedy. It's just business.
at some point subsidizing someone else's lifestyle at your own expense goes beyond nice. It's just foolish.
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Pleasanton, CA
If investors where not allowed to purchase homes for profit, the price of single family homes would not be the height they are today. More people would be able to afford a home of their own. One of the first questions on a psychological evaluation is, ( have you moved in the last year?). The reason they ask this question is because moving is traumatic and an extremely stressful event. This type of stress is constantly imposed on the American people and their children. It also destabilizes our communities by not allowing time for children to develop attachments to others or feel a sense of security knowing at any moment their life can and will change. It's no wonder so many adults have grown disconnected from their environment and the people around.
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Pleasanton, CA
Toothfairy, you are not subsidizing your tenants lifestyle, your tenants are subsidizing your life style.
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Mountain View, CA
bmwman91's website
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iwog says
LOL wait a sec...what on earth does this even mean? You do know that McCain lost in 2008, right? Greed knows NO party lines; there are sad specimens that vote for both parties.
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bmwman91's website
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toothfairy says
Indeed, it IS a business. There's no arguing against that. While it is frustrating when a landlord raises the rent, "because the market is going up," and you know full well that the lower rent was still providing them profit, it is the way it is. GREED. Sadly, it is sort of the thing driving our entire economy. If the market will bear it, then you CAN crank the rents up. Since it is business, I guess that there is no real "right or wrong" to it. Anyone that rents and thinks that the landlord is supposed to be their friend is delusional.
Now, personally...
If $3k/month covers all expenses and you are still turning a profit, but you up the rent $300 because you can, you are a dick. Greed may grease the wheels of the economy, but it is still a wretched human trait.
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Pleasanton, CA
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Raise it 20%! Don't do any improvements, they shouldn't be renting anyway. If you got a look at their savings you'd be kicking yourself in the ass. They are living off of your equity and it needs to stop. Also, the higher rent will mean you get a better tenant than before. Studies have shown a high correlation between net worth and moral character.
Lastly, make sure you screw them on the deposit. They have socked away 10's of thousands living off your house, it only makes sense you get some of that back. Bastards. I wouldn't even tell them to leave. Just put down a "For Rent" sign in the front yard and let them figure it out. Be the landlord you know you can be.
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Seattle, WA
By all means raise the rent. I suppose the worst that will happen is that your current tennants will find another place.
Its very simple, if they feel you are charging to much, they will up and leave...for sure.
Then you have to go through the process of advertising it again, taking time off work to show people, and for what, and extra $3600 a year, which if you miss one months rent, you are already down for the year all for nothing.
If it was me, and as you say they are good tennants, i would leave well alone, and continue at the present rate.
But hey, as you say "Its just a business" which is what your tennants may say as they close the door on the way out.
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47 male
Lafayette, CA
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bmwman91 says
Landlords exist because of wealth disparity. If the gap between rich and poor wasn't so large, there would be fewer landlords owning fewer properties and real property prices would decline. Remember "It's a Wonderful Life"?
Republicans are the driving force behind wealth disparity with Democrats either being powerless to reverse it or complicit. Every tax cut just makes matters worse. The Ryan budget will make matters MUCH worse.
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Denver, CO
bmwman91 says
What about when rents go down, but your monthly nut is still $3k. Should the tenant still pay you the 3k for the same reason? What about when you lose a tenant and then can't rent the place for 3 months, who pays for the monthly expense during that period? What's in it for them?
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Oakland, CA
Andy S says
As a business you have to think long term. Yes my 1 year profit could be wiped out by the turnover but the higher rent over the next 5 years will more than make up for it.
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47 male
Lafayette, CA
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Carolyn C says
You're advocating against private ownership of property. This is also a very dangerous road that no one should recommend. Entire city blocks have been decimated by rent control in New York and San Francisco. During the last several years, it's usually only landlords who have been fixing properties while owners have been letting them rot.
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Mountain View, CA
bmwman91's website
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swebb says
If rents in the are going down...you also don't necessarily have to do anything, unless the tenants start bugging you. I never once got my rent reduced because the landlord offered. I had to ask & negotiate. Obviously, renting involves 2 parties with opposing incentives for action. You can let the rent "float" and risk tenant turnover, or you can keep it constant and that can buy you, the landlord, a bargaining chip. "So you want lower rent because the local market is a little lower now? Well, keep in mind that I didn't raise it when the market was more expensive."
Anyway, once you are covering all costs and pulling 5%+ profit on top of that, it seems sleazy to crank the rent up more. But, as stated before, it IS just business, and most business is sleazy & not very nice. It's just how it is, regardless of whether or not someone is a dick for participating.
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Mountain View, CA
bmwman91's website
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iwog says
Fair enough. It just irks me when it looks like someone is trying to say that one party is the reason for all wrongs. They both are, IMO. The whole, "look look they are so bad, elect US to save you" game is getting tired. There is only one team with two uniforms. One distracts while the other runs up behind the people & screws them. Every 3/4/6 years, they switch places, and people keep falling for it! Which party is "worse" is totally immaterial at this point...it is exactly the same as arguing that a rapist that uses a condom is better than one that doesn't. In the end, it is still a heinous act.
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Lafayette, CA
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bmwman91 says
The situation right now is actually black and white. Democrats want to let tax cuts on the richest Americans expire almost to a man. Republicans want to cut taxes for the rich down to zero almost to a man.
Regardless of what has come before, that's the reality today.
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Denver, CO
bmwman91 says
Imagine the tenant moves out. Now you have to put your $3k/month (costs to you) place on the market, but the market has dropped to $2,500 / month. Do you list it at $3k / month and hope the tenant will pay the above market rate because that's what it costs you? Or do you expect to be able to get market rate, even though it means you are losing money every month?
Another way to look at it is that the "how much it costs to maintain" line in the sand is arbitrary. I was renting a place that cost the landlord $1,000 more per month in PITI than I was paying rent (due to bad decisions on his part). Increasing the rent to that level would have sent me packing. But if the place was paid off, and his costs were only a few hundred per month in taxes...should he rent it to me for that?
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Carolyn, what's an "inverter"?
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swebb says
It ultimately depends on whether or not you want the tenant moving out. If you are signing a new lease with a new tenant, anything goes as far as I am concerned. I was focused on the "keeping the current tenant" side of the discussion. And, as long as toothfairy gives the current tenants ample notice of a rent increase so that they can decide what to do & find other accommodations, it's not a huge deal. If rents have gone up & the market is as hot as he is saying, he will have no issues finding someone else to pay a higher rent.
I see no issue with signing new tenants at the going market rate. Once a tenant is in, it is up to the landlord to determine whether to change the rent on them when the lease is renewed. If the landlord is going to raise the rent, then he owes it to the tenants to inform them in advance...lest he be branded a dick. I am sure that there is some minimum amount of time prescribed by law. Personally, anything less than 30 days is a dick-move.
Anyway, there's no point in arguing about whether or not I think that a landlord is a dick. Whether or not I think highly of them is largely immaterial in most cases. If it is just business, then how I feel about them as people shouldn't matter. In my experience, many of them are dicks, period. Despite that, it is still a better value than buying in the part of the BA that I am in, so I deal with it.
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What is a good tenant that pays their rent on time every month, is in a stable financial position and take care of your place worth?
Get a bad tenant in there, that can't pay their rent or just chooses not to and stays in the house for half a year for free, completely screwing you.
But that's just me. A good, longterm tenant has a $$ value from turnover and risk. Determine what that value is.
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Los Angeles, CA
You should charge whatever rent amount will make you the most, balancing the amount of effort you will expend and also balancing how long you will own the property.
The anti landlord posts are ridiculous. But I'd guess that's what realtor/troll OP was angling for.
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Oakland, CA
leo707's website
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toothfairy says
Yes, think long term. What about next year when market rates go up again (or down)? You may be setting yourself up for a high churn on tenants. In the end if you get one bad tenant years of rent increases could be wiped out. Even just getting an annoying tenant can make the rent increase seem not worth while.
If these are indeed good tenants it is well worth your while to try and keep them around. If you really want to raise the rent I would follow Iwog's good landlord/bad landlord advice.
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Mountain View, CA
bmwman91's website
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dodgerfanjohn says
lol
Is toothfairy a known / admitted realtor?
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Reston, VA
Maybe raise the rent 5% if you want to keep them but keep up with market rates.
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Oakland, CA
Thats true not sure why the post says Oakland but this rental is not in Oakland its in the heart of silicon valley and I havent had a problem finding good tenants.
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Oakland, CA
leo707's website
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toothfairy says
That is the location indicated by the zip code in your profile.
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Oakland, CA
ah I see. and for the record I'm not a realtor. If it were up to meeven more people would be renting so I guess you could say I'm the anti-realtor :)
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Seattle, WA
Why dont you post the general location of said property, we can all then comment of what we think you can expect to rent it for. Just give a brief description of property i.e 3 bedrooms, lot size, sq footage of residence etc, and the location. And I can promise you that within a week we could all find similar properties that rent for the same price or less.
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Oakland, CA
Ok 3br 1ba house within 2 blocks of downtown mnt. View. For $3000 or less.
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iwog
You're so right. San Francisco and New York are falling apart because of rent control. If they were more like Detroit, Cleveland, Indianapolis and Cincinnati, which have high rates of homeownership and no rent control, they'd be thriving metropolises -- the most beautiful in the land.
It's sort of like Europe, where Greece, Spain and Italy, with high rates of homeownership, are just blowing the doors off Germany, which has 41 percent homeownership, the lowest in Europe, and strong renter protections. God forbid we should be like Germany instead of Greece.
Or we could just expand rent stabilization, so renters had some protection against the government's despicable bailouts of property owners -- virtually none of whom came to own real estate privately.
Government has nanny-stated the putative owners of this so-called "private'' property. Only renters aren't too big to fail, or to resist the rape of their only real property -- their paychecks -- to subsidize and subsidize and subsidize property owners/debtors.
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Folks -- if this thread isn't the most compelling argument against the better-off-renting mindset, then truly nothing is.
Personally, I'm nearing the point I would rather reach up my asshole and pay for a place with part of my spleen than enrich my miserably cheap, soul-starved, balding, flab-gutted, penny-loafer-wearing, khaki short-sporting, bottom shelf cereal-eating, LIVE STRONG bracelet-wearing, Zig Ziglar/Warren Buffet-worshipping, penny chiseller of a landlord with any more of my precious lucre.
That, and engaging with any human being so stinking drunk with the fear of poverty every month is just...depressing.
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Baltimore, MD
I also think 10% all at once might be too much. Try something lower, like 5%, then reevaluate again next year.
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San Jose, CA
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Toothfairy,
Losing a good tenant over a couple hundred bucks is not worth it in my book. Instead of raising the rent $300, why don't you raise it $100 and call it a day?
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Denver, CO
Austinhousingbubble says
I moved to Denver 2.5 years ago and rented a SFH for $1500/month -- we figured it was $200-$300 under market when we rented. We got a year lease and once that expired the landlord only wanted to do month to month, so we knew the situation was tenuous (we also knew that the neighbor with the same landlord had been month to month for 10 years)
A few months back he emailed us to let us know that the rent was going to increase from 1500 to 1750, then to 2000, and then to 2250....all with improvements, and all within a 9 month time window.
In the end he gave us notice that he needed the place for himself, so we had to move. We had a few months, but given the rental market in the area, we jumped on the first thing we found (4 days later). The move totally sucked.
Was it stressful? Yes! The uncertainty, the move, the suddenness of it all...all stressors. Would I do it differently? Probably not. In the 30 months we lived there we probably saved on the order of $7500 in rent, which is about 1/2 year of 401K savings. Our savings over buying a comparable house is harder to estimate (and we wouldn't buy a comparable house anyway), but we came out way ahead financially. At the end of the day I feel like we did the right thing given our situation. We can't afford a house in this school district, my employment situation is tenuous (so buying a house didn't make sense), and pre-emptively moving to a more expensive place just to avoid some uncertainty didn't make sense to us.
So, no, this is not a convincing argument against renting for my situation and tolerance for uncertainty, etc. A convincing argument would be if rents went up, or if prices went down, making it a clear financial benefit to own.
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Denver, CO
Austinhousingbubble says
Wow. Deep breath.
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Seattle, WA
Does not seem to be a shortage of homes for rent in that area. There is a whole list of different properties for rent that were listed today.
http://sfbay.craigslist.org/pen/apa/3015976089.html
http://sfbay.craigslist.org/pen/apa/2991660230.html
http://sfbay.craigslist.org/pen/apa/3016039504.html
http://sfbay.craigslist.org/pen/apa/3015268102.html
http://sfbay.craigslist.org/pen/apa/3004160812.html
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Oakland, CA
Andy S says
Those aren't even in Mnt. View. East Palo Alto is low income + high crime...the other listings here are 2br condos?
If you do the search for 3br in Mnt. View there are 15 total for rent and Most are apartments.
http://sfbay.craigslist.org/search/apa/pen?query=&srchType=A&minAsk=&maxAsk=&bedrooms=3&nh=81