Tip #8
Don’t Always Raise the Rent
Written on August 28, 2012 by Lucas Hall, updated on July 11, 2014
Raising the rent should be a standard practice when a lease is up for renewal with the current tenants or when you have a turnover of tenants.
I try to raise the rent 2-4%. However, it’s also a very influential bargaining chip, and should be played appropriately.
When you have a stellar tenant (one that pays on time and maintains your property), you should try your best to get him/her to renew the lease. A quality tenant is far greater than a 3% raise in rent. Eventually, they will inevitability leave, and you will always be able to raise the rent for the next tenant.
Topics: Landlord Tips, Rent & Expenses
18 Comments
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Omar
I agree 100%! In fact I usually never raise the rent on my tenants unless there is a major cost issue. The reality is that a change in tenant can easy cost you 2-3 months rent (on a good day) and 6 months if they decide to trash the place. As Lucas mentioned, most tenants will leave at sometime anyway so if you can keep them another year, its a huge savings.
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Lucas Hall
Thanks for your feedback Omar. I’m glad to see I’m not the only one who usually only raises the rent between tenants. I’ll reconsider my policy if I ever have a tenant stay longer than 2 or 3 years, but so far, a 3 year tenancy is my record.
Brian
I am new into this landlording adventure and have learned a lot just by reading. My day job is purchasing for a large railroad and know the value of “quantity breaks.” I offer a property for $975.00 p/month for a 1-year or $950.oo p/month for a 2- year lease. I signed my third tenant ever to a 5-year lease and put granite in for him. It imporves the value and rentability of my property and he’s there for 5-years at $950.00. I try to offer something that will stay with the unit and make it appraise for more. Just my thoughts.
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Lucas Hall
Brian! I love it!
The tenant feels like they are getting “granite countertops”, which they will indeed be able to enjoy – but in the end, it’s really a gift to yourself.
1. Your house will appraise higher – more equity
2. Your tenant will be happier and might stay longer
3. The next time you go to re-lease the unit, it will have nicer finishes and therefore attract a higher paying tenant.
Genius!-
Omar Garcia
Its like buying lingerie for your wife or girlfriend. They think it is for them, but it is really for you!
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