Good on you. Especially in light of their situation. When we rented our house, we built in raises to cover the increase taxes and insurance. God Bless you as you consider what is right.
I wouldn't suddenly separate out one item, like the alarm system. If they haven't had a rent increase in 3 years and there's nothing comparable at that price, then they won't be surprised by an increase. If, as you say, "The young husbands are well paid professionals," then they have been getting raises and there's no reason you should be subsidizing them.
StanleyandIris wrote: I guess I should have raised the rent over the last 3 years, but with everything that has happened since Katrina, I wanted to give everyone some time to recoup. Believe me, there is nothing to rent around here for $1,200 a month except a 2 BR apartment in a huge complex. Not a great place for kids, no fenced yards or sidewalks and too much traffic for bikes.
I am going to ask them to pay for the alarm service and forget about a rent increase for now. I do have other income and a very soft spot for young couples trying to raise little kids and I love the fact that they are stay at home moms. I want happy little families in my houses.
Thanks for the perspective.
I think that is a good decision for this year. Our property taxes skyrocketed a couple years ago and since we had not raised rates for a long time, we found ourselves covering more of the costs ourselves. We raised rates that year $25-30 and quit paying electric on one we had been paying. No one complained. It didn't cover our increased expenses, but it was as much our fault for not anticipating that big increase. As it happened, this year the taxes have gone down because the property around here is more depressed and sales are down. It is working out for us just to stay where we are for now. Next year we will probably have another slight increase.
We love our tenants and they love us. We had windows replaced last week in one and Libby, the elderly lady who lives on the one side, fed the workers lunch and later gave them cookies. She did the same a couple days later when the A/C guy was there replacing the unit next door. She's like that with everyone!
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Being in the apartment business, I would recommend a $50 increase along with a detailed explanation of why. {Yes, you should have been increasing rent each year.} We do a $15-$20 increase at the end of each lease. It is not enough to make the resident move, but it does help keep up with the increases we "normally" see. {FYI, we are seeing increases far above what we normally see!}
If you really want the alarm to be a part of their obligation, just keep it in the monthly rent. If you break it out and allow them to pay for it, you give them an opportunity to cancel the alarm.
In the current market, most people are looking for any reason to reduce expenses.
WE do a yearly increase just to cover the rate of inflation, our rent is fairly close to everybody elses in the comm that we have rental property. Eventually you will need a rate increase just to break even and it will be a rather big jump so I would do a yearly increase but keep low. ALthough it does make a difference if you own or have a mortage on the properties.
MikeSmith wrote: Being in the apartment business, I would recommend a $50 increase along with a detailed explanation of why. {Yes, you should have been increasing rent each year.} We do a $15-$20 increase at the end of each lease. It is not enough to make the resident move, but it does help keep up with the increases we "normally" see. {FYI, we are seeing increases far above what we normally see!}
If you really want the alarm to be a part of their obligation, just keep it in the monthly rent. If you break it out and allow them to pay for it, you give them an opportunity to cancel the alarm.
In the current market, most people are looking for any reason to reduce expenses.
This is the best advice I've read on how to keep a tenant, and keep up with necessary price increases. Unfortunately, we did not increase rents over time on a schedule, and we did not offer leases. We did not want to be saddled with a tenant we didn't want, so we always gave ourselves the option to increase their rent enough on 30 days notice to get them to move on their own. The $15 to $20 dollar increase a year, regardless, is just plain smart. One tenant was with us for 28 years until we sold the units.
I had exact situation in my rental. I always keep my rent below the market, since I figured out that changing tenant every year with 2 months vacancy in the process cost much more, than $200 lower monthly rent.
But after few years my rent become $500 below the market. I talked to tenants and we agree to rise $200 over 6-month period.
Serious talk goes long way and if they can't afford it, I am still $300 below the market. What can I say?
Pessimist sees dark tunnel, optimist sees a light at the end, realist sees lights of coming train.Engineer sees 3 idiots on the tracks.
I think that you should tell all your tenants that one can expect a rent increase of not more than XXX dollars a month for each year. You can add that the rent increase may be less than that depending on expenses but as a tenant you should plan to see your monthly rent go up xxx dollars at the expiration of the lease. That way there are no unpleasantries at lease renewal time. And yes an all at once $200 a month increase is WAY out of line.
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