My tenant pays me 3295 a month rent. The lease is up for renewal. I am thinking of increasing the rent by 250 a month but my property manager is suggesting it's steep. The market is around 3600-3800 a month. I had spent around 3000 last year on repairs on the home. Shall I go ahead. If it matters, HOA pays for water / sewer / trash and solar covers almost 90% electric bills. So they don't pay almost anything for utilities (as I pay for HOA and solar) It's a townhouse. P.S There is a rent increase protection. I cannot increase by more than 10%. CPI in that area for last one year 5.1% Location Irvine
They indicated that they want to renew the lease. We haven't spoken about the Rate yet. I just checked the rental comps and they are around 3600. Rental prices have fallen in bay area but they have risen dramatically in other places.
rent price is going up though
No tenant will be happy with any rent increase. I personally would be livid for a rent increase higher than inflation. Be prepared for backlash or to lose the tenant. And that may suck if they are a really good tenant
They are good tenant. CPI is around 5.1% in that area. What do you think I should increase it by.
I would probably do 4% citing the number you just told me. Unless they faced some particularly hard times due to Covid. Then maybe 2% or less bc of the shitshow of a year we all just went through. I’m not as cold as some other people. And I think losing a good tenant could potentially cost more in the long run
What you spent on repairs doesn’t matter. I’d go up 3%. Almost any wherever else is the same except pop and mom landlords who like to lose out on money on the long run.
If they have been good tenants and you haven’t increased the rent for them last 2 years, you can increase it modestly stating the current market condition but keep it slightly below market rates to keep them in place and also win. If market is $3600-$3800 around, you can put a lease of $3500 saying you want a 18 month lease signup as you are giving below market rates and want to keep them for a longer commitment. Be a good landlord, win over your tenants and dont screw them over.
Yes. They are very good tenants. They've been there for only a year so far. This is their first renewal.
If the company you put for Irvine are very close to your unit description (similar make model yr etc), $3500 will be a good price point for 18 months.
Thanks. Good point.
I would go with $80 increase.
180;
You will lose your tenant to greed
Increase the rent by 500 and let the tenant know that immediately without apology or explanation. Let them throw a hissy fit and then you explain that it’s because of inflation adjusted market pricing and that you wish you could have avoided it given how nice tenants they have been. Give them a fixed deadline to accept said increase. Let them come back to you. They will most likely write a pissy email saying that they will be moving out because of the steep increase. That’s when you change your tone and say you are sorry to hear about their decision and as a last offer, because once again they have been such amazing tenants, you are willing to give them a 50% discount on the inflation adjusted market increase.
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Is there no rent increase protection? Don’t do 6% and lose a good tenant, just do 2-3%
There is a rent increase protection. I cannot increase by more than 10%. So if I don't increase this year I cannot do more than 10% next year.