Best Way To Raise Rents

As I mentioned in a previous post, I am preparing to buy my first investment property. The property has several tenents that are paying below market rent and whose rent will have to increase by $150 per month. Is there a "good" way to do this? Also, is there a way to raise the rent such that it will be effective when I take ownership, which should be in the next six to eight weeks? Thanks in advance.

Comments(11)

  • getgoing9th December, 2004

    If they are under lease you will be forced to honor them until they are up. I believe if they are not under lease you may be able to put it contingent in the contract for the rents to be raised. However it would not be a good idea to have 8 vacants on your first deal!

    Hope it works out,

    Scott

  • getgoing9th December, 2004

    Catman,

    Are you a member that gets PM's?? If so send me your e-mail adress.

    Scott

  • ray_higdon9th December, 2004

    You have to look at your state landlord laws, in Fl you need to give 30 day written notice (that is, if they are not on leases of course)
    [addsig]

  • cataman9th December, 2004

    Probably not as I don't know what a PM is.


    Quote:
    On 2004-12-09 07:45, getgoing wrote:
    Catman,

    Are you a member that gets PM's?? If so send me your e-mail adress.

    Scott
    :-?

  • alexlev9th December, 2004

    PM = Private message

    Click on "Profile" of the person you want to send the message to, and then look for the "Send a private message" icon next to the "Location" line in their profile.

  • cataman9th December, 2004

    All good input but should I notify my tenants in writing? Tell them personally? How much notice do you give?

  • getgoing9th December, 2004

    Check with the VT landlord laws on this, and I would be sure to get it in writing and certified.[ Edited by getgoing on Date 12/09/2004 ]

  • loon9th December, 2004

    Raising rents can be tough. It's easier if you do some work on the building, new carpet, roof, whatever, then you can explain that's why the rents are going up, create a sense of value added. "Property tax increases" is a nice catch-all reason too. It seems cold and cruel to me to simply raise rents due to market forces, but, esp. if you base your buy on market rents, you've gotta do it. If different tenants now pay different rents, you can explain that you have to "equalize," rents, perhaps to satisfy your bank, or partner, or someone else.

    May not apply to you, but if you can replace fridges, stoves, carpet, etc. before Jan 1, 2005 for the 50% initial write off (ask your acc't about this) you might have a plausible reason as well as a nice deduction payback.

    Since I'm not in a hot market, I find it easier--esp. with good tenants--to just raise rents as vacancies occur, when necessary. Probably better to raise rents soon, as people are less likely to want to look for a new place in Winter. I have one tenant who helps a lot with work on my buildings for dirt cheap wages, so I don't plan on raising his rent!

  • d_random20th January, 2005

    A landlord I used to rent from would send out a form letter to all her tenants (after their one-year lease had expired and it when to a half-year lease) every six months. It stated that their rent would NOT increase, and would they want to extend their lease another six months. Every other half-year lease form mailed out WOULD raise the rent by $50. Pretty sneaky, eh?

  • NewKidinTown221st January, 2005

    Why do the rents have to increase by $150? If only because the market rents are higher then you have time to let your periodic rent increases catch up to the market.

    If the reason for a large increase is to keep your property out of a negative cash flow, then a large increase will likely create vacancies and make your cash flow even more negative.

    If you want to keep your existing tenants, raise rents slowly. Advertise your rent at market levels whenever you are filling a vacancy.

  • curtbixel22nd January, 2005

    What steps have you taken to be sure that the current rents are really and truly $150 below market?

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