When To Notify Tenent Of Rent Increase !!!
I have 2 rental homes that i bought earlier this year, fortunately i was able to rent them out to people i know. i gave them a great deal on rent on a 6 month lease, so i could get it rented quick but had the intention of raising the rent, unbeknowence to them, after the lease is up.
should i let them know now or wait until their lease is up, and see if they want to sign a new lease with the increase ?
thanks.
what does the lease say happens at the end of the lease?
Adjusts to market rate?
Same rent, but mo-mo?
what notice much be give (by state law or lease)
This is going to be mostly a state mandated law - check with your local laws and you will know when you will have to notify them. Make sure you notify them in writing... If you intend to keep them living there then inform them sooner rather than later - this is assuming the market rents are higher than what you are charging now!
Good Luck!
[addsig]
As Matty and cjmazur said, the answer to what you can do lies in your lease and the state law. In most cases, tenancies tend to become MTM once the lease expires. Likewise, in most cases, lanlords are required to give 30 days notice if increasing rent or not renewing a lease. Check the lease and the law and if everything becomes MTM upon expiration of the lease, then let your tenants know about their new rent 30 days before the lease expires.
Good luck.
Aside from state laws and your specific situation where your tenants know you are the owner, my general rule of thumb to keep tenants while increasing rents is to do it when they "expect" it. First of all, increases should be standard at all annual lease renewals if you use them. I recently acquired a 9-unit building where most were on MTM and rents hadn't been raised in two years. I didn't want to go in guns blazing with rent hikes immediately so I started doing this: A few months prior to the increase, I gave all my MTM tenants a signed certificate that states "Even though you are on a MTM rental agreement, this certificate guarantees your rent will not increase above (current amount) for a period of (3-6 months)." And some other feel good stuff. Guess what. At the end of the 4 months they were expecting an increase and I lost no tenants. It also helps to kind of start rumors of increases to get them to expect the increase. If the increase is huge simply because you are so far below market rents (say from $800 up to $1000) blame it on higher authority and split part of it with them. What I mean is renew the lease and give them a check for say 25%, or $600. This gets them in the mindset of paying the higher amount, yet keeps them from leaving. The lease also states the higher amount in case you sell the building. Both these ideas work better when you are the manager to the tenant and not someone they know. Happy Landlording!
Basicly you want to give tenants as much notice as possible so that if they do decide to move they can make other arrangements, as can you.
I'm not sure I'd be real happy with a guy who enticed me into moving into a unit with a teaser rate and then gave me a huge rent increase without warning.
I like datalynx2's comments. Let them know that their rent will not raise maybe 3 months after the lease is up. I'm always for a long term commitment from tenants. You might entice them to a 1 year or 6 month lease with no rent increase. I've found that good tenants that take care of your place are as good as gold. :-D
Desertrat,
In your original post, you said that you rented to people you know, and are now considering waiting until the end of the lease before informing them of a increase in rents. What is your motivation for waiting until the lease is up before informing them of the increase?
In Ohio, we have to give at least a 30 day notice when we want to raise our rents.
You really should know the laws in Nevada about landlording, please go to:
http://www.leg.state.nv.us/nrs/nrs-118a.html
How does this work in CA just curious, 30 day notice?
How is the rental market in LV versus Phoenix(not good from what I know)?[ Edited by jamesCA on Date 09/03/2004 ]