OWNER OCCUPIED (by TERRY [ID]) Jun 13, 2019 12:47 PM|
OWNER OCCUPIED (by Dave [MO]) Jun 13, 2019 12:52 PM
OWNER OCCUPIED (by S i d [MO]) Jun 13, 2019 12:52 PM
OWNER OCCUPIED (by razorback_tim [AR]) Jun 13, 2019 12:52 PM
OWNER OCCUPIED (by WMH [NC]) Jun 13, 2019 12:53 PM
OWNER OCCUPIED (by AllyM [NJ]) Jun 13, 2019 1:14 PM
OWNER OCCUPIED (by TERRY [ID]) Jun 13, 2019 1:41 PM
OWNER OCCUPIED (by Robert J [CA]) Jun 13, 2019 3:26 PM
OWNER OCCUPIED (by Nellie [ME]) Jun 13, 2019 6:19 PM
OWNER OCCUPIED (by JKJ [MA]) Jun 13, 2019 6:29 PM
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OWNER OCCUPIED (by TERRY [ID]) Posted on: Jun 13, 2019 12:47 PM
I own a 4plex and have moved into one of the units, yes I receive 1/4 or the homeowner's exemption; I also receive another 1/4 for a family member living in another unit.
I'm trying to figure out if I should kick up the rents for the tenants to cover my rent, or if I should kick in a portion which I already do...actually it turns out to be a little more than $500. I calculated all building annual expenses, divided by three and all 3 tenants should have a substantial rent increase in order for me to live rent-free.
If I divide by 4, I should kick in $500+ (I already do this) a month and not increase rents... for now. Although, we just received our property assessments and rents will definitely be going up January 1, 2020.
My son is getting into real estate investing and getting into my head that I should be making a profit of so much per month, but I'm living in this place for basically $500 a month. I'm not getting rich on this investment...should I be making more money on this property or just be happy being in the "black" each month. Actually, I'm pretty happy, but a little more cash would be nice too!!
What are your thoughts?
OWNER OCCUPIED (by Dave [MO]) Posted on: Jun 13, 2019 12:52 PM
Increase the rents to market rate. Cash flow is king! --108.243.xxx.xx
OWNER OCCUPIED (by S i d [MO]) Posted on: Jun 13, 2019 12:52 PM
Setting rents based on your costs sometimes works, but depending on other factors you could be either too low or too high.
I have saved rental property searches on Zillow and Trulia for the types of properties we own, so I get a daily listing of what it out there on the market as my competition. Based on those, I make adjustments for location and amenities as required and set my rents.
Market research is a must. --173.20.xxx.xxx
OWNER OCCUPIED (by razorback_tim [AR]) Posted on: Jun 13, 2019 12:52 PM
Rent the other units at market value. If that allows you to live there for free, great. If not you can't force it. Tenants won't pay above market rents just to help you.
OWNER OCCUPIED (by WMH [NC]) Posted on: Jun 13, 2019 12:53 PM
Rents are not determine by your expenses but by market rate. Are your tenants paying that? --50.82.xxx.xx
OWNER OCCUPIED (by AllyM [NJ]) Posted on: Jun 13, 2019 1:14 PM
Be glad you only have to pay $500 a month. Go carefully. You could lose the three tenants easily. If they all are already kind of unhappy, that could push them out the door. I have 25 years experience. Your son has only read a book. Increase no more that 2%. --173.61.xxx.xx
OWNER OCCUPIED (by TERRY [ID]) Posted on: Jun 13, 2019 1:41 PM
Thank you for your comments. I've owned this property since 2005 and I just moved in here 2015 and I have been managing this property and another by myself since 2005.
For many years, I didn't increase rents for existing tenants--there were three total. After two moved out, I increased rents up to market value for the new tenants. I have one tenant that has been here for 14 years...In the last few years I have been increasing is rent $50/year (mainly because his brother moved in) and because their rent has been ridiculously low; I'm trying to get his rent up to market value.
Thank you for the education on trying to increase rents per market value, not expenses. I imagine rent increases should be evaluated by a combo of market value, expenses, and each tenant situation, right?
Ally M (NJ) Yes, I agree with you.
OWNER OCCUPIED (by Robert J [CA]) Posted on: Jun 13, 2019 3:26 PM
You need to do a "free" cost analysis to determine the following:
1) How much would it cost to fix up the unit if the tenant moves because you raised the rent too much all at once.
2) Home much more rent can you get if you re-rent the unit with a quick cheap make-over VS a complete fix-up. (Example a quick fix, paint and clean the carpets. A make-over, add features that will attract a higher paying renter -- like painting, flooring, blinds, appliances, window a/c, ceiling fans, etc.
3) Determine how much you can ask a tenant towards their rent raise. Just because someone makes good money and has savings doesn't mean they won't move to a better place that offers a few extra's at the same rent you wanted to charge them.
Mr. Landlord has taught us that some free upgrades will make your tenant happy and will make a small rent increase easy to accept. --47.156.xx.xx
OWNER OCCUPIED (by Nellie [ME]) Posted on: Jun 13, 2019 6:19 PM
Rent can’t be based on expenses directly. It must be based on what the market will bear. Just because I have a big roofing job doesn’t mean that I can directly have the tenant pay. Hopefully I have developed an emergency account that I pull those expenses from.
I am owner occupied also. I have a set deposit from the W-2 that goes into the apartment accounts.we have always done this since buying the building. But, we have never given ourselves a rent increase, and have toyed with reducing our personal rent... --70.16.xxx.xxx
OWNER OCCUPIED (by JKJ [MA]) Posted on: Jun 13, 2019 6:29 PM
I own and live in a 2 family, the other apartments rent almost pays my entire mortgage. Charge market value, if your far below that now, increase rent incrementally over a period of years. I wouldn’t just jack up the tenants rent all at once, you risk losing the tenants. I also wouldn’t base my rent by dividing by the number of units by monthly costs, (chances are you’ll be charging to little or to much for rent) You need to do a fair assessment of your property, determine your rental market, then base rent on current market value for the apartments. As far as your son saying you should be making a profit off the property, no offense but he needs to take more classes. It’s just not that simple, there are a lot of factors, I.E. size and condition of apartments, neighborhood, mortgage, your monthly costs for the property, etc etc. --174.199.xx.xxx
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