ANNUAL RENT INCREASE
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ANNUAL RENT INCREASE (by TERRY [ID]) Nov 29, 2021 11:37 AM
       ANNUAL RENT INCREASE (by Ray-N-Pa [PA]) Nov 29, 2021 12:18 PM
       ANNUAL RENT INCREASE (by myob [GA]) Nov 29, 2021 12:33 PM
       ANNUAL RENT INCREASE (by Jim in O C [CA]) Nov 29, 2021 12:40 PM
       ANNUAL RENT INCREASE (by Terry [ID]) Nov 29, 2021 12:58 PM
       ANNUAL RENT INCREASE (by Terry [ID]) Nov 29, 2021 1:14 PM
       ANNUAL RENT INCREASE (by myob [GA]) Nov 29, 2021 3:58 PM
       ANNUAL RENT INCREASE (by S i d [MO]) Nov 29, 2021 4:32 PM
       ANNUAL RENT INCREASE (by Jim in O C [CA]) Nov 29, 2021 5:09 PM
       ANNUAL RENT INCREASE (by Still Learning [NH]) Nov 29, 2021 5:20 PM
       ANNUAL RENT INCREASE (by 6x6 [TN]) Nov 29, 2021 6:07 PM
       ANNUAL RENT INCREASE (by Pmh [TX]) Nov 29, 2021 6:08 PM
       ANNUAL RENT INCREASE (by Busy [WI]) Nov 29, 2021 10:24 PM
       ANNUAL RENT INCREASE (by Busy [WI]) Nov 29, 2021 10:26 PM
       ANNUAL RENT INCREASE (by Robert,OntarioCanada [ON]) Nov 29, 2021 11:35 PM
       ANNUAL RENT INCREASE (by Nicole [PA]) Nov 30, 2021 8:50 AM
       ANNUAL RENT INCREASE (by Terry [ID]) Nov 30, 2021 1:24 PM
       ANNUAL RENT INCREASE (by Robert,OntarioCanada [ON]) Dec 2, 2021 12:01 AM
       ANNUAL RENT INCREASE (by Dave [CA]) Dec 2, 2021 6:34 AM

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ANNUAL RENT INCREASE (by TERRY [ID]) Posted on: Nov 29, 2021 11:37 AM
Message:

Good morning Landlords - my question is about raising rents beginning 1/1/22. I have owned this 4plex for 16 years, for the past 6 years I have lived in one unit, daughter and son live in 2 units, and 1 tenant has lived in the other unit for 15 years. My question is, I'm barely breaking even on this place, it's no money-maker for sure. I've been advised to start charging for building utilities and services (1/4 for each unit - called RUB (ratio utility billing). On Dec 1 each year I send out rent increase letters arbitrarily increasing annual rent by $50; due to inflation and increases in utilities the $50 increase isn't cutting it anymore. So this year I'm increasing rent $125 a month based on the annual "calculated" cost of utilities and services, fyi, after the increase, all of the current rents will still be well below the average for our area.

I'm feeling nervous about sending out the letters on the 1st of Dec, I know it's going to be a big shock to the tenants, but I figure they will understand or exercise their option to move out...my thought is the new rent is still well below the average in the area, so hopefully they'll realize how good they've got it.

What do you think? Should I feel bad, or just rip off the bandaid?

--65.129.xxx.xxx




ANNUAL RENT INCREASE (by Ray-N-Pa [PA]) Posted on: Nov 29, 2021 12:18 PM
Message:

move ahead with the rent increases.

With that letter , send them a copy of the rentometer . com rent report showing that they are still well below the rental market.

No need to feel guilty. You have been robbing yourself. Please don't do that. If you are still not okay with the increase, sell the place for what you are collecting on it. Since you didn't do many rent increases, your property values dropped. --24.101.xxx.xxx




ANNUAL RENT INCREASE (by myob [GA]) Posted on: Nov 29, 2021 12:33 PM
Message:

lets get this right- you live in one unit, son lives in a unit and daughter lives in a unit. This for a 4 plex. So one tenant for 15 years?

You need more than a rent increase. --99.103.xxx.xxx




ANNUAL RENT INCREASE (by Jim in O C [CA]) Posted on: Nov 29, 2021 12:40 PM
Message:

I would delay until February and increase rents annually. For my rentals I increase annually on there move in month. --67.169.xxx.xx




ANNUAL RENT INCREASE (by Terry [ID]) Posted on: Nov 29, 2021 12:58 PM
Message:

To myob (GA) Thanks for your response, you got it right! So, what more could I possibly need, LOL! Just having fun! --65.129.xxx.xxx




ANNUAL RENT INCREASE (by Terry [ID]) Posted on: Nov 29, 2021 1:14 PM
Message:

To: Jim in O C [CA] - Yes, I raise rents annually, 30-day-notice dated 12/1 effective 1/1 of next year. My problem is the rents started out so low, especially for the tenant of 15 years, an annual raise in rent of $50 is too slow to catch up the current market rates. Same problem with daughter in #3 unit, originally her rent was labeled as "family discount" to give her an opportunity to "save" to buy a house. The situation now is, I see no saving for a house, so this is my move save myself and let her figure things out for herself (can take a horse to water, but can't make them drink). My son in other unit is paying almost current market value, no family discount there. My goal here is to live almost rent free, and travel, travel, travel. By no means am I trying to get rich here, I just want a little more financial freedom without trying to take advantage... --65.129.xxx.xxx




ANNUAL RENT INCREASE (by myob [GA]) Posted on: Nov 29, 2021 3:58 PM
Message:

this is funny. your not an investor-- your a hobbyist!!!!

You got it made-- and your worrying about not making any money?-- who cares? really your family and yourself- are well taken care of. you got 1 tenant, who even if you increased the rent to market, would only net you maybe 800.00 a year. Life is to short. Keep doing what your doing cause you ain't doin it for profit. Don't think you ever had that intention.

It's really great not having a care. --99.103.xxx.xxx




ANNUAL RENT INCREASE (by S i d [MO]) Posted on: Nov 29, 2021 4:32 PM
Message:

I'm agreeing with Myob...no matter what you do this isn't going to be a "money maker." At best, the rent from one unit is doing to slightly offset your taxes, insurance, and maintenance, but you'll still be paying out of pocket for all of those things.

That said, I would bump it to market rate immediately. What is the current tenant going to do: refuse? Then they get to move and go pay market rate somewhere else instead of to you.

One of the worst mistakes I made early in my investing career was being afraid to raise rents. We've had in-depth discussion on that topic here for years. "Do it" is the consensus. You can leave it a tad (no more than 5%) below market as a courtesy if you like, but ultimately if you didn't buy this place to make money, I'm not sure why you bought it.

Basically, today you're subsidizing your tenant's lifestyle by charging below market rent. If that's what you want to do, more power to you. Otherwise, raise those rents to market. --108.230.xxx.xx




ANNUAL RENT INCREASE (by Jim in O C [CA]) Posted on: Nov 29, 2021 5:09 PM
Message:

The IRS doesn’t recognize a family discount. They want realistic true market rents. If on paper you are losing too much and for too long expect an audit to explain your loses.

When I was audited they said break even, make a profit or sell. --67.169.xxx.xx




ANNUAL RENT INCREASE (by Still Learning [NH]) Posted on: Nov 29, 2021 5:20 PM
Message:

How far below market rent is the tenant of 15 years? $200, 400, 600? If you gave them 60-90 days and raised them to market and they chose to leave, what would your renovation headaches, costs be? I raised a 10 year tenant by $200 and she left. All good, except no labor available for the renovation, vacation, Covid and family death turned what should have been 30 days into 90. It goes on the market tomorrow but will be $500 more than what it was. If you aren’t comfortable going all the way to market, start raising a bigger amount yearly so you will be there in a few years vs farther and farther behind every year. --24.61.xxx.xxx




ANNUAL RENT INCREASE (by 6x6 [TN]) Posted on: Nov 29, 2021 6:07 PM
Message:

Following --73.120.xx.xxx




ANNUAL RENT INCREASE (by Pmh [TX]) Posted on: Nov 29, 2021 6:08 PM
Message:

I do 3% each year for renewing. I jack up 10% min for new renters. --107.77.xxx.xxx




ANNUAL RENT INCREASE (by Busy [WI]) Posted on: Nov 29, 2021 10:24 PM
Message:

Son is close to market, small increase. Tenant of fifteen years- have you been in the unit recently? That tenant might be good to try Jeffrey’s letter about rent increases. Daughter, bring up to rent son is paying. She knows what he is paying , they talk. Even if she is going to feel a pinch.

Be prepared for us hack from daughter. I predict daughter might try to wiggle out of the increase, if she was able to finagle a special rate based on the idea she would save the difference.

IRS deems those charging ‘family discount’ rates are hobbyists for tax status. All income from the hobby is taxable, no deductions allowed ( ouch!) If you need ammo to fortify you against the pleadings of the specially treated child, the realization you may be paying a huge penalty on taxes in the near future if this situation isn’t remedied may strengthen your resolve. --70.92.xxx.xxx




ANNUAL RENT INCREASE (by Busy [WI]) Posted on: Nov 29, 2021 10:26 PM
Message:

Edit- Push back from daughter --70.92.xxx.xxx




ANNUAL RENT INCREASE (by Robert,OntarioCanada [ON]) Posted on: Nov 29, 2021 11:35 PM
Message:

Raise rent 3 percent every year then go to market rent on vacant rental unit. Sooner or later major capital expenditures are going to required for building such as replacing a boiler, hot water tank, roof or structural repairs where there needs to be funds to do that. Even with a 3 percent doubt anyone is going to leave as when they find out what a bargain they have. The last year a lot of things have gone up dramatically like gasoline, natural gas, insurance along with many other things where inflation is starting to kick in. --99.236.xxx.xxx




ANNUAL RENT INCREASE (by Nicole [PA]) Posted on: Nov 30, 2021 8:50 AM
Message:

...I know it's going to be a big shock to the tenants, but I figure they will understand...

The amount of rent isn't your big issue. These aren't "tenants", they are your children !!!!! What type of family doesn't discuss this type thing just as a matter of conversation and requires dad to send an arbitrary letter to his kids?

The 15 year tenant, raise more than the $50 but realize the amount of upgrades that will be required when that tenant vacates.

If I didn't want to assist my kids and subsidize their life styles (which is something I have done for all my kids at one point or perhaps several) I'd figure out the market rates and raise up to there or almost. The utilities, if you pay everything, I'd certainly figure out a formula that everyone is paying a proportionate share and charge accordingly. --98.237.xxx.xx




ANNUAL RENT INCREASE (by Terry [ID]) Posted on: Nov 30, 2021 1:24 PM
Message:

THANK YOU ALL for your constructive advice, I have carefully listened to you all, I'm so appreciative. Here's my plan... Yes, I did rip off the bandaid and mailed out the "rent increase letters" to all tenants. In my letter I explained that the "old" way of doing business in managing this apartment building is NO LONGER working for me. Starting in 2022, utilities and service for the building will be totaled and divided by 4 units; each tenant will pay their 1/4 share; for 2022 there will be no increase in rent. For 2023, rent will increase by 3% (or whatever cost of inflation is); cost of building utilities and services will be reevaluated and the price of cost of doing business will be passed along to the tenants as I started in 2022.

I'm thinking I should have been handling business in this fashion all along.

Before I moved into the one of the apartments in 2015, I didn't have to worry about this because all the tenants in 3 of the units usually only stayed for the 1 year lease term; after quick paint job and cleaning, I brought the rent up to the going rate for the new occupants, and I was good to go.

Thanks again for your thoughts and advice. Happy Holidays! --65.129.xxx.xxx




ANNUAL RENT INCREASE (by Robert,OntarioCanada [ON]) Posted on: Dec 2, 2021 12:01 AM
Message:

The most important capital expenditure is to completely separate out out electricity and natural gas where the tenants will start to conserve usage. If utilities go up then the cost is past directly onto tenant where absorbing a utility increase can easily put in a loss position. Once a building is converted to where tenants pay and control use the value of building goes up immediately. More then ever smaller buildings are going away from all inclusive as this is a bygone. Most jurisdictions are going to phase coal fired power generating stations which means the cost of electricity is going to go up. Building natural gas, solar and wind generation is expensive where costs are past on to consumers. --99.236.xxx.xxx




ANNUAL RENT INCREASE (by Dave [CA]) Posted on: Dec 2, 2021 6:34 AM
Message:

1. This years INFLATION FACTOR is over SIX PERCENT

2. labor and materials costs have gone WAY UP. Rents everywhere are up exponentially

3. Go go juice for our cars and that tuna sandwich and coffee now costs way more.

If you want to help resident family members, raise their rents to full market rent so your property is run at FAIR MARKET VALUE, and then gift them back Tax free money under the irs codes. This is tax free to them and you.

It reduces your net taxable estate upon your death. It gives you more gross rental income to be offset by MORE rental expenses. It increases the book value of your rental property. It gives you more cash in hand if you want to turn that two week vacation into three weeks.

It will then be perceived for what it indeed is by your family members ......A GIFT.

They are not moving anywhere

YOUR ACCOUNTANT should be telling you this.

Not your fellow landlords on this site.

--67.49.xx.x



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