Just a discussion topic. How do you handle the NECESSARY ever-rising rents issue (based on insurance for us, property taxes for others, maintenance costs for us all...) vs the fact that people's paychecks simply have not kept pace?

I struggle with setting rents when a non-renewal is given because while I *know* we need to keep up the rents, my available tenant pool gets shallower with every increase - not my fault or the prospects. It just is what it is.

My places are older. We keep them up but they are not today's luxury apartments, and by choice, they are all SMALL. So it's not like tenants can rope in more roommates to help share the costs. We limit occupants on purpose - but it reaches the point that one or two people are carrying a heavy rent burden.

I think 2025 was a bad year for us - haven't done the taxes yet but I'm thinking we might have taken a hefty pay cut. Or at the very least, didn't get a raise after years of annually increased cash flow.

For me, I know that I am not at the top of market. I base my increases at 3%. I like even numbers so I float it a little here or there.

I need to do a better breakdown for increases in taxes and insurance. I know that I increase my deductible to save on increases with the insurance and if the county raises a property a lot I fight it and have always won.

Actually had a couple properties stay the same, tax wise, this year which I hope helped to offset the insurance.

As for the maintenance costs I still buy things on sale, in bulk or at auction sites. This has saved me a lot overall but I am also buying ahead of the repair.

It is sometimes difficult to see what the competition is charging. Some places are doing the ala carte thing. Some just do not list the entire costs in the ad, and then there are some that are listing as STR even tho it says MTM.

Those make my places look even better.

I had a few roof problems this year that I was not ready for. I also replaced one roof entirely. That makes my numbers on that house look really bad for the year.

In a low rent marketplace like I am in it is tough to even consider hiring everything out. So figuring how to hold back for things like a big tree branch that breaks off but is still attached is a feat in itself.

Not everybody is suffering from that.

Fortunately I have not dropped rents at all. The only reason I have a long vacancy is because I am rehabbing the place so it is my call.

That doesn't mean that my little part of the world won't finally catch up to the rest with the problems tho.

WMH said - Topic: How do you handle the NECESSARY ever-rising rents issue?

Well I just paid $7000 to install a replacement HVAC unit and I am thinking how am I going to pass that on to the tenant because I am not enjoying that HVAC. They are.

Even if I raise the rent $100 a month it will take 70 months to recoup the money. That's 6 years.

I have not dropped rents on any unit. Most of the time I raise the rent $30 on a duplex and $60-75 on a SFH at the end of a 1 year lease.

I have had 3 vacancies and have filled all 3 in less than a month at a rent rate $75 to $100 more than before.

I was not aggressively / consistently raising rents before the last 2-3 years. Sometimes on a good tenant I would not raise the rent at all.

But primarily because of this group (and Jeffrey) I found the courage to raise rents on an annual basis and to do at least a 3% rent raise. I have one person who always pays on the 5th before NC Law lets me charge a late fee so I upped his rent $100 because of it.

Jeffrey has suggested letting the tenant respond to a letter asking what they can afford. I have tried that once and raised the duplex rent $50. He mows the yard and his rent is below the going rate. Going rate is maybe $950 and his rent is currently $825.

Mainly I just send a new lease for e-signature and the first page has the new rent amount and when it starts. I don't discuss or justify or anything.

I have not had any pushback. Everyone knows the cost of everything is going up. Rent is just part of it.

While I realize turnovers cost me money, I have always made the rent higher for the next tenant.

I have also aggressively made the leases end in March, April or May either by shorting the 1 year lease or extending it to 1 and little bit. I do not want winter vacancies and if they want to leave in the winter they are paying the early lease termination fee. This makes whatever work I have to do in the spring. I get all my lease renewals out of the way, and hopefully the summer, fall, and winter are quiet.

YMMV

My roof was $9,960.

I am in the same boat as you. I can't raise the rents to cover it in a timely manner.

It wasn't their fault I needed the roof. Not like they were running around up there.

That's where the doing business takes over I guess.

Also, I am not sure who came up with the 3% but I use it as a starting point.

I am not so sure that paychecks have ever really kept pace with inflation and cost of living. Seems that that gap keeps growing as well and making things worse every decade or generation. That being the case, perhaps a look back at how LL's and tenants have managed this in the past may be at least some answer. However, with that ever-increasing gap, there will need to be new solutions or strategies.

We have a large enough tenant pool that somebody always makes enough. High rent and tough requirements wipes out 80% of them. So high starting rents means longer vacancies. It’s short compared to what I hear from many of you. It’s up to about a month now.

For my units at closer to market I do not have much room to raise rents. Others are limited by rent control. Because of rent control I raise them every year expect for the units near the top.

I moved to DFW in 2000. We rented a 3/2/2 near downtown FW from a little old lady for $750/month until we left in 2006.

Maybe around 2009, 2010, I got curious to see how rents were in DFW. Houses like mine were renting for, like, $2k/month. I was curious how anyone could afford it, because obviously, wages hadn't doubled since then.

Fast-forward to today, and 3/2/2's seem to still be plentifully available at around $2k/month since then, although there are plenty of options available for $4k/month or $8k/month. Part of it is the competition-- there's no way to capture that infinite growth of perpetually-rising rents, because it ultimately gets capped at what's economically realistic.

It's something that I've always dealt with in a rural, isolated area with naturally-depressed rents. Around 2010-2015, my 1-br's were $3xx, my 2-br's were $4xx, and my 3-br's were $5xx. I had to rely on multiple houses to pool their rents together to afford a $6k roof or a $5k HVAC. But then once the shutdowns happened, and the price of everything doubled overnight. But we also had a large influx of population that drove up the demand-- so the price of rents also increased steeply. So now those 1-br's at $6xx, my 2-br's are $8xx, and my 3-br's are $1,xyz. Then again, those HVAC's and roofs are now $10k.

But it also reminds me of those A, B, C ratings that always cause so much drama when the subject comes up. Originally, those ratings were for multi's in urban areas, but your A's are top location, top finishes, top rents. Your B's are the former A's, but they've aged some. Your C's are even older, not the top rents, not the top top location, but still serviceable. The thing that always caught my eye with the B's was that they probably were originally A's when they were first acquired... but you can't just sit on them and expect them to still be A's. Through no fault of their own, they age and become less desirable, unless someone is willing to sink large amounts of money into them to maintain their A status.

Back in 1996 to 1998 I added around 80 units to my portfolio. I had a 5 year plan to take these deferred maintenance properties and bring them up to current high standards. But L.A. City changed their tactics and wanted to "Tax" landlords to death, looking at everything as a way for them to make money. This moved up my timeline from 5 years to 1 year to get things up to par. Spending around $3K to $5K per unit, or 1/3 of a million dollars accelerated for no good reason.

So fast forward to 2000, time I wanted to raise rents by 4%. Every tenant looked at me as a pirate trying to steel food from their children. From almost friend, to an enemy.

So I had a meeting at each property, tenants attendance mandatory.

I had documented proof their current rents were way under market. They already had a 30% discount. Then I showed how my Insurance cost almost doubled. Utilities were up 25%. Property Taxes were also sky high and the added rent won't even cover my extra costs.

SO THEN IT HAPPENED! THE TENANTS SAID THEY COULDN'T AFFORD SO MUCH AS A DOLLAR A MONTH MORE IN RENT.

So I put up my slid projector and had a show-and-tell moment. Every tenant had a vehicle either new of less than 2 years old. My truck was 15 years old. Every tenant had a large screen TV, 50 inches at least and full cable. I had a 30 inch tube tv on an antenna. Tenants ate out 3 times a week. I cooked at home for me and my family. The tenants were living high on the hog. So I told them to cut of some of the fat, or move!

LordZen (MA) - Here's what I sent. I used chatgpt to polish it up. The tenant is in a duplex and does the yard for me which would otherwise cost me $140 a month for 2x mow. More if they mowed every week.

I hope you're doing well. I wanted to reach out because it is lease renewal time and I want to thank you for being a great resident. I especially appreciate you taking care of the mowing and general upkeep of the yard. It is a big help and something I truly appreciate.

As you know, your current rent is $780 per month, and I have also not been charging any pet rent for your cat. I have tried to keep the rent affordable and stable, but rental rates in (your hometown) have increased significantly over the past few years. Comparable two-bedroom, one-bath rentals are often renting for considerably more than the current rate. While I am not looking to bring the rent all the way up to current market levels, I do need to consider an increase to help keep up with rising expenses.

I value having you as a resident and I wanted to ask for your input before making any decisions. What amount of monthly rent increase would be manageable for you?

Please take some time to think about it and let me know your thoughts. Thank you again for being a great resident and for all you do to help care for the property.

LordZen (MA)

Here's something to send if it is just renewal time and you do yearly leases. Some peeps are just doing month to month which probably makes sense in tenant friendly states like yours. I like everyone to be on the same version of the lease and I like to be reminded yearly to raise the rents. Just having people go month to month makes me lazy and not raise rents which is how I let rents get behind market rates.

We appreciate you making your home with us. The decision to raise rents is not made lightly.

Your lease expires 6/30/2026. The new lease is being sent via Dropbox Sign for your electronic signature. The lease terms and new rent are on page 1. If there are errors or questions, please call.

If you prefer to go month-to-month, the covenants, terms and conditions of the lease will remain the same, but the total monthly rental payments shall increase by 25%.

If you decide to move, please remember the lease requires 30 days Written notice. Notice may be given anytime during the month prior to your last desired full month of tenancy. For example, if you want August to be your final month, you must give notice anytime in July that August will be your final month. Last month’s rent is not prorated and must be paid in full.

I can see what you are experiencing coming here. Our real estate market lags the national trends but keeps its own rental marketplace.

For me it means keeping a tighter eye on LTV and expense to income ratios. Those who avoid accounting are going to pay a hefty sum. The other thing I am shifting around is not always trading in an upward manner in an exchange.

Add that to the fact that tenant friendly states usually discourage opportunity and commerce at every turn.

W,

Good question!

Some quick thoughts no how we handle rising costs and folk's tougher home budgets...

-"Know your numbers" (says Mr Wonderful and Mark Cuban!) at all times. We use Quicken for money in and out. At any moment I can click on a button for a report and know EXACTLY profit/loss for the month and year, or by house. Too many LLs fly by the seat of their pants then wonder "WHY?!!!??"

I can make changes instantly when I see something not working.

-Know what costs are rising. It's usually more than we think.

-After all these years I learned "replacement" insurance at $250/sf was cheaper than the low prices I set just enough to cover the mortgage and a few bucks.

-stay on top of annual increases. Little bits each year so we don't get caught playing catch up or feeling like a schmuck because we let them go so long at a low rent.

-stay in touch with your business and it's market. Zillow can show rent comps, and watch your competitions ads on Z.

-Our rent increase letter includes a copy of the lease with their initials next to the clause about annual minimum 2.9% Cost of Living increases.

-BIG IDEA from Convention - the left side of the room - include a print out of a Zillow ad or comps for similar homes. Help the SEE the market with their own eyes.

-Gotta manage tighter. ALl that stuff I promote like weekly rent, appliance fees, animal fees, septic tank fee...

and my Rent DiscountPRice Lock Guarantee Program Fee where they ASK FOR IT and pay me $1000 Non-Refundable FEE to sign the lease (Paid for my Rolls in cash)

-Get rid of debt. Profit gives us breathing room. Emergencies don't hurt so badly. The Borrower is SLAVE to the lender. We were sweating and bleeding to make the banks rich.

One more

-consider the value of YOUR time. ALl we have is TIME. Learn how to manage others doing the grunt work so you can MANAGE your business and make decisions and changes daily.

-Set a written goal. I GUARNATEE you will save expenses and make more profit because you did.

Operate with INTENTION, not REACTION.