Raising the rent for the first time in 7 years
We want to raise the rent of our tenant’s apartment and are seeking guidance. We have a ground level floor through with a small deck in deck in the back on a prime block in Fort Greene. Our tenant has been no trouble at all and is, in fact, pretty cooperative and even helpful. That said, we haven’t raised the rent in 7 years and let her have the apartment for $100 less than we initially wanted. We signed a two-year lease way back when, and neither she nor we have referenced it in all this time. My husband is ready to raise the rent $200, which is still at least $200 below market value. I love the idea but like knowing our tenant is good. What do you all think we should do?
cleancutmovers
in About Brooklyn 9 years and 7 months ago
7
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7 replies
brokelin | 9 years and 7 months ago
It might make someone’s budget bust – depends on the tenant. I also think it is better to raise in smaller amounts, and not necessarily every year. You can’t control your tenant’s actions – your tenant might decide to move. To entice people to stay, raise it 25 – 50 per year, not every year, and they aren’t hit with a single big increase. If you definitely want your tenant to stay, raise it 50 – 75 this year, and smaller amounts thereafter. If you don’t care, and could see rerenting it at market rates, then gamble with the $200\. Just because it will still be below market doesn’t mean there aren’t other neighborhoods or living situations that are cheaper that might be preferable to your tenant.
corikodjo | 9 years and 7 months ago
We are actually a tenant of 5 years in a similar situation in the garden level of a townhouse way under market rate. Our landlord came down one day (and we talk pretty often so it wasn’t uncommon) and just stated “look I’m sure you know the rent is well under market rate and I haven’t raised since you’ve been here so I’d like to raise it. Is there some raise in rent which would be fair to you? It doesn’t need to start this month but upcoming.” When he said this we completely understood and actually volunteered $200 more and he agreed that was great and very reasonable (we were well under market rate and it wasn’t lost on us). Not sure how your relationship with your tenant is or their financial situation but if they really are a great tenant my guess is if you just stated you haven’t raised in a long time and would like to they should be willing to accept that and you can discuss how quickly and how much you can adjust without compromising them financially. $200 and remaining under market rate really shouldn’t put anyone in dire financial straights.
snowman2 | 9 years and 7 months ago
Agree with others. Don’t raise more than 100 if you want her to stay and give her plenty of notice. In the future, raise small amounts annually. I set an initial rent at slightly under market (to have a choice of tenants) and raise it annually (as long as rents are going up) but NEVER to bring it up as much as market rate. Every year they stay the rent falls further below market. They get a bonus for not moving and I don’t have the hassle of breaking in another tenant. As an aside, I’ve never raised the rent to get rid of an undesirable tenant; no amount of money is worth having them continue to live here. I have left written notice at least 2 months before the end of the lease reminding them that their lease ends on x date and to have their entire security deposit returned they need to leave the apt in … condition.
peaceout | 9 years and 7 months ago
Years ago as a landlord I learned the hard way. We had a tenant we loved, never raised the rent. Suddenly 6+ years flew by and the tenant was terribly under market. We raised the tenant $250\. Needless to say they were not happy, and we felt uncomfortable. Lucky for us, our tenant stayed and we learned a big lesson. Raise your tenant $25-50 every year, this keeps the rent at market rate, and if expected every year, everyone is on the same page. And renew the lease every year too.
daveinbedstuy | 9 years and 7 months ago
Maybe $100 this year and another $100 next. Losing a good, helful tenant isn’t worth the extra money.
slopefarm | 9 years and 7 months ago
If you like the tenant, I wouldn’t hit them with 10% all at once. I might let them know that the unit is well below market and you want to bring it up some, but then do it in smaller annual steps and let them know. Something like 3-5%/year. If they move out, you will lose a month and spend money painting and doing other maintenance, so there is a financial advantage to holding on to a good tenant below market.
NeoGrec | 9 years and 7 months ago
I don’t know what % increase you’re considering but, assuming the current rent isn’t VERY below market, $200 could be 10% or even less. That’s not unreasonable if it’s the first increase in 7 years. I would suggest giving her extra notice (3 months) so that she can plan to move out if she needs to. But going forward, “a little and often” is easier for most tenants to handle.