Rent Increase

Hello Brownstoner,

We have phenomenal tenants who signed with us last year and their lease is coming due next month. I am almost certain they will stay as we have a great relationship with them. I certainly do not want to loose them but wanted to ask the forum what your thoughts were on keeping the rent the same or a small increase. Our taxes and homeowners insurance have increased this year. Nothing crazy but worth mentioning. I would like to keep them as long as they are willing to stay. We rented to them on the high end of the market last year but have a gut renovated apartment and take great care of the building.
Thoughts?

For those of you who think a small increase is OK, what is considered small? I read 2% would be expected and quite normal. This would be per month I am assuming, correct? On the flip side, I do not want to be put in a position where we don’t increase the rent for years and have very under market apartments.

Thank you all in advance for your opinions and suggestions.

stuyheights

in General Discussion 8 years and 10 months ago

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slopegirl | 8 years and 10 months ago

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and worth knowing that rents have softened in BK this year. I would leave the price the same and as advised say you are waiving any increase this year. We have a one bedroom renting for $2600 and have raised it a couple times by $50/year over the years for our excellent tenants. the value of good tenants is enormous!

stuyheights | 8 years and 10 months ago

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Thank you all for your comments. I will keep things as they are for another year.

boredatwork | 8 years and 10 months ago

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I second dibs and resident2’s comments.

You can also write a lease with an increase for the second year should you decide to renew. Not a two year lease, but a one year lease with an owner’s option to renew at the higher rate. So they know the deal moving forward. If circumstances change, dont renew and you can charge whatever you want.

anotherposter | 8 years and 10 months ago

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Also, whatever you do, let them know why. E.g. if you don’t raise it, maybe mention to them that you don’t want to raise it every year, but at some point there will be some small increases to keep up with the market. They might get used to it not being raised and feel caught off guard when you do raise it if you haven’t warned them. I say this all in the interest of keeping your good relationship.

resident2 | 8 years and 10 months ago

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After the expense of their initial move-in if they are paying market rent, then I normally let the first renewal be at the same rent, but start increasing annually on the 2nd renewal. Tenants do not move because of a small increase each year, they move because their life circumstances tell them it is time to move. But they yell that the rent is to high, even when the reality is that they lost their job or they are splitting up etc.
But let them know that you are willing to waive the increase this year, so that they do not get in the mind set that the rent is frozen in time!

Arkady | 8 years and 10 months ago

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What Dave said.

daveinbedstuy | 8 years and 10 months ago

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Is 2% really worth bothering with? If you have great tenants, skip a year of raising it. Do the math for how much two months vacant would cost you and you’ll see my point.

BSDOD | 8 years and 10 months ago

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I don’t always raise the rent, but I do raise it so that the gap between the market and the current rent isn’t too large. I may want to reclaim the apt. In the future and want to make the transition easier.