With a new year coming up, how do landlords decide when to raise rent and what to tell tenants? Raising the rent is is this week’s question for veteran landlord, property manager and real estate investor Hank Rossi.
Dear Landlord Hank:
How do you decide how much you going to raise rent for tenants in 2019? We have some leases coming up for renewal and of course just got increases from our insurance company and taxes from the county and school district. How do you decide how much?
Dear Landlord Tim,
When I have increases in fixed expenses I try, when possible, to pass along the entire cost to my tenants.
If your insurance went up $300 and your taxes went up $400, for example, that is $700 increase total.
If you divide that by 12 months it only comes out to $58.33 per month over an annual lease.
That, to me, is very reasonable and I think most folks could handle that with no problem.
Don’t let your decision to raise rent cost you a tenant
I’d be open to discussion if a rent increase could be problematic for a tenant.
I would rather not pursue an increase in rent if it is going to cost me a good tenant.
Vacancy costs and rehab costs will more than make up for the small amount of rent you aren’t receiving from not increasing a good tenant’s rent.
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About the author Landlord Hank:
“I started in real estate as a child watching my father take care of our family rentals- maintenance, tenant relations, etc, in small town Ohio. As I grew, I was occasionally Dad’s assistant. In the mid-90s I decided to get into the rental business on my own, as a sideline. In 2001, I retired from my profession and only managed my own investments, for the next 10 years. Six years ago, my sister, working as a rental agent/property manager in Sarasota, Florida convinced me to try the Florida lifestyle. I gave it a try and never looked back. A few years ago we started our own real estate brokerage. We focus on property management and leasing. I continue to manage my real estate portfolio here in Florida and Atlanta. “ Visit Hank’s website here.