Raising rent for the tenant

Question

we would like to raise the rent for our tenant of 5 years. Of all these years, we've only raise the rent once (@ the beginning). I think it's time to raise the rent again. What would be a good reason to tell them why we're raising the rent? There's a lot but which one is best? Economy? Taxes? What else?

Answer 1

Why do you have to give a reason?  Just explain that you have been able to avoid raising the rent for the past 5 years but with the rising cost of energy, heating/electricity/water/sewer etc, it is unavoidable.  

Answer 2

actually its an easy answer;

determine your cap rate.  IF you are not earning that,

you are losing money.

revenue minus expenses= Net  Operating income

NOI divided by selling price [appraisal value]

= cap rate, capitalization rate.

you deserve a good return on your investment.

it is as simple as that.

Answer 3

You don't have to give a reason. It is always wise to raise the rent at the end of each lease. I always raise rent for my tenants by $10.

Answer 4

If you're already making a profit, don't raise the rent, espeically if they're good tenants.  As a tenant myself, I feel as if I'm being raped for my hard earned money each time there is a rent increase, because I SURE haven't gotten a raise.  In fact, if they raise our rent much more, I will be forced to move.  

Anyone who rents most likely works very hard for the money they make.  Why jeopardize your tenant's and his/her family's security simply because you're looking to line your pockets?  Property ownership alone usually increases wealth, nevermind the fact that you have someone paying the mortage for you.  Already sounds like a good enough deal to me.

Answer 5

You don't need to actually document anything. Merely "Your lease is up for renewal on October 1 and we reluctantly announce an increase of..."

However, a wise landlord won't raise the rent so much that the tenant moves. A wiser one has regular small increases to parallel local market rates.

If you feel you must justify, simply go to the library and pull out a couple newspapers from the time of your last increase and create a chart showing the increases in taxes, insurance, utilities, gasoline, bread, milk, etc. Include current rent rates for comparable apartments nearby.