rent increase or stay the same

Thanks for sharing this blog today, loved the piano playing and getting an insight from a women's perspective. Love this site and just finished attending a free seminar on May 31st. Dean's site is so helpful

Hi Lydia - I tend not to increase rent after the lease expires the first year if they've been good tenants. After two years I may do a small increase and stay just below market rates. This tends to keep people from moving.

My view is that if the rent is $750 and you're going increase by 10% or $75 per month, if they move and you're vacant for only 2 weeks, it will still you a while to make up that difference. Turnover every year is tough and I try to minimize that.

- Tom

Lydia,
check out rentmeter.com and you will see where rents are in your area.
As long as you are coming out positive after you pay property expenses, including a reserve for repairs, you should be fine. However, if you expect your expenses to go up, and the current rent is not enough, then you may want to increase the rent, but keep in mind that you have to give your tenant 30 days written notice, or 60 days notice if increase is more than 10%. If you explain that the increase is to cover the property expenses, tenants tend to be more understanding; and if rent is comparable to others in area, they will be less likely to move.
Ask your property management, they should be able to advise you with regards to your area.

The typical rental contract allows for a grace period of 3 to 7 days after the first. For example, if the rent is $700 and due on the first, the contract may allow for a 5 day grace period before the rents are due. Typically a late fee is attached to anything that is paid after this grace period.

Why not try this? Set the rent at $800 and give a $100 discount for paying on or before the first. Have late fees beging accumulating on the second.

You are still going to get your $700. You will be getting it on the first and not the fifth to the seventh. Your cash flow position will be strengthened.

I agree with Tom's answer above. If the renter is on time with his or her rent and they are not a problem renter I would keep the rent the same for the 2nd yr lease. As long as you are cash flowing positive after your bills are paid why rock the boat. The only exception to this would be if the tenant moves out after the lease expires, then I would raise the rent. I go thru this on a daily basis with the properties we have and it does make for a happier tenant. Just my 2 cents...Jan

Thank you for your advice, I was leaning this way and my sister whom I am partnered with was leaning this way too. We had a few minor rent issues with partial payment and one just occured this month. The property management company has been excellent on nipping this in the bud. The tenant was good for six months on being on time. Something unexpectant must of occured. I've convince my sister to ride with this tenant since most of the issues were minor
FMfor one more year. Waiting to see the numbers from the PM agent.

I am leaning toward Tom's advice and now yours. You all have given me peace of mind on this since I am so new to this venture. Thank you very much.

Valerie,
Thanks for this great tip on this site. I will add this to my favorites on the computer. This way I can check rates myself and make sure my PM agent is giving me the most accurate rental info too.

Fantastic suggestion, I wonder if my PM agent can agree to do this and have it be legal in Florida. Will check with them.