If you increased your rents in 2023 and plan on doing it again in 2024, how do you determine the amount of increase? Do you use a flat fee or do you use a percentage of the existing rent to determine the increase? Most of my Class C rents are currently in the $600-$1,000 dollar range and last year I used a flat fee increase of $25.00.

My personal opinion is that a percentage seems most fair - especially if you have multi-units where neighbors will talk & compare their increases. Rounded off to the nearest dollar (or $5).

Using you numbers above, the $600 folks got a 4% increase, and the $1000 people got a 2.5% increase. It looks like you kind of averaged it out.

In comparison, if they both got an increase of 3%, the amounts would be $18 and $30.

Not knowing how many you have at what price-point, which way would make you more money?

With that said, I think it is also reasonable to have a policy of a bigger increase for someone who has caused you more expenses during the past year - like frivolous repair calls, needed to give them a notice to cure something, etc.

I pull it out of thin air. Literally. After looking around at markets and considering the house, etc, we will say to each other, "Well, what do you think?"

WMH,

I look at the house also and like you ask myself, 'if this tenant moved out, could I get more rent?' The answer in many cases is Yes.

I don't know if any of ours struggle to pay the rent - I don't want to know. Do I get it on time and in full? Good enough. I don't want to know if they had to sell blood to pay it.

I look at the house only, not the tenant. Not anymore. We held off raising the rent too much on one old lady long-term tenant until it was ridiculous, finally raised it to market rent last year and it was hard for them to increase the deposit enough (I did put them on a payment plan for that) PLUS pay the rent increase. But now they are paid up and they pay the rent too (her daughter is involved.) She's been there since 2009, and not raising her rent enough over the years turned out to be unkind overall.

Before 2020, increases were generally very cautious-- $5, $10, $25, because people would move rather than have a $25/month price hike. So I needed to make my increases at incoming. My tenant pool was stagnant. There was nothing that brought people into the area, so most people grew up here their whole lives. The average household income was about $25-$30k. (Average household income is now around $37k/year.) So because of that, rents were stuck 10-15 years behind bigger cities with more robust economies.

Now, with all the rules changes, we're flooded with people not-from-around-here. The increased demand is reflected in the increased rent. Things are still very economical, especially compared to 30 minutes this way, or an hour that-a-way, but they're much higher when compared to themselves. The actual increases are arbitrary-- "Can I get $x/month?" and then I see if I can. The answer is always yes, but I'm not the most ambitious with my pricing.

While I'm getting lots of traditional families, I'm also having a lot more groups of two/three/four working adults who are teaming up to split costs. So that also helps me get more for a highly limited resource than I would with my traditional tenant pool.

Roy ... I look at what my taxes, insurance and any other utilities, etc that I pay were from the previous year to what I know now (and add in a 2-3% hike for the ones that I don't know because even though they say "no increase"... there is).

I then look at that difference and I know that I don't want to "eat" that amount so then I increase above it.

So for example, if the difference in the two is say $150.00 then I know that I need to raise it to at LEAST $12.50 per month TO BREAK EVEN. Do I want to break even? No, I don't so then I most likely would double the amount to maybe $25.

The other thing you need to figure into the equation is any repairs or expenses that you think you will (or know you will) be doing. Now, that doesn't mean that if you are thinking "oh, I'm going to paint the house in 2024 and the quotes I'm getting are $5,000 so I'm going to raise my rents by $450 per month" is going to happen it's not (usually) BUT it's something to consider that you ARE going to want to pay attention to and ensure you are sustaining the property and adding value to not just YOUR investment but also the Tenant's appeal.

The same goes for windows, furnaces, etc... what it does FOR THEM as much as it does for you.

I was giving increases at the rate of inflation, but had to slow that down. Tenant income isn't going up and there is no point in going up beyond what the tenants can pay.

Feds claim only 3.2% for last year and that would be a reasonable amount to increase rents and a good enough reason for doing the increase.

My property tax assessments went way way up, and I was scared to open the tax bill, but the actual property taxes did not go up. So just insurance went up and the cost of repairs went up.

I'll see what happens in the spring, but it doesn't look like anyone else is increasing rent, judging by the asking prices for vacant units. I may still be at the top of the market without doing any increases.

Deanna,

Are 'noncitizens' the same people crossing the Rio Grand river every day? I have always wondered where they ended up living.

I've discussed my strategy here before. I set up search criteria on Zillow as if I were a tenant, for the size, bedrooms, and locations where I have rentals. Every 1-4 days, I get an email with what's on the market. This keeps me in touch with my competition, so I always know "what the going rate is" (aka, the Market Rate).

I can't see any other strategy working as well as shopping your competition and beating them... slightly. I work for a Fortune 500 retailer, and that's what we do. No need to reinvent the wheel. Play like the big boys do!

For existing customers, I default to 2.9% if no one does anything and normally that keeps me right where the market is. But if we get below market like Covid when rents went crazy, I'll raise it with the renewal notice.

As you may know, I also tend to cycle out my tenants every 3-4 years. Gives me a chance to refresh the unit and apply their deposit to keeping the place nice. This avoids the dreaded "10 year turnover" when you have to replace everything and only have one measly deposit to cover everything. Better to have 2-3 deposits. This also means rents get bumped to market every 3 years or so.

Sid,

SID -- I'm kind of surprised as you are a seasoned LL on here.

the mindset of using deposits towards upgrades and rehab make ready really isn't what is supposed to take place.

damage, missing and excessive wear .... yes.

normal wear and tear, end of useful life .... no

I admit that I was only increasing rents when I had a turnover.

Then when I started reading here I realized that I was doing it wrong. I had one guy with 16 years and no increase. I pay water at that place. So my water, insurance and property taxes all increased but his rents didn't.

That is long gone now. I do not have a perfect solution but I have it set for a 3% increase minimum per year to the next $5.

Some I go a little higher just because. but for the most part that is what I do with my current tenants.

Just got a deposit today where I increased rents by 3% plus fifty cents to make it even. They paid. Never complained and are still below market.

hey Zero,

Our rents are in same price more or less. A small 1 BR in a class C place is $650 and a 3 BR is about $1,100. Class Bs are an extra $300 a month.

I raised a tenant's rent this year without raising his rent. Well I take that back - I raised our INCOME on his place without raising his rent.

We required him to start mowing his own lawn. Lawn Guy was charging $60/week in the approximately 6 month season. Tenant's lease had always called for him to mow because he started out at a SFU, but his riding lawn mower was stolen (true) and we had our guy do it because there is also an ADU on the premises and it needed mowing. That turned into the original tenant never getting a new mower. Of course.

Dave... don't be surprised. I'm not scamming tenants. It's the reality of the situation. They do damages: I bill the security to fix or replace, as appropriate.

The mistake many landlords make is they count a lot of things that are damage as 'normal wear and tear.' No, they are damages. I simply catch those damages a lot sooner than most landlords do.

Case in point: let's consider mini-blinds. Just had a move out where the tenant's dog must have eaten a pound and a half of vinyl after devouring several slats off every window blind. She was a 3 year tenant, so I bill full replacement cost. $225 to refit the unit.

By contrast, the 10 year landlord most likely shrugs his/her shoulders and eats that expenses because "The blinds were fully depreciated anyway" or the line I never understand "Well, they paid me $X rent during that time so I won't charge."

Make sense?

Roy I disagree with you about long term tenants. While I didn't raise rents for years on the one guy I have been increasing rents on everyone for a few years now.

I believe that people are not leaving because I provide a good place for them, there are no other places as nice in the same price range, and probably the most common is they are complacent. Nobody wants to move across town or a few blocks over. Laziness is a real non-motivator.

Most times when I get a move out that I didn't cause it is where someone is getting into a place better suited for them. Maybe the family grew and they need more space. Maybe the family got smaller and they need less. Rarely do I get a mover because they got a job out of state, but that could happen.

When a tenant moves I evaluate things like the paint, flooring, maybe tile in bath or around the kitchen. Now if a tenant lives in the place for a decade and moves I still evaluate all that.

But I do not put the high end carpet down in my duplexes. It seems to last the same as the mid range stuff. Maybe I get four years out of it. Tenant stayed a decade so I got double. If there are horrible stains or rips the tenant covers the costs anyhow.

The paint I can get a few years out of without touching up a lot. So I have saved when the tenant stayed a decade on that as well.

Updates are not more costly. If the tenant stayed in the place for a decade and didn't mind no tile above the shower then that's fine. When he moves out I update certain things to the new standard I have in place.

When I get notice I start a list of things that I want to do before I put it back on the market.

6x6,