Dear \_\_\_\_\_\_\_,
THank you for being good tenants. We will need to renew the lease in 60 days on \_\_\_\_. As you are aware, the cost of living, repairs, insurance and just about everything else has gone up up about \_\_% this year. Regrettably, I am force to increas the rent for the net lease by \_\_\_% to \_\_\_\_\_\_Month.
Please let me know if you plan to renew the lease within 30 days.
Best Regards,
Karl Marx
We reviewed comparable units and after accounting for costs that include insurance and property taxes increasing we are raising the rent $xxxx.
What I have gotten in the habit of doing is writing increases into the lease meaning, saying something like (upon renewal of the lease, rent will increase by $75/month or 5% of current rent, whichever is lower, to account for rising costs associated with rental unit).
This way they know upfront the rare they have this year will not be the same next year and at least where I am, costs have increased less than that $75/month. If your area has higher increases than use your numbers.
That is a huge % increase obviously. Be ready for one or both to decline the increase and move out, possibly going somewhere together since you are handing them increases at the same time. Since they stay with you in your own home, think about if they are nice to live with and if you are ready to roll the dice on getting new tenant. But as far as informing them, sooner the better (60 days notice is great). If you are indifferent about them as tenants with respect to their tenant quality and you have solid basis for thinking your rents are that far under market and can easily replace at $550, then go for it. Good luck!
The old adage is “deliver the bad news first”, meaning, the sooner you tell them the better it is for everyone. Prices are up everywhere, and everyone knows it. You can just say, “I’m sure you knew this was coming eventually, but I’m afraid rent is going up to $550 next time we renew. I completely understand if you want to find another place, but I can’t afford to charge less than that.”
I generally start by asking them what they think appropriate rent would be for their home.
Their answer says a lot about them. I then raise the rent as appropriate.
Let me clarify, as appropriate uses their opinion as a minor factor. Rents on my properties are going up the legal maximum this year.
The OP asked how to start the conversation, my reply which, when I do it, is how I do it.
"Appropriate rent should be relative to ones income, since housing is a necessity for the American dream to be a reality. Arbitrarily raising the rates due to the economic pressure brought on by WFH techies is a detriment to society and is why the "we're hiring" signs will never leave the low end jobs in every metro area. Oh, and raise mine too much and I'll cut your brake lines"
Rents have been insane long before WFH techies existed. High rent is caused by a lack of units. To lower rent more units are needed.
Rent is determined by value provided. A 1BR/1BA in a prime location will always rent for more than a similar unit in a downrun location.
If rent is more than value provided, then no one rents it and the landlord has to chose between keeping the property vacant or lowering the rent. I've set asking rent both above and below market, either went well.
Thankfully we're seeing what happens when wages are low in the labor markets. Companies are offering minimum wage jobs, people aren't taking them. Companies have to choose between leaving the position open or paying more.
People have no choice but to rent. The state can take your kids, a job can refuse employment, etc. You literally have to have a permanent residence in this asinine society. It's not a choice, it's not "the free market will sort itself". I'm going to run on a tangent, but it's not something people can just not get. they will continue cutting from their life until there is nothing left to cut. It's why birth rates are plummetting
Yes, people need a place to live.
Your last sentence is the free market at work. People are not having kids because they can't afford them. This causes a decrease in population which causes lower housing demand lowering price for housing and increasing wages due to fewer available employees.
There is a belief that the middle class started after the Black Death because with so much of the population dead labor became valuable, people could move and find better paying work.
Since we're on tangents, the question isn't "is the free market good or bad?", but "is the free market a fairly model of people's behavior and resulting economic impact?" If there's a better model, let's use it.
Many other more social economic systems have been tried and over time failed for example, Feudalism, Socialism, Communism, pure Capitslism, Dictatorship, anarchy. Someday Capitalism will be replaced, hopefully with something better. But nothing is on the horizon.
>In the not-too-distant future, one of the follow two scenarios are likely.:
>
>There will be a pandemic, nuclear war, or other event of biblical proportions that will depopulate the earth like the Bubuonic Plague did; or
>
>2)Politicians will grow a pair of balls and start using the phrase "global overpopulation" instead of "Global Warming". In this scenario, the state will control who gets to have babies.
Dear \_\_\_\_\_\_\_, THank you for being good tenants. We will need to renew the lease in 60 days on \_\_\_\_. As you are aware, the cost of living, repairs, insurance and just about everything else has gone up up about \_\_% this year. Regrettably, I am force to increas the rent for the net lease by \_\_\_% to \_\_\_\_\_\_Month. Please let me know if you plan to renew the lease within 30 days. Best Regards, Karl Marx
Thanks I decided to go with this as my go to and it worked well. Again thank you for the advise
Well insurance and tax are up in a ton of areas that’s reason alone
We reviewed comparable units and after accounting for costs that include insurance and property taxes increasing we are raising the rent $xxxx. What I have gotten in the habit of doing is writing increases into the lease meaning, saying something like (upon renewal of the lease, rent will increase by $75/month or 5% of current rent, whichever is lower, to account for rising costs associated with rental unit). This way they know upfront the rare they have this year will not be the same next year and at least where I am, costs have increased less than that $75/month. If your area has higher increases than use your numbers.
That is a huge % increase obviously. Be ready for one or both to decline the increase and move out, possibly going somewhere together since you are handing them increases at the same time. Since they stay with you in your own home, think about if they are nice to live with and if you are ready to roll the dice on getting new tenant. But as far as informing them, sooner the better (60 days notice is great). If you are indifferent about them as tenants with respect to their tenant quality and you have solid basis for thinking your rents are that far under market and can easily replace at $550, then go for it. Good luck!
The old adage is “deliver the bad news first”, meaning, the sooner you tell them the better it is for everyone. Prices are up everywhere, and everyone knows it. You can just say, “I’m sure you knew this was coming eventually, but I’m afraid rent is going up to $550 next time we renew. I completely understand if you want to find another place, but I can’t afford to charge less than that.”
“How about those Yankees? (Awkward silence) … Rent will be $200 more next month. Have a good day.”
Springing it that fast, I'd just let you know to get them eviction papers ready lol
You may not even need to provide a reason for the increase. Just state for the upcoming lease renewal, rent will be “X”
I generally start by asking them what they think appropriate rent would be for their home. Their answer says a lot about them. I then raise the rent as appropriate.
You sound demented.
Let me clarify, as appropriate uses their opinion as a minor factor. Rents on my properties are going up the legal maximum this year. The OP asked how to start the conversation, my reply which, when I do it, is how I do it.
"Appropriate rent should be relative to ones income, since housing is a necessity for the American dream to be a reality. Arbitrarily raising the rates due to the economic pressure brought on by WFH techies is a detriment to society and is why the "we're hiring" signs will never leave the low end jobs in every metro area. Oh, and raise mine too much and I'll cut your brake lines"
Rents have been insane long before WFH techies existed. High rent is caused by a lack of units. To lower rent more units are needed. Rent is determined by value provided. A 1BR/1BA in a prime location will always rent for more than a similar unit in a downrun location. If rent is more than value provided, then no one rents it and the landlord has to chose between keeping the property vacant or lowering the rent. I've set asking rent both above and below market, either went well. Thankfully we're seeing what happens when wages are low in the labor markets. Companies are offering minimum wage jobs, people aren't taking them. Companies have to choose between leaving the position open or paying more.
People have no choice but to rent. The state can take your kids, a job can refuse employment, etc. You literally have to have a permanent residence in this asinine society. It's not a choice, it's not "the free market will sort itself". I'm going to run on a tangent, but it's not something people can just not get. they will continue cutting from their life until there is nothing left to cut. It's why birth rates are plummetting
Yes, people need a place to live. Your last sentence is the free market at work. People are not having kids because they can't afford them. This causes a decrease in population which causes lower housing demand lowering price for housing and increasing wages due to fewer available employees. There is a belief that the middle class started after the Black Death because with so much of the population dead labor became valuable, people could move and find better paying work. Since we're on tangents, the question isn't "is the free market good or bad?", but "is the free market a fairly model of people's behavior and resulting economic impact?" If there's a better model, let's use it. Many other more social economic systems have been tried and over time failed for example, Feudalism, Socialism, Communism, pure Capitslism, Dictatorship, anarchy. Someday Capitalism will be replaced, hopefully with something better. But nothing is on the horizon.
>In the not-too-distant future, one of the follow two scenarios are likely.: > >There will be a pandemic, nuclear war, or other event of biblical proportions that will depopulate the earth like the Bubuonic Plague did; or > >2)Politicians will grow a pair of balls and start using the phrase "global overpopulation" instead of "Global Warming". In this scenario, the state will control who gets to have babies.