Shall I Raise My Tenant's Rent?

[andasai]

I am torn as to whether to raise the rent on my central Seattle 3 bedroom house. When I was single (& poor) 30 years ago, I lucked out & was able to buy this house when Seattle prices were ridiculously cheap. I’ve had the same tenant for 25 years.(nice guy) & as a landlord, I’ve been very good about keeping the house updated and in tip top shape. Here’s the thing: In 25 years I’ve only raised it 3 times. I know, not very smart way to operate a business! But I’m an old softy, who doesn’t want to be the greedy landlord, pricing people out of being able to live in Seattle. I could get $2500/month and soft hearted me is only charging $1400. I’m feeling more and more that I should raise my rent. If it makes any difference, the house is paid off and although it’d be nice to have more $, I’m not in anyway in desperate means. What do you all think?

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[Bonnie]

Well, it’s nice of you to keep the rent so low but is it keeping up with the raising cost of property taxes? At the very least you should raise it to cover your property tax increases over the years, which I am sure are significant.

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[skeeter]

You’ve had the same tenant for 25 years??? That’s gotta be some kind of record.

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[jissy]

I see your dilemma and share it with you somewhat. I too have a rental property (not in the city of Seattle though) and have had the same tenants for 6 years, raising rent $35 one time in that 6 years, only because we include some utilities in the base rent and those utility rates have gone up.

I battle with this, too but ultimately have decided to keep it as is b/c what we’ve saved in lack of tenant turnover over the years is worth far more to me than getting more rent. It’s a mental vs. financial trade-off for me (& my property is nowhere near being paid off). I guess though if I had a tenant that was causing trouble or always complaining about something (doesn’t happen when you maintain things and keep it in good repair) I’d reconsider. I don’t think just because you can that you should but it’s an individual choice for the property and you as a landlord – you’ve got to look out for yourself and your future financial plans. I have rental property for a Plan B to move into if ever needed (it’s happened once before) but also b/c I am a small business owner with no 401K or pension and its a little bit of a plan for retirement. So I have to plan accordingly in my best interests not necessarily those of my tenants just to be a nice guy.

And I’m sure your tenant has sort of been waiting for it. I think an increase can be appropriate if you’re going to do some improvements, too.

Good luck, you’ll make the right decision.

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[Michael Waldo]

I think you need to raise the rent. Not necessarily up to current market rate, but $1,400 is a small studio apartment these days. I agree with Jissy, sometimes it is worth under charging for such a long time tenant. Who knows who you might get in their place. I lived in a W.Sea rental for ten years and he raised the rent very little. He had two horrible tenants in a row who trashed the place. I kept the yard up, did minor repairs myself and it was worth it to him to keep me there. He was sorry to see me go. Perhaps talk to your tenant and see what kind of increase they can handle.

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[seaview native]

How nice of you to be thinking like this. I was in a situation where my landlord raised by rent over 30% in one year to lift to market rates (after I had been there for at least 5 years) The change certainly threw my life into turmoil. So since you have such a great tenant, if you do need to raise the rent, I would give him lots of time to figure out next steps and maybe do a stepped increase-let him know you’d be needing to raise the rent yearly at a moderate rate. While I landed on my feet after the change, it really was emotionally quite a drain for the few months in which I was trying to decide what to do.
And I think the idea of talking to the tenant about what is doable is a great idea.

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[Jeannie]

I agree with the comments re talking with the tenant. And do you know anything about his financial situation? E.g., is he working as a developer at Microsoft and earning six figures, or is he struggling with a minimum-wage job?

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