# Raising rent



## Newby1983 (Apr 9, 2015)

Hi everyone. Looking for experiences of people who own investment properties. I've owned one rental property outside the gta for 3 years. Tenants cause no problems the odd maintenance issue once in a while but rent always paid on time. I'm renting it out for $1410 per month they pay utilities. Based on what I've seen in the area lately comparables are around 1450. I can only raise by a max of $28 per month. I replaced the 25 year old furnace and AC last year ($4700) no doubt reducing their gas and hydro bills. Since they moved in 3 years ago insurance and property tax have increased by $120 and $200 respectively. My mortgage interest has reduced however by $400 per year. 

Would you raise rent? Keep in mind this is in the hamilton region.


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## dougboswell (Oct 25, 2010)

Do the other comparable have their tenants pay all the utilities? If not that could explain the slightly higher rents. Your furnace was 25 years old so it was on its last legs. You would have had to replace it whether tenants were in there or you were living there. At least this way you can write the cost off. It sounds like you have great tenants. Maybe raise it by half the allowable.


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## Davis (Nov 11, 2014)

I found that when the tenants moved out, I usually had to paint, repair, clean, and lose a month's rent. Keeping good tenants happy by freezing their rent for a few years pays for itself very quickly. Ask "Just a Guy", who posts here regularly and has lots of landlording experience.


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## Just a Guy (Mar 27, 2012)

Not sure what your cash flow is like, but my general rule of thumb is to keep a good tenant happy. You could get a really bad one and you'll lose a lot more than $28/month. 

There are some tenants that I've never raised the rent on and they've been with me for more than a decade. My bills are paid, I make a profit from them, they keep my place in great shape and never bother me. It's a win-win. If I maximized the profits, they'd probably have moved, I could have gotten a tenant who was much more work, or worse yet, slipped past the screening and trashed the place costing me thousands.

If your place is being paid off, you are meeting your expenses, don't get greedy.


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## none (Jan 15, 2013)

I'm a good tenant and I don't have a problem with my landlord raising my rest ~3% per year. It's inflation.


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## Newby1983 (Apr 9, 2015)

Just a Guy said:


> Not sure what your cash flow is like, but my general rule of thumb is to keep a good tenant happy. You could get a really bad one and you'll lose a lot more than $28/month.
> 
> There are some tenants that I've never raised the rent on and they've been with me for more than a decade. My bills are paid, I make a profit from them, they keep my place in great shape and never bother me. It's a win-win. If I maximized the profits, they'd probably have moved, I could have gotten a tenant who was much more work, or worse yet, slipped past the screening and trashed the place costing me thousands.
> 
> If your place is being paid off, you are meeting your expenses, don't get greedy.


Thanks for the info. Can you explain what you mean by never bother me and keep the place in great shape? Do they repair minor issues? Do they keep the place clean? 

Ill give you examples of things they've called me for over past 3 yrs 1) furnace not working so I drove there and someone thought the furnace switch was a light...flicked it back on. 2) replaced laundry tub because it's cracked 3) screws on aluminum door came off. They are not clean people but I don't care cause they don't damage anything.


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## maxandrelax (Jul 11, 2012)

Just a Guy said:


> Not sure what your cash flow is like, but my general rule of thumb is to keep a good tenant happy. You could get a really bad one and you'll lose a lot more than $28/month.
> 
> There are some tenants that I've never raised the rent on and they've been with me for more than a decade. My bills are paid, I make a profit from them, they keep my place in great shape and never bother me. It's a win-win. If I maximized the profits, they'd probably have moved, I could have gotten a tenant who was much more work, or worse yet, slipped past the screening and trashed the place costing me thousands.
> 
> If your place is being paid off, you are meeting your expenses, don't get greedy.


As a responsible renter, I support this 100% I lived in a place for 6 years, no rent increase. I would do anything for that landlord and house. I took great care of the place. He was truly sad to see us go. The LL and I still talk once in a while. I could write a song about it for you... Speaking of that... Woody Guthrie apparently hated his landlord of many years - Donald Trump's Dad. Guthrie wrote songs about the experience in a negative light.


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## Rusty O'Toole (Feb 1, 2012)

The amount you can raise the rent, and the time, (once a year) are set by the Rent Review Board.

You should raise the rent by the legal amount every year. There are good reasons for this.

If you don't bother for several years, and then find out the property no longer pays its way, you can't make up the foregone increases. And, if you do raise the rent, expect the tenants to resent it. Oddly enough they do not resent regular increases. They get used to them and don't mind too much. Nobody likes an increase in their rent but if you expect it, and it is a small increase, it's no big deal. But if you let it slide for 3 or 4 years all of a sudden you are a monster. They never reflect that they have been getting off cheap all these years they only see the sudden unexpected increase.

Another thing you can do is offer a discount for prompt payment. You can't charge a penalty for late payment but you can offer a discount for paying early.

I can assure you, your tenants won't move. If they have been there a few years their rent is cheaper than comparable apartments even if you have had regular increases. Sometimes they get sore and threaten to move but they never do - once they look around and see what they would have to pay for an apartment anywhere near as good, they change their minds.


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## Just a Guy (Mar 27, 2012)

none said:


> I'm a good tenant


I've never met a tenant who said they weren't. That being said, from the postings of your last rental, I certainly wouldn't want you as a tenant. 

If they are "average" tenants, I do raise the rents. You have to make the call as to how good you think they are.

As for Rusty's comments, he forgets that rents don't always go up. There are times when they also go down...take a look at Fort McMurray right now.

Your rental should be priced to make money long term, if your cash flow is barely making payments, especially in this market where interest rates are so low, you've got a bad investment. Most of mine generate several hundred dollars a month in profit, so I can absorb small increases short term (3-5 years) and each mortgage renewal should be increasing profits...

Also, don't be afraid to appeal you property taxes...


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## none (Jan 15, 2013)

Relationships go two ways. My landlord two houses ago was a mentally ill pig. The one I have now is a pro. She actually reduced my rent by $50 a month for no reason ( I offered to pay a years rent in a lump sum for a rent discount - she declined but still reduced my rent - go figure). Most landlords think they're great as well, however many simply aren't and don't know that it's actually a job.

Anyway landlord is great. Hence I don't mind my rent being raised each year. I'm not moving over $50 a month and my place is worth it anyway.


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## NorthKC (Apr 1, 2013)

Coming from a tenant's experience. My landlord could have raised my rent for 3 years but he didn't because I was a good tenant (in his words). When I first moved in, he did have a much higher rent due to a lot of repairs from the previous tenant so he was hedging his bets and his expenses were covered by my rent. 
He did let me know in my 4th year that he needed to raise rent by an extra $5/mth to help cover the increase in utilities (hydro shot up in PY) and I had no problems with it as it was a very reasonable increase. And guess what? He still had me for another 2 years.

My other experience was when I was living in a basement apartment for 4 years. Then one day, I got the form and my rent increased by $50/mth which was right at the limit of the allowable increase. Well, that was a big hit to me at the time as I wasn't making a lot of money and rent was extremely high to begin with so I talked with the landlord to see if we could come to a compromise say a $25/mth increase. They said, "no we can't, we're at a loss and we need to start making it up". I said, "Why didn't you increase it by a small amount each year for last few years? I would have understood it as it's inflation and it would have been easier to adjust my spending. I'm now going to have to cut back on food (which wasn't much at the time) just to pay your rent." 

So guess what? I moved to another place and the landlord ended up dealing with the tenant from hell for the next 2 years. They tried calling me back because they didn't realize what a good tenant I was.

So yes, don't be greedy if they are good tenants. Just do a small increase in rent every year, say 1% which is far easier for the tenant to adjust their spending and it helps you to create a little buffer in your cash flow for future major repairs.


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## Berubeland (Sep 6, 2009)

In Ontario we have 2 types of properties, those subject to guideline increase and those built after 1991 that are not subject to the guideline increase. There are no limits except the market to increase the rent in the first group of properties so I generally do a market survey to see where the property falls. Specifically with new condos, rents after the initially competitive phase of rental (When hundreds of units become available at the same time) may rise. In these cases I will raise the rent up to $100 per month. I currently have a unit that I will raise that much, but the market rent for that place is $150 more than she is paying. 

The maintenance fees increased $200 per month too. 

For the rest I generally raise every year or two, just to keep prices up, it doesn't at all follow the actual price of repairing stuff and utilities and property taxes. Above the guideline increases can be had up to 3% per year, per unit, but the legal fees are insane, the work required is insane, the application fee is $250 which will take 11 years to pay back with your "increase" sure if you have 100 units it's worth it but not for the properties I manage. Not enough units.


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## tygrus (Mar 13, 2012)

Everyone I have ever known that was a landlord was willing take a few dollar hit to keep a stellar tenant. My advice dont rock the boat. Your $28 investment could turn into a larger loss pretty fast.

I would only own individual apartments or condos as rentals because the are virtually maintenance free and the strata board and fees take care of a lot of it. Its easy to pass along a strata increase.


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## Berubeland (Sep 6, 2009)

I understand that's a fear many small landlords have, but they happen to be ripping themselves off for nothing. It's not $28 rent increases that make tenants move.


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## Just a Guy (Mar 27, 2012)

I think the bigger problem with "small landlords" is them buying $400k properties for $1200/month in rent. Nickel and diming tenants is a good way to piss them off. If you need the extra $28, then your investment isn't very good. Rents don't always go up, will you drop it as fast when they go down? How do you explain "yeah, we raised it last year, now we're dropping it". No, they move out on you and you have to pay to refill it.

I'm not against rent increases for some tenants, I do raise my rent on most...but a good tenant is different, and get treated as such.


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## marina628 (Dec 14, 2010)

I thought I had a good tenant and didnt raise the rent ,Rachelle knows all about it lol .I would raise the rent every year no exceptions because no good deed goes unpunished ,you are in business not to make friends .
I pay $1550 plus for a 635 sq ft condo in Toronto for my daughter , I know 100% that the landlord will be asking and I expect to pay an increase.


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## Just a Guy (Mar 27, 2012)

I once had a tenant, he owned his own plumbing and heating company. He put in a new furnace, new hot water tank, kept the place spotless. Never raised his rent for ten years. Sad when he bought his own place.


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## Newby1983 (Apr 9, 2015)

Just a Guy said:


> I think the bigger problem with "small landlords" is them buying $400k properties for $1200/month in rent. Nickel and diming tenants is a good way to piss them off. If you need the extra $28, then your investment isn't very good. Rents don't always go up, will you drop it as fast when they go down? How do you explain "yeah, we raised it last year, now we're dropping it". No, they move out on you and you have to pay to refill it.
> 
> I'm not against rent increases for some tenants, I do raise my rent on most...but a good tenant is different, and get treated as such.


You're a big landlord I take it yet you increase rents on most of your properties. Why is that if its not for the $28? What reaction do you get from your B+ tenants. I think your plumber tenant is an anomaly and no rent increase is a no brainer for this type of tenant.


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## Rusty O'Toole (Feb 1, 2012)

As for Just A Guy's comments - you have to use your own judgement. I meant you should increase the rent every year WITHIN the legal guidelines. In some circumstances you may want have a small increase or even a reduction. The point is that business should be done in a businesslike way. It does not pay to neglect rental properties and it does not pay to neglect rent increases either. I might add that I have a really good tenant in one of my properties and have not raised his rent in 5 years. I know I am taking the easy way out and feel bad about it but at the same time, appreciate that he is a good guy and not a pain in the ***. I also sent him a Christmas card with a $50 Tim's card in it and he put in a new sump pump out of his own pocket. This is what I mean by using your judgement.


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## Berubeland (Sep 6, 2009)

For larger above the guideline rent increases I wrote this blog post http://landlordrescue.ca/the-art-of-above-the-guideline-rent-increases/ and all the tenants either still there or moved because of other reasons. 

Fort York I get $100 more now, the tenants moved because of their visas expiring. Forest Vista they bought a house in Pickering, Sherway they moved 8 month later into a 2 bedroom in the same building, they were very overcrowded anyways. None of them moved because of their large increases but because of other factors in their lives. I end up collecting hundreds of $$ more for the owners, if the tenants really couldn't afford it, I wouldn't force a move. 

It's unfortunate but as the business people in the equation we need to accumulate some $$$ towards future repairs. I hate to inform people about entropy but I've been fighting that ******* for 20 years and **** is still breaking down every damn day. And fixing it isn't cheap. So you have to think ahead other wise you don't have the money to fix things. Needless to say, all that great equity increase and capital appreciation in your property doesn't mean anything until you sell or refinance, you need money today to pay for stuff that needs fixing.


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## Just a Guy (Mar 27, 2012)

Newby1983 said:


> You're a big landlord I take it yet you increase rents on most of your properties. Why is that if its not for the $28? What reaction do you get from your B+ tenants. I think your plumber tenant is an anomaly and no rent increase is a no brainer for this type of tenant.


If it's just normal tenants, keeping up with market rents is just plain good business. If the rents are the same everywhere, there's no real incentive to move. If you read this entire thread you'll see that I say I treat really good tenants well...there aren't a lot of really good tenants out there. I too said you need to use your judgement, maybe you assume our standard for good is the same. Every tenant says they are good, I think most are average at best. I'm in business to make money, but I'm not looking to maximize my profits at the expense of the quality of my business. 

There are a lot of mistakes people make in real estate, I pointed out one before with the purchase price. The rent has to cover the mortgage, the taxes, maintenance,minus dance, and all other expenses including things like travel to inspect the property at least once a month by someone as well as a profit on top (which should be fairly large considering the current interest rates). Most "landlords" don't factor all this in. People are so focussed on "getting into the business" which will "make them rich" and usually have a rude awakening.

This is why I say it's really not a good time to get into the market, housing prices are too high to make it viable. So, you barely scrape by, even at these low rates, probably losing a little each month that you don't even notice, all while patting yourself on the back and looking for ways to get a few bucks more...

Just wait until the interest rates rise, and the economy tanks...rent prices will go down, and expense up...

Sorry people, this is a business, picking up any property and hoping someone will pay for it for you isn't going to work long term...tenants aren't your ATM ready to bail you out. If it doesn't cash flow well from the start, don't buy it.


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## Newby1983 (Apr 9, 2015)

Thanks for feedback. But it seems rents are not increased for model tenants who install sump pumps, furnaces and do other renos...I completely agree for that. But in my case, I probably have B+ tenants at most and as I had the furnace and AC installed, toilet flange repaired, laundry sink replaced, etc. 

For those who care, here is what I've decided.

I will raise rent by $15 to $1425 and still be slightly below market comparables. I am a good landlord (and no I don't just think that ask them) so it's probably a risk for them to leave too not knowing what kind of landlord will be operating their next home. As for my investment, the $15 is not going to make or break the business. 

At the end of the day it's not the $15 I was concerned about but more to do with tenant expectations and reactions to rent increases. Thanks again.


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## bull (Feb 17, 2016)

Just a Guy said:


> I'm not against rent increases for some tenants, I do raise my rent on most...but a good tenant is different, and get treated as such.


I am in a consideration with good tenants.

I have 3 tenants in two rooms (1 couple and 1 single). Recently, I renovated the house (about 10K) and have one more room to rent out. When I revealed my idea to rent out the new room, my single tenant said that 4 people sharing 1 bathroom is not acceptable, couple has no comment because they are really easy. But keeping like the current situation would keep them for long time for sure.

I want to take what I have paid for renovation...My plan is kick the couple out and rent 3 rooms for 3 single tenants. 

But the couple are clean and paying on time. The single tenant, contrary, is very messy and paying on time too. 

From your good experiences, what is the best option for me?


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## Ag Driver (Dec 13, 2012)

What is your tenant turn over? 

When renting out individual rooms, I have had each stay no more than one year. Can you wait it out? 

I personally would continue one with status quo until the couple moves out. 4 is a bit much for one bathroom. I never accept couples for this exact reason -- but then again, I am owner occupied and sharing common space as well.


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## bull (Feb 17, 2016)

Ag Driver said:


> What is your tenant turn over?
> 
> When renting out individual rooms, I have had each stay no more than one year. Can you wait it out?
> 
> I personally would continue one with status quo until the couple moves out. 4 is a bit much for one bathroom. I never accept couples for this exact reason -- but then again, I am owner occupied and sharing common space as well.


Thanks for your advice. What will I do if the couple would stay for at least 2 years? 

Actually, I would lose about 400$/ month for not changing the current situation. Since the rental fee for the couple is higher than single only 100$, if I kick the couple out and accept two singles in, the total number of tenants is still 3, the utilities bills will be almost the same.


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## Just a Guy (Mar 27, 2012)

I'd never rent out rooms individually, nor share accommodations with tenants. It leads to way too many issues and exposes me, so I'm not the person to ask.


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