Quote:
Originally Posted by TiltonBB
I am not sure if you have any actual experience owning rental properties but I would tell you that is just not correct.
The tenant couldn't care less what your expenses are, or have any interest in helping you to make a profit. Tenants will stay as long as they think they have a good deal and like where they live. As soon as you raise the rent to cover YOUR expenses, if it does not reflect fair market value, they will move along. From a tenant perspective your costs of ownership and maintenance mean nothing.
For the last 42 years I have followed the rental market closely to establish fair rents. I have reviewed numerous ads both in print media and on many websites to determine the market value of a property and determine what amount I could charge. That determination is what works in the real world, not what my expenses are.
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I agree if you raise the rent $150 a month to pay for a roof that had to be repaired the tenant is NOT going to be OK with it. What I am saying is that BEFORE you rent out a property you should be including a maintenance buffer into the rent. If you as the landlord have a mortgage on the property, wouldn't you make sure the rent covers that? You know you will have to do some cleanup (paint touch ups, etc.) between renters. Shouldn't the rent or damage deposit cover your costs? You should be able to estimate your required maintenance expenses using expected lifetimes of roof, heating system, appliances, flooring, etc and add that coverage to a planned monthly rent.
If you do not, do this, you are planning to subsidize your tenants and THAT is not smart business. Maybe in certain areas you can't get the rent you would need to cover your costs. IMO, if would be business foolish to rent out a property in that area. You would be far better off to sell the property and invest your money in the market where you can get a 9.5% return with a LOT less hassle.