A good renter and zero vacancy rate are your two best friends. If the renter is good and paying on time and caring for your home and you have a zero vacancy period for two years you'll save. Taxes have actually gone down in many homes based on new assessments so things look good at this time. I would write in the lease that the second year dependent on tenants remain in good standing and smile! It's a win win
Keller Williams AZ Realty
Select Realty Group
Do you have a good tenant? Listen odds have it(without knowing about your home) that you could probably get more in rent but if your fortunate enough to have a good renter and they have been good over the past couple years, why ruin a good thing for a little more money. Talk to your renter, find out their upcoming year goals and renew the lease for one year at a time if you think the market is going to change. If you had not had any issues and they have been good, I would renew the lease and be thankful you have a good renter.
If you would like a free copy of the landlord/tenant act please go to http://www.INSTANTRENTERS.COM.
I hope this helps out.
On the other hand, anyone who believes we are not experiencing an inflationary period econonmically has not been to the grocery store lately. So you need to cover yourself in the event the price of things goes up. What do you, the landlord, pay as far as utilities, heat, hot water, electricity, water, sewer, trash removal, and taxes? How likely is it that the cost of those items will increase over the next two years and by how much? How much of a financial hit can you take in exchange for the promise of guaranteed payment and decreased effort? I like the idea of a cost of living increase, but I am not sure the national statistics includes all the costs associated with owning a property. Still, you have to use something as a bench mark.
If you use a professional financial planner or CPA you may want to discuss it with them. Or, if you are a member of your local real estate investor's association, there may be some guidance you could get from your fellow investors. In any case I would recommend building in a reasonable increase each year to account for any increase in costs.
Here are a few things to consider:
1) How long has the tenant been there?
2) Are they paying rent on time?
3) Are you going to re-run their credit check and background check?
4) Are you comfortable with a 2 year lease?
1) Extend the lease for 1 year and look at rental values then
2) Extend the lease for 2 years with a COST OF LIVING INCREASE that meets the current inflation rate (example: 3% per year)
You can see what homes are renting for in the 85254 zip code by going to this website:
I hope this helps
In business all is fair. A rule of thumb is factor 2 month's vacancy and ask yourself over a 2 year period is it profitable to get 'market rent' if it means being vacant for a period.
That said there are other factors - like can the tenants actually afford more rent? (They may not) And will the market give more rent (It probably will in Scottsdale)
I live and work in Scottsdale and the rental homes available are very low. People pay between 1400 - 2200 for a 3BR to 4BR depending on North or South and other factors.
As many people in outlying suburbs lose their homes to short sale and foreclosures many high quality renters are entering the tenant pool and relocating closer to the city center. This trend is pushing up rents.
SO while your tenants may not be able to afford more rent, someone probably will, and they will probably pay more within 2 months. If you figure you are getting 1400 now and you could get 1600 - is it worth losing 2800 to get the better rate long term.
I know this must be a tough decision on your part. You run the risk of losing a good tenant by raising the rent. Yes, you want to get the "fair market" for your rent in your area of Scottsdale. However, you must weight this increased rent against the move out and move in repairs, cleaning and preparation in addition to the costs to rent the home to a new tenant, including time idle with no rent coming in.
Spread the numbers, ask a Realtor what your home would rent for and for the average time on the market for other homes similar to yours. Many people are not looking to move in December, so keep that in mind.
May I wish you the best with your decision.
Jeff Masich, Realtor
Is the current rent in line with rent for similar properties? If you want to sell it as an investment remember investors look at the rental income.
If it is difficult to find tenants and these tenants pay on time , you might want to consider two year lease but you might want to consider asking for higher amount in the second year.