I bought a house last year that I’m going to live in eventually after my elderly parents (who I live with) pass or move into a nursing home. In the meantime I’m renting it out below market to a coworker who needs an affordable place so she can keep her daughter in our school district. I get enough to cover my insurance and property taxes and some additional renovations to the house. I consulted with a property lawyer before buying it and he gave me a copy of his standard lease which he recommends to clients; it included an automatic annual 5% increase in rent. I’ve rented most of my life and I’ve never seen anything that rapacious.
In fact the 5% increase will roughly keep you even especially if you are charging under market rent. That’s not keeping up with rental market increases, just inflation + the consequences of market increases even if you aren’t tracking with rental rates yourself.
If you charge $1000 this year that’s around $950-$970 next year. Or to flip it around, say you have $1k in expenses for repairs etc that’s around $1030-1050 next year. And that’s with average-ish inflation (it was 7% in 2021!). The 5% covers that plus increases in property taxes (jeebus fuck) and insurance costs (holy shit).
I bought a house last year that I’m going to live in eventually after my elderly parents (who I live with) pass or move into a nursing home. In the meantime I’m renting it out below market to a coworker who needs an affordable place so she can keep her daughter in our school district. I get enough to cover my insurance and property taxes and some additional renovations to the house. I consulted with a property lawyer before buying it and he gave me a copy of his standard lease which he recommends to clients; it included an automatic annual 5% increase in rent. I’ve rented most of my life and I’ve never seen anything that rapacious.
In fact the 5% increase will roughly keep you even especially if you are charging under market rent. That’s not keeping up with rental market increases, just inflation + the consequences of market increases even if you aren’t tracking with rental rates yourself.
If you charge $1000 this year that’s around $950-$970 next year. Or to flip it around, say you have $1k in expenses for repairs etc that’s around $1030-1050 next year. And that’s with average-ish inflation (it was 7% in 2021!). The 5% covers that plus increases in property taxes (jeebus fuck) and insurance costs (holy shit).