Q. I have some friends whose rent went up a ton last year. Some of them actually had to move out because they couldn't afford to stay. I’m searching for a new apartment now. Is there any way I can protect myself from that happening to me?
A. Yes. When it comes to negotiating rent for the second year, you have a bit more leverage with the landlord if you do it before you ever move in, rather than when you face the expense of moving.
When you negotiate your initial lease, ask your landlord for an option to renew and include an escalation clause. That is a term in the lease that gives you a contractual right to renew (if you decide to) at terms you agree to now.
A typical escalation for a residential lease would be 3 – 5% of the first year’s rent. You might also be able to get an option for year 3, though many landlords do not like to negotiate that far in advance.
Q. I am a small landlord and would like to be able to get the most out of my rental building. Do you have any advice for me?
Definitely. There are a number of successful strategies for maximizing rents in your building:
- Say yes to dogs. According to the U.S. Census Bureau, 42.1% of households with annual income over $85,000 own a pet. That’s quite a large section of the market to exclude from your pool of potential tenants.
- Go smokeless. These days, besides producing healthier tenants, a smoke-free building can be a lucrative marketing technique.
- Be a mensch with security deposits. Holding deposits just to “see if the tenant will really pursue it” or overcharging for necessary maintenance and repairs will not promote a landlords reputation in the community or in the Internet age.
- Be uber-responsive . When tenants have complaints, they should be addressed immediately. Nothing makes a tenant unhappier than a non-responsive landlord.
- Rule with an iron fist. Set strict rules and regulations and enforce them. Don’t allow severely delinquent rent payments to slide and don’t tolerate tenant behavior that make other tenants quiet enjoyment of the property suffer.
- Build community. People want to like where they live and this will give them a reason to be proud of it. Send out monthly newsletters to promote what’s happening in the building and the neighborhood and sponsor tenant mixers.