No. The OP is complaining about THIS.
That is a legitimate thing to be angry about. But I don’t really think that’s the landlady’s fault.
I agree with this completely.
and also:
[QUOTE=Eonwe]
I will say that if I raised my rates every year to match my increase in costs I’d be very shortly out of business because clients would go elsewhere.
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If you continue for many years in this manner, soon your costs of doing business will outweigh your income, and you will go out of business. You must, of course, eventually raise your rates to match increased costs. Everyone does this out of necessity. If they didn’t I would be able to head down to my local shoe repair place that’s been in business since 1940, and give the guy a nice shiny quarter to fix my boots. “Same prices since 1942 sir!” If you don’t have a plan for doing this in a reasonable manner, you might as well fold up the tent right now - your business plan is on track to bankruptcy.
Here’s a hint for what a reasonable plan might look like:
- keep any rate increases on par with what inflation or your cost increases are like. Say 4%
- let your clients know well ahead of time that you’re planning this - don’t spring it on them as a surprise. Say a year’s notice of an increase.
Does this plan look familiar to you?
The gross is meaningless.
If I am running a business that grosses over 10 million/year, I must be doing pretty good, right?
If my Gross is 10 million/year, and my costs are 12 million/year… Do you still think I’m doing pretty good? Do you think my business can keep operating year after year like this?
Or did you mean a profit of $100,000 a year is doing pretty good? This is also meaningless. Here’s why:
If I own a property that is valued at 10 million dollars, and my profit from the property is 100,000 dollars per year, that is a 1% return on my investment. That is in actual fact pretty crappy.
The OP is a BUSINESS OWNER. Don’t try to baffle him with facts.
I’m actually facing that same type of situation myself, but from the other side of the table.
I bought a 2 unit investment property about a year ago, and one unit had just renewed. The other one turned over the tenant during the year, so I’m facing my first lease renewal as landlord next month. I would rather keep rent at or slightly below market rates, so I don’t want to increase the rent if it means that I might be going over market, and I’m struggling to get a handle on just what market rates are for this apartment. I’ve looked through ads but can’t find anything directly comparable, and I don’t want to go about asking people what they charge or pay for rent.
I have a brother who is a very experienced real estate guy so I asked him. He says his general policy is to not increase rents ever. His philosophy with tenants is “you leave me alone and I’ll leave you alone”. (He adjusts the rents when the apartments turn over.) OTOH, I’m not sure I share this philosophy, and plus, this tenant has not exactly left me alone. [He’s a good tenant in that he’s paid the rent and (according to my wife, who - unlike me - has actually seen the inside of his apartment) has kept the place in very good condition. But at the same time, he got me involved in his dispute with the other tenant, who claimed he was a jerk and bully and that they moved out because of him.]
Under the terms of the lease (inherited from the prior landlord) the rent can be raised up to 5% a year. I sent him an email today, telling him I was raising it 2.9%.
Slow clap 
Seems to me like rents are going up by 7% a year (based on this former apartment) and you have an offer in hand for your rent to go up by 4% a year.
Let me get this straight.
You found a place that is comfortably sized, in a good area, in decent shape and is in your budget?
Want to trade? I pay $650 a month for a room without a door in a rat infested flophouse in a bad part of town. I thank my stars every day I found this place, because it’s the cheapest rent I’ve seen in DC and hitting one out of four desirables is a win. Oh yeah, I’m a 32 year old professional, too. Yeah, it sucks that even as grown-ups we don’t get a free pass to the white picket fence. But I choose to live in a pricey city, which is a luxury of it’s own.
Seriously. College towns are a bad scene unless you can live ultra-cheap like a college kid or are well-off like a professor. For any people in the middle, it’s naturally an unbalanced economy. The only real industries that thrive in college towns are service industries, and there is an infinite supply of cheap labor. What are you going to do? Is it really fair to resent the college just for existing and doing what it is there to do?
Most of our ancestors lived someplace that was also a sucky place to get ahead, and they packed their bags and went across the Atlantic (or Pacific, or Rio Grande) for greener pastures. This idea that we are owed a nice lifestyle of our choice is absurd.
I sell and lease commercial real estate for a living as a commercial real estate agent. Decisions to raise the rent in this economic environment are not typically made willy nilly, and there are a number of costs involved in owning real estate that outpace inflation.
Whether you have sympathy for the landlord’s position is beside the point. With all due respect based on what you have said in this thread so far it really does not sound like you have a solid intellectual grasp on the nature of what it takes to be successful in business. If you cannot find some way to pass on your costs and make a profit, at some point you are going to eat enough losses that your business will fail.
Re
Facing a competitive economic environment the answer to survival is not to keep eating losses so you can hang on by your fingernails as your profitability dwindles (your scenario above). You seem outraged and annoyed at basic economic facts of survival and the way most business people have to deal with them. None of this bodes well for you being successful in business over the long run unless your attitude changes and you gain a better understanding of the way successful businesses operate.
The rent is possibly going up even less than inflation. Our property taxes have gone up 25% in the past year, and our property taxes are about 20% of our monthly housing costs.
Get a 2 bedroom and move in an extra roommate. It sucks, but times are tight. You won’t be the first couple who’s had to share living space to make ends meet. Take the money you save on rent and put it by for a house down payment.
What business are you in, that you can’t raise your prices? Most businesses can and do raise their prices for their products or services as their costs go up. If you can’t, you don’t have a sustainable business model. You might even be in a dying industry. It might be better to cut your losses and get out now rather than in several years when you’ve run up a lot of debt trying to keep your business going. There’s no guarantee anywhere that any kind of business will be successful, or that a business that once was successful is always going to be successful.
In my job I analyze budgets for apartment complexes and yes costs go up at least that much on an annual basis. I agree. Very lame pitting everybody’s costs go up everywhere. Of course those increases will be passed along to the consumer. Duh!
But as i suggested before, it’s not really “Duh!” if the market won’t support your price increases.
If your costs, as a landlord, go up (for example) 6 percent in a given year, but rents in your area stagnate, then you can whine all you like about wanting to pass your cost increases along to the consumer, but you’ll have a hard time raising rents if the market itself won’t support the increases.
Just like the landlord has no obligation to take the tenant’s salary increases (or lack thereof) into account when setting the rent, the tenant has no obligation to take the landlord’s expenses into account when deciding whether or not to put up with a rent increase in a flat market.
As i mentioned earlier in the thread, i negotiated a rent reduction a couple of years ago, based on the market in our area. When i asked for the reduction, my landlord resisted at first, saying to me that his expenses had increased and that he thought that our original rent was a fair amount.
I said to him, as politely as possible, that his expenses were of no interest to me. My only concern was whether i was paying a rent that reflected the market value of the property, and i was basing my request for a reduction on the fact that market rates in the area had decreased, and that the next-door condo had remained vacant for over two months after previous tenants moved out, leading to a reduction in the advertised rent to less than what my wife and i were paying at the time.
I also made clear to the landlord that he was well within his right to refuse my request. I said, “If reducing the rent won’t allow you to cover your expenses on this property, then i’ll understand if you say no. But if you do, i’ll also have to start looking for another place, because i know that i can get a place as good as this for less money in the same area.”
I guess my point here is that some landlords seem to have the same problem as the OP of this thread, from the opposite end of the deal. Some landlords seem to assume that the laws of nature accord them the right to annual rent increases even in stagnant or declining markets, and then wonder why good tenants move out.
That’s all completely true of course, but it’s also true that - all else being equal - if the factors that caused a given landlord’s expenses to go up are general factors that apply to all landlords in the area (e.g. taxes, or general inflation) then this will tend to push the market price higher.
OTOH, all else is not always equal, and if an area is in decline (or too much new housing created) then the market rates can get pushed down anyway, and if the landlords’ expenses are going up then that’s their tough luck.
NOoooooo Landlords make the same profit every year. No matter what. Any and all new expenses are pass on to the tenants. In fact, we should feel sorry for them as I’m sure they are traumatized by raising the rents.
Of course the face that people are lucky to get a 2 or 3 percent raise a year is their tough luck. Maybe I should go to my boss and tell him that my expenses have gone up 4% so my salary will be going up 4%.
I can’t tell if that’s sarcasm or real. I’m sensing it’s not sarcasm, which is kind of scary.
Then, (to paraphrase mhendo, who had very good points):
If your costs, as a consumer, go up (for example) 6 percent in a given year, but salaries in your field stagnate, then you can whine all you like about wanting to pass your cost increases along to the company, but you’ll have a hard time raising your salary if the market itself won’t support the increase.
What is so hard about these concepts?
on edit, I’ll just say this: Rent is bad and we shouldn’t have to pay for stuff.