Landlord upping rent 40%

[FremontPC]

"Another bizzare thing in my area is that they keep finding the tiniest piece of land and putting up a strip mall or oddly shaped retail complex."

Cheap money chasing "investments" that may pay off somewhere down the line. Interest rates are low and real estate typically is a favored investment vehicle for people looking for a place to park money and perhaps get a return that's riskier than Treasury Securities and might offer a better return too. Then there are the real estate funds, REITS, etc.

Sometimes people just have more money than sense, and really not all that much money...

 

[Galdorf]

what happened in my area is some mines closed permanently and other mines are cutting back on production most of the economy here now is retail and since economy is getting worse there are so many empty buildings it is not funny even main mall has 5 closed stores and are empty.
most of the big box stores under sell i can`t even match prices they are lower than my cost.
sales
1. Costco this store is busy parking lot is always maxed out they sell everything get most of sales in area.
2. Walmart Costco competitor alway having price wars number 2 in sales

 

[Mainstay]

My Property Tax went up 50% this last year. A 33% increase the year before. Water metering rates are going up this year. Hydro always goes up.

So if you've been paying the same rent for the last x years, there is a good chance that they are simply adjusting their rates to reflect the overall increase in their overhead.

I know we will be giving notice to our tenants that we will be increasing their rates (3.7% is the maximum we can raise it for RESIDENTIAL properties).

Some considerations from a COMMERCIAL perspective:

1. I don't want to set a rent rate that doesn't reflect fair market as I don't want to set a precedence (and maybe always be stuck with low rent); I also don't want to drive down the resale value of my property
2. I don't want to sign a 5 year lease on a renter as the real estate markets are going through the roof; I may want to sell, and sell fast.
3. Through holding companies and tax laws, a un-leased property may have more value than a leased property (income generator). The holding company can operate at a loss.
4. The cost to improve the property may be cost prohibitive (all of our commercial buildings with tenants require massive improvements to the infrastructure from a fire perspective. Sprinklers and firewalls cost a lot of money. They may simply be looking to cover these costs before laying out the money to actually do it OR they may prefer to have a lower liability and oust the tenant in the hopes of selling the property.

Not related to me, but maybe you:
5. The property may form part of a bigger picture that you are not aware of (foreign investment?). The owners property portfolio may include plans for combining multiple properties and selling them as a larger investment bundle (some small shops around me just got BULLDOZED - beautiful buildings that I would kill for - BULLDOZED - . Some box store is on its way, no doubt.

<edit> the irony is that one of the main building that got leveled was the employment center.

 

[Your PCMD]

When the economy is tight, a bird in the hand is better than two in the bush.

That depends on what type of bird it is. If its a chicken, duck or turkey, its better in my belly then in a bush.

 

[NYJimbo]

That depends on what type of bird it is. If its a chicken, duck or turkey, its better in my belly then in a bush.

If you have all 3 then you have a Turducken. 'Murrica !

 

[Blues]

I will add a piece to this the area I live in just had a property value reappraisal, they do one every 4 years, this value is used in calculating the annual property tax. This years reappraisal has the average across the entire county at ~40% and in a few areas close to the center of town, which will include many business areas, the increase was 90% or greater I have seen instances of an increase of 170%. The actual tax rate will be lowered but if your increase is over the county wide average then it means more taxes. To add to this a residential property only 25% of the value is taxed but for commercial it is 40% so their taxes are already high. When you have a long term lease/rental agreement the property owner is likely to get hit with this increase while a contract is still in place.

I am not trying to justify any increase or leaving properties vacant but adding insight to what your landlord has on his/her plate.

 

[Galdorf]

I finally got him down to 10% with the amount of empty spaces he has now asking 40% is a little too much 2 of his larges spaces are still vacant almost 6 months and the largest almost a year.