I could use some advice on setting rent rates. (Click for more details)
I own a bakery and a restaurant in San Bernardino County, California. It has been years since I have raised rent, and due to the increased cost of living, it is definitely time. What is the best way for me to determine how much rent I should be charging? Is there a person or organization that I should consult? I'd like to be as informed as possible when I tell my tenants that I am raising rent, and I want to be able to prove to them that the rent increase is reasonable according to market value. Thanks in advance for the advice! =)
[{"id": "ififocg", "text": "First and foremost hire a broker. For a million different reasons. \n\nShort of that you can get a market rent study from any appraisal firm, that will only cost you a couple grand.", "replies": [{"id": "ifihi4o", "text": "Thanks! This sounds like a good plan. =)", "replies": [{"id": "ifiuzqn", "text": "You can do the research yourself once you find out the commission the brokers will charge. \nYou can pull the market rates from various commercial broker website marketing info. This can be a bit misleading since it leans more towards Class A retail and your place may have reasons to justify lower rent. Additionally you can look at inflation over the term of the lease and add a little more to that as a base for your rent increase.\n\nFor San Bernadino it is highly likely rent has been going up faster than inflation.", "replies": [], "depth": 3}], "depth": 2}, {"id": "ifjp4ry", "text": "Lol imagine paying a few grand for some comps that an analyst getting paid 30 an hour put together in half a day", "replies": [], "depth": 2}], "depth": 1}, {"id": "ifigc0z", "text": "Due_, offered good advice. Additionally, You could ask your tenants what they think is fair. If they give you a number that your ok with\u2026 then everybody is happy. Also, due to waiting so long to increase rates to market\u2026 your tenants will likely get some sticker shock and may not be able to absorb the large increase\u2026 even if it is a fair market rate. You may want to weigh the risk to vacancy versus the increased  rents asked/received.", "replies": [{"id": "ifihsl4", "text": "You make some good points. Thanks! =)", "replies": [], "depth": 2}], "depth": 1}, {"id": "ifimaie", "text": "Comps are everything. The market sets the rates. \n\nEvery quarter we do a market survey of comparable properties and update the fair market rent for each of our units. \n\nOn a turnover, we charge the market rate - that\u2019s easy. For a renewal, our default was always a 3% bump per year - it\u2019s important to set the expectations that rent goes up every year and we make sure it does. But during the last two years 3% has been too low to keep up with the market.  So now we have a letter we send listing comparable rents in the area and the increases in cost that we have been hit with and apologetically ask for a bigger increase. In some cases the increases have been very large. We always give at least 60 days notice for a big increase. \n\nTbh, many tenants are mad about getting a more then 3% increase and let us know about it. They reply that they are moving. Then a few weeks later, after they have checked to see if they can find something cheaper, they apologize for their initial reaction and sign on for the higher rent. The market dictates pricing. \n\nDo your homework. Find out where the market is and match it.", "replies": [{"id": "ifinhxu", "text": "Very valuable information. Thank you! =)", "replies": [], "depth": 2}], "depth": 1}, {"id": "ifiytlj", "text": "Go to [Loopnet.com](https://Loopnet.com).  Search for available properties for lease in your zip code.  Those are your comps.", "replies": [], "depth": 1}]