What would be a fair rent increase?

We have some great tennants, but their rent does not cover all of our expenses. It costs us about $1000/month in mortgage, regime fee, taxes, and insurance and they pay $925. They were originally paying $900, but we increased it last year. We don't want to push them out, but we don't like losing money either. With the market not going so well, we really don't have much hope to make much money at all with this investment.

Big question: if you do up the rent more than $25, should we explain why? And how would we do that if we did?

Thank you for your help!

Believe me when i tell you that whenever you get a rent increase, you always start looking at what else is available out there. You raise the rent to 1,000 and they are going looking for a better place for that same money. If your property value has gone down, get it reassessed so you will pay less taxes. I suppose i dont need to tell you now that you should never buy a property that doesnt cash flow. But for next time, try to remember that whatever your rent is, you P&I should be 50 to 60% of the rent (so you have money left over for taxes, ins. vacancy and repairs.) If they are renting for 925 your P&I should be 462 to 555 per month. Otherwise you get into trouble.

yes you should explain why in advance or in written on a earlier date stating that the rent could increase..but asking for 25 is a little to much you should at least start at 10 or 15.

In california it's 3% a year.

It seems to me that you have gotten yourself into something here that is always going to loose you money. Maybe you should think about selling!

Talk to them..I think they will take the increase much better if you tell them why you are wanting to increase it..

5% a year is not asking too much. I would definitely explain why just to clear up any questions that they may have. If they feel that 5%/year is too much I would sit down with them and maybe meet somewhere in the middle. That way you're happy and you have happy tenants.

You should explain why but a $75 dollar increase just to break even is not worth it for anyone.