Very typical scenario: property owner hires a property manager – manager rents the home – just before the years lease is up – manager signs tenants on for another year – notifies owner. The owner responds, “That is great, but I would like to increase the rent.”
A few reasons why landlords (and owners) increase the rent:
- Because they think they just should.
- Property expenses have gone up (taxes, insurance, etc.)
- The neighbor next door is getting more rent for their house.
- It’s part of the investment plan.
These are a few reasons why I don’t raise rent:
If the tenant is good – I prefer to keep them. Raising the rent even by a little tends to cause tenants to look for less expensive homes to rent.
Vacancies cost money. Typically, a landlord will lose more money on a vacancy than they would get with a rent increase. Example - if you increase your rent by $25 a month - that's $300 in a year. If your rent is already at $900 a month - and the home is vacant for even a month, do the math.
If more money in your pocket is the main objective– that is probably not the best reason to raise rent. Why? I have a rental home, on a 15 year note. I paid one mortgage payment. The tenants (one lived in the home for 9 years) – over the course of 15 years paying rent – paid the remainder of the note. Why be greedy -this is the best "more" money in your pocket.
If you are a landlord and decide to raise your rent with every lease renewal – make sure you do it correctly, and weigh the benefits – and potential losses before you do it.
This blog is written with my opinions and my opinions are presented with accuracy but not guarantees. Please talk to a professional before making any real estate, financial or agency decisions. Gabrielle Kamahele Rhind - 2014. If you want to reprint parts of this - just email me for my permission: KGCProperties@gmail.com .