For some landlords, the price of rent is simply a business decision. It’s not personal, and you can do it with ease. For others, it’s more difficult. You like your tenants or maybe you worry about confrontation.
The good thing about rent increases is that they can only be done at specific times, making it easier to treat it like the business decision it is. If you’ve decided it’s time to raise the rent lease renewal and once a property is back on the market are when you can.
If you’re not sure you should increase your price, here are a few signs to help you make the decision.
Higher Expenses
If your taxes, insurance, or maintenance costs are going up on the rental, it’s probably time to increase the rent, too. You didn’t get into the landlord business to lose money. You can always explain the increase to your long-time renters if you have that kind of relationship with them. Most renters assume the rent will go up from time to time anyway, though.
Better Market
Your asking rental price was set, in part, by the market when you became a landlord. You couldn’t ask a price no one would pay. As the market improves, so should your pricing. You don’t want to price yourself out of the market, but if you’re asking too low of a price, people might wonder what’s wrong with the property.
Improving Neighborhood
Maybe your rental used to sit on a desolate road with almost no traffic or access to shopping, dining, or even good schools. Now, though, your property is in the center of a bustling, growing side of town. You definitely need to increase the rent to reflect where the rental is located.
Upgrades to the Property
You made changes that increase the value of the property itself, like a new roof, new HVAC, or new windows. You upgraded all the appliances to state-of-the-art or at the very least, not the 20 year old versions you’d had. You may have added new amenities like smart technology, a security system, or pool. All of these upgrades are worthy of an increase in rent.
Improving Economy
If you live in an area where income is on the rise, jobs are growing, and new companies are moving in, you need to take advantage of the change in the economy. Higher rents - with a good rental to justify the expense - will help attract the kind of tenants you’re looking for.
You’re the landlord and property owner. You can increase your rent for any reason, even if it’s just to keep pace with your own cost of living expenses. But if you hesitate to do it instead of automatically raising the rent a little each year, use these reasons to help you. It’s okay to be an affordable option for families. It’s not okay to lose money if you don’t have to.
Need help figuring out what you should charge for rent each month? Work with a property management team who understands the market and home values. ERA American Real Estate can help you price your rental correctly and make sure you raise the rent to keep pace with the rental market.