How much do you increase the rent each year?

Question

I'm sure this varies based on local market conditions, but how much are you typically increasing the rent by? I only do 12 month leases so its convenient to up the rent with each lease renewal. But what percentage does everyone else do? I'm looking at 2-3% as a target.

Joe Splitrock · Answer

@Nathan Waters I think this is driven by the local market rates. I watch Craigslist and Zillow to monitor rates. I generally keep my rate under market value to remove incentive to leave. If the tenant is good, I may not even raise rent. Vacancy and turnover costs are my largest expense. Raising rent will not guarantee someone moves, but it will cause them to shop around. Look at it this way, if your property rents for $1200 per month, one month of vacancy is the same as $100 lost per month over a year or $50 lost per month over two years. That doesn't include turn over costs or time to re-rent.

David Faulkner · Answer

As much as the market will bear.

Max T. · Answer

I can see the smoke rising from @Greg S. ears right now.

Glenn McCrorey · Answer

What @Joe Splitrock said.  I keep the rent flat for years at a time and keep tenants longer which I think is better  than trying to get a few extra bucks out of them.  Having a good tenant is key to your financial and mental well being.

Nathan Waters · Answer

Thanks for the advice everyone.

Linda D.. Reading your post reminds me of a tip from the Carleton Sheets program. He had a technique similar to that. I studied his material years ago before I started investing.

Adam Christopher Zaleski · Answer

If you want to keep the tenants, no more than 3%. If market rent goes up 15%, you can increase by 15%, but you will probably need to get new tenants.

Jerry W. · Answer

It is always based on the market and the quality of the tenant for me.  If rents have increased in my area I increase the rent a little to keep up.  It has been flat lately so I have not raised rates and even dropped the rates on 2 houses.  On the other hand all of my units are full and I have several other landlords who have been trying to rent their units for several months.  It is hard to rent units when it is -25 degrees out there.  I have had some great long term tenants, well over 10 years, who I never raised rates on.  What I may have lost in income, I made up for in no turnover and no headaches.  Rents here are very slow to rise so it really didn't cost me that much.

Sam Shueh · Answer

rental control in your area?

Best is when you bring in new tenants. You charge at market. Many landlords do not raise rents often to keep good tenants there.

Scott Weaner · Answer

I have been doing small increases, like $20/month. This is usually not enough to make someone move.

How much do you increase the rent each year?

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