How often do you increase rent on your property

Question

It could be i understand the plight people go through or i am just a compassionate person, i just got my first property (a 2 Unit MFH) and i don't think its appropriate to increase the rent on a yearly basis even if an update on the property has been done, will be done or not. Especially on tenants who have been renting for a while. I could be happy with myself if i do it every 3 to 5 years.

What do you guys thinks, how often do you increase the rent on your property

Thomas S. · Answer

I raise my rents annually, keeping them at market and have never lost a tenant due to a annual increase. When tenants like where they are and know they are paying market rent they have no motivation to move. I will never subsidise any tenants rent.

The cost of living  rises every year without fail for as long as any of us have known. It's called inflation. Not raising your rent annually means that you are supplementing your tenants rent. Professional landlords raise their rents at lease by the annual cost of living index every year to keep rents at market and avoid huge increases every 3-5 years.

If you do not raise your rents you are reducing the resale value of your property. As investors when buying we prefer to target hobby landlords that subsidise their tenants rent. Pigeons for plucking.

How long a tenant has been renting is irrelevant, how good of a tenant they are is irrelevant. You are either a professional investor/landlord in business to make a profit or you are a hobby landlord that places a low value on profits.

Compassionate and being happy with yourself smacks of a hobby landlord. If that is the case raising your tenants rent should be a low priority.

Bettina F. · Answer

Small increases every year near anniversary of their moving in.  (We do M2M) Tenants expect  small increases, and a small manageable increase is better than a big jump every 3-5 years.  I give 60 day notice of rent increase, and have NEVER lost a tenant to a rent increase -- my apartments are still a good deal for my long term tenants.  My costs for taxes and insurance go up every year.

Steven D. · Answer

Answer is pretty simple, when market conditions call for it. Obviously there are other factors to consider such as, good renters are worth a rent slightly below market value to keep. In the end it is a business and the goal of the rent is to maximize profit. Sometime maximizing profit isn't allows charing the highest price but getting the most money based on avoiding vacancy and avoiding expensive repairs. Good luck!