What’s the percentage you can raise your rental?

Question

I’m trying to figure out how much I can raise the rent with out making the tenant run way.

Patricia Steiner · Answer

Are we taking about your business or the tenant?  The tenant doesn't have any bearing on what you charge.  If you increase rent by $10, the tenant is going to balk ("you're raising the rent!!!").  What determines price is the market.  Do a quick google search of comparable properties in your rental market and compare pricing.  By knowing the rent and price demand in your market, you can set a competitive price, attract quality tenants, and not short-change yourself.

You're running a business.  Tenants come and go.  Let your tenants know that the rent price will always be determined by market demand to ensure that it's a good value for both of you.

Aaron K. · Answer

Depends on what the market will bear, you can generally raise to market rate as that is what they would compare to, if they can't afford market rate, that may be a sign that you are too far below market to justify leaving the rent where it is even if it means a vacancy.

Mark S. · Answer

@Ahmed Motiwala Ahmed hits on a very important point. What is a good,long term tenant worth? Arbitrarily raising rents without considering the time and expense of replacing a good tenant who may leave I think is an incomplete decision. Not that you want to give away your property, but I believe the process needs to consider the value of the existing tenant.

Nathan Gesner · Answer

@Michael Neves I'm with Patricia. You need to determine market rate and raise the rent to that level. Give the tenant the appropriate notice and then bump it.

I don't recommend extended notices or graduated increases. Those both tend to delay the inevitable. If your tenant can handle market rate, they will accept it because they know it's fair. If they can't handle it, they'll move on.

Mary M. · Answer

First, what does your local laws say about rent increases?

Once you figure that out it then becomes a calculation: is it better to do a smaller increase and keep the tenant or a bigger one and have them move.

I generally want my tenants to stay as vacancies are costly

Theresa Harris · Answer

I agree with the others.  Check your local laws to see if there is a maximum amount that you can raise the rent and how much notice you have to give.

Account Closed · Answer

I agree with what has already been mentioned above.

I do want to add that giving the proper notice (time and formality governed by your state' statute) will matter, especially for the more difficult tenants. Also note, the rent typically cannot be raised until the end of the agreed upon lease period, unless the lease contains a clause that allows otherwise or if there is already reason for eviction (current lease violation of some sort) which can be leveraged. When the rent is increased, it is a good idea to rewrite the lease agreement to reflect any changes and have the parties resign.

Additionally, there is no limit to how much you can raise the rent. But careful not to abuse the privilege above the reasonable market rates; good landlords in the business will recognize that high rent is not the only route to high profits (long-term, reliable tenants are low-maintenance, but often hard to find). Raising the rent too high could lead to undesired confrontation and may be difficult to find tenants moving forward if the current tenants choose to find housing elsewhere. Also, if you raise the rent, also be clear about whether you are taking the liberty to raise the security deposit amount too.

Andrew Pugh · Answer

@Michael Neves Good advice above and I would only add that unless you're already at the top end of what the market will tolerate, I believe in raising rent every single year even if it's only $10/month.

If you don't do this, then they will be "surprised" when you do raise it and be more likely to move.  You want them to expect an increase.  Plus, you can always negotiate it down if you start with a rent increase of say $40/month and they protest, you can be kind and drop it down a bit.  But not down to zero increase.

Just my 2 cents, let us know what you decide to do.

Kurt Kwart · Answer

need to check local laws or local eviction attorney.  i know for here we can't simply raise it to market rent if it gets challenged in court you will lose.  if you are just looking at it as what the tenant will tolerate, I have found experienced landlords didn't nickel and dime good tenants to keep them in the longest.  you will save money this way vs cost of turnover and being empty

Michael Neves · Answer

@Nathan G. Thank you!

What’s the percentage you can raise your rental?

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