Increasing Rent: When to Notify & How Much

[Tammy Wiggins]

We acquired a great duplex and have great tenants on both sides.  In one unit, which was my son's, we painted everything, put in new flooring, nice new blinds, redid the staircase, updated bathroom, new light fixures/fans.  The building has a 2 car garage which we included in the rent and is on a nice double lot.  It's a 2bed/1bath townhome style unit with private basement with washer/dryer.  Just under 1300 sqft.  The second unit we just painted walls, replaced fixtures/fans, new blinds, and cleaned really good.  Both have original metal cabinets and mix and match of older and newer appliances.  The second one we rented for $875/month.  The market has been changing and we are obviously under charging for this unit despite doing as much as we did to the other unit.  We were trying to get both units rented in January.  

Fast forward, I just renewed the leases with both tenants.  I was in no way going to raise the rent with the COVID issues.  They are great tenants, pay on time, and rarely contact me.  However, I do feel we need to increase the rates based on the market.  Our place is unique with the size and private basements in St. Louis City.  It is a fantastic place, that's why my son first purchased it for his first home.  He'd still have it but he relocated out of state and me and my husband do all the work so we bought it from him.  It helped him and we didn't want to give up the property.

Question is....what's the best way to go about the rent increase issue and what is a fair amount to raise it.  I want to give my tenants plenty of notice before the lease expires.  I'm thinking 3 months notice.  Also, what is an appropriate percentage?  At this time, I'd like to keep them, but number wise we need to up it.  Taxes and insurance has increased along with water and sewer costs.  Plus, we hire out lawncare which was free since my son was there and the other side was rented.