Best practice for raising rent annually

[Dona D.]

Hello BP community, what is the best way (and wording to write) for raising rent?

Thank you.

[Louie Gabriel]

Why are you raising rent? Is it currently below market?

If so, say that in your letter. Let your tenants know that rents in the area for similar properties are higher than what you are charging, and based on the expenses you incur to keep the property in great shape, you need to increase the rent to market levels.

Of course, also throw in how great they are as tenants, how much you appreciate them, and any concessions you're willing to make in order to retain them (for example, if they've been there for a year, offer to paint a room for them or put a nice fan in the master bedroom; if they've been there for several years, perhaps offer to replace the carpeting in a couple rooms; etc).

Remember, it's MUCH cheaper to keep existing tenants -- even if you're getting a bit below market rents or have to provide incentives -- than it is to replace tenants.