One of the most important topic that many landlords remain unsure about is raising rents. It is a necessary process in the business, but many landlords, maybe even you have not been comfortable with it. There are many reasons behind landlords not wanting to raise rents like:
- Confrontation- you may not want to walk up to your tenants and face them with the news.
- Vacancy- your tenant may move out if you do
- Relationship- your tenant and you may be a friend
- High enough- you feel like the rent is already high enough
Why should raising rents be done?
Simplest and most obvious answer will be inflation. Everything is getting pricier by the day, including taxes, so it only makes sense that you should hike the rent in your properties if that is your sole source of income. If you do not raise rents by a certain percentage, you will be making losses as money not made is money lost.
How much should you be raising rents to?
There are state regulations on rent, but the market dictates rent levels more than anything else. It is simple, if the rent in the locality, is for example, on average $500 for similar sized homes, you can charge somewhere close to that amount only. You can think of raising rents in your properties to $750 and stick to that amount, but you are unlikely to get occupancy simply because the market average is much lower.
Before raising rents, remember that you need to send out an intimation to your tenants, there is a minimum of 30 days for you to do this, if you give your tenants a formal notice of 30 to 90 days in advance, they can be better prepared for it and are less likely to complain, get upset or even vacate.