It is no secret that rents are now at all-time highs. Demand for rental housing has pushed rents up higher and higher over the last few years, and short of a huge building boom or crash, there is no end in sight. This is good news for us landlords, as higher rents equal more income and an increased property value. If you are a landlord who has not raised the rents on your rental properties in a while, perhaps now is the time you should. At the very least, you should consider it, as the current set of market conditions may never again be so favorable.
Raising the rent sounds like something that would, and perhaps should, be very easy to do. But, as with everything in life, there are pros and cons to raising rents, and there are good and bad ways to go about it. Some ways will be more effective than others. Some will cause you less pain and grief.
So if you are considering raising your rents, here are some steps to follow to make it as easy as possible on both you and your tenants.
Assess Your Market
First, you must carefully consider if you can raise your rents in your market. All markets are local, and while rents in some communities may be skyrocketing, in others they may be barely climbing or even on the decline. The only way to consider this is with a bit of market research. You simply have to see what other landlords in your market are charging for comparable properties. Most of you are probably doing this all of the time anyway, but if you are not, check rental ads and online sources like Rentometer. Talk with other landlords in your area. If you find that your rents are lower that almost everything else or under market, then you can move to raise rents.
Finding that your rents are under market does not mean that you can instantly raise them. Remember that lease you signed with your tenant? (I really hope you are using a written lease!) That lease is a contract, and per the terms of that contract, you cannot alter any of the terms, including rent, for the specified term of the lease. That means you cannot raise the rent in the middle of a lease term. You have to wait until the lease expires or is up…