When Should You Increase Rent?

The decision to increase rent on your income property should be made based on financial factors and not personal factors. If you make the decision to price your property based on personal factors, you will find a higher turnover of tenants and a higher rate of vacancy.

Financial Considerations

  • Rental market - The cost of comparable rental units in your area will give you an idea of the going market rate for your property. 
  • Maintenance costs - If property taxes and other fixed costs rise on your rental property, then you can justify a hike in rent to your tenants.
  • Inflation - If your tenants are in a property for years, you will need to raise the rental price in order to cover parallel increases in inflation.

Personal Considerations

  • You should not raise the rent in order to help yourself financially cover other debts or raise your personal income.
  • You should aim to be priced appropriately for the market instead of simply getting as much as you possibly can from the tenants.
  • You should not plan a consistent rate increase each year. Your tenants will move out if they can find a more competitive price elsewhere, and even one month of vacancy can eliminate potential profits from the increase.

 

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