How to increase rents: the annoying increase in rents
Every landlord is faced with the question: should I increase the rent? And if so, how much and how often? I like to use what we call annoying augmentation.
If you increase the rent too much, you risk the tenant moving out. An increase of $ 50- $ 100 or more will likely make your tenant think of another place to call home. Now if for some reason you haven’t increased your rent in many years and your current rent on the market is really $ 150 more than what you are charging now, you have two options.
First, you can increase the rent by the full amount, explaining to your tenant that it is the current rate and that you will have to pay that amount elsewhere for a comparable home. However, there is still a good chance that they will move out because they are probably not prepared to take such a big hit on their budget.
The other alternative is to start using the hassle increase strategy by increasing your rent each year when your lease is renewed between $ 20 and $ 25 until it reaches the current market rent. This amount will generally not cause a tenant to move out; It should feel like a minor hassle for them, but it’s easier for them to pay $ 20 more per month and then go through the hassle of finding a new place and moving all of their stuff. .
Ideally, you should use the nuisance increase strategy from the beginning with all of its properties. However, there is an upper limit to what you can charge for a certain property. You don’t want to price your unit outside of the current rental market; Stop raising your rent before you get to this point. Instead, reevaluate every year and raise the rent only when prices go up again.
Increased nuisance works well because tenants can understand that property maintenance costs increase over time. Every year you typically see a small increase in property taxes and insurance, and over time repair costs go up as well. Tenants agree to this. They usually don’t agree with you hiding them with a big rental hike.