Rent Increases: How and When to Raise Your Rental Property Rates

rent increases

With the rising cost of living, building materials, wages, and more, rent increases are a normal part of owning or managing a rental property. But how do you increase rent for your tenants? Is there a right and wrong way to go about it?

Keep reading to learn the basics of how and when to raise your rental property rates!

Know the Rules for Rent Increases

Legally, there are rules about when and how you can conduct rent increases. Rent increase laws say that you cannot increase rent for a tenant in the middle of the term of a lease. You must wait until the lease is up before you can give notice of rent increases.

If you have a yearly lease, this means you can increase once a year. If you rent by the month, you can increase at the end of any given month.

In most states, you have to give your tenants at least 30 days’ notice before you raise their rent. However, it is important to check the laws for your state because if you are increasing your rent above a certain percentage, you may need to give your tenants more advance notice.

Research the Rental Market in Your Area

Before you decide how much you want to increase the rent for your property, you should research the average rent increase per year in your area.

Conducting research is a great way to help ease any conversations that you may have with questioning tenants about the increase. You can address their concerns with solid evidence and research. You can also explain that your rent increase is reflective of rising rent costs in the area, as well as a rising cost of living and cost of property management and maintenance.

Raise the Rent a Little At a Time

Raising rent by a large amount every few years is a very unsettling experience for your tenants. The sharp increase could lead to you losing some of your tenants!

The best way to conduct rent increases is to raise a small amount each year. These raises should always be supported by your market research, and the tenants should be alerted with ample notice.

However, increasing rent by small amounts doesn’t cause as much immediate financial strain for your tenants and will increase your chances of having them renew their leases for the following year.

Write the Perfect Notice Letter

If you are planning to raise the rent, then you need to send out a rent increase notice letter to anyone staying at your rental property. This letter should include:

  • Information like the date, address, and name of the tenant
  • Key information about the lease like when it expires and when the new rent cost would take effect
  • Information about the rent, like the current amount, the new amount, and the date that the new amount will be due
  • The date you want to be notified as to whether they are renewing their lease
  • A friendly closing letting them know that you hope they will choose to renew their lease

Your letter should be friendly but professional. Write a welcoming introduction and a familiar closing, but be sure to give all of the necessary information your tenants will need in the body paragraphs of your letter.

Will You Be Raising Rent?

Investing in real estate and managing properties is a worthwhile experience. However, it is good to learn as much as you can about the rules of processes like rent increases so that you can develop the best possible relationship with your tenants.

Are you thinking about getting into real estate investing and property management? Contact us today to learn more!