Raising rents is a question we see a lot. Should you or shouldn’t you. For those landlord’s or property managers that do raise rents, 2-4% seem to be the typical range.
If you have good tenants who take care of your property, pay on time and all-around good tenants, raising their rent may push them to look for another place to rent.
Finding new tenants, especially good ones, is a costly endeavor and may not be financially prudent for an extra 2 or 3%.
Not So Good Tenants
However, on the other hand, if your tenants are not the best, maybe it’s worth losing them if you raise their rents. If they stay, fine. You gain a little extra profit for the extra work they bring to you.
Progressive Rent Increases
Residential leases vs Commercial leases are different. Commercial leases are more common for regular rent increases, but not always. Many commercial leases include progressive rent increases stipulated. If you use a property management software, often it will have the ability to calculate these increases automatically for you. This saves you time and you won’t have to rely on your memory to increase their rent at a certain point in time.
Below Market Rent
If your current rent is 10% below market, you may be able to raise the rent on good tenants without any pushback from the tenants. They will know that they can’t beat your property for the price. But if you are in line with current rent or slightly lower, raising rents should be done with extreme caution and financial analysis. Don’t’ mess up a good thing with a good tenant!