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How much do you increase rent by every year?

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Mike K

Jun 17 '06, 08:48 AM


I wanted to get a feel for what people typically raise rents by every year. Are rents increasing 3% / 10% / 20% ? What does the law say about raising rent? Are rents increasing more in some parts of the country over others?

I'd like to hear where people are from and what they typically raise their rents by every year. Thank you.


Edited Jun 26 2010, 02:59


Frank Adams

Loveland, CO

Jun 17 '06, 09:36 AM


I don't do rentals anymore, but I can tell you that when I did my policy was to ALWAYS have at least some increase on each renewal. If you didn't increase it by at least a small amount this time, then you would need to increase it by a larger amount next time, it can kind of snowball on you. And in my experience the delayed (larger) increase is more likely to cause a loss of tenant than a smaller one.

I used to use the change in the consumer price index as a minimum for my increases, sometimes adjusted up from that if insurance or taxes had taken a big hit.

all cash


Edited Jun 26 2010, 02:59


N/A N/A

Jun 19 '06, 12:16 PM


Because the rental market has been so poor lately, I haven't raised the rent at all, as an incentive for my tenants to stay put.

However, in the longterm, not raising the rent can be a disservice to not only the landlord, but also the TENANT. If a tenant stays in an apartment for an extended period of time, without any rent increases, when the time comes for them to move out, they may be unable to budget for a normal market rate at another rental.


Edited Jun 26 2010, 02:59


Jason Barnett

Dayton, OH

Jun 19 '06, 05:37 PM


A lot of landlords in my area have either kept rent the same or they will raise it by $5 / year. That equates to less than 1% inflation and most tenants don't complain.

thelandlady: what I try to do is tell my tenants up front about rental increases. I also tell them that if they will sign a long term lease with me (2+ years) then I am willing to let them lock in their rental rate. This is a win-win situation because I don't have to worry about vacancy for a long time.


Edited Jun 26 2010, 02:59


Jeff Takle

Real Estate Consultant from Somerville, Massachusetts

Jun 20 '06, 04:09 AM


According to the POMS and Census Data, most tenants move due to reasons outside the control of the landlord (got married/divorced, want a shorter commute, larger place, etc) and specifically not because of rent increases.

I try to raise the rents each year a tenant stays, and a $10/month increase doesn't seem to make anybody blink. It certainly doesn't seem to be enough to them to justify the hassle of moving. $25/month starts raising eyebrows. I've had few tenants staying longer than one year, though.
:cry:
Jeff


Edited Jun 26 2010, 02:59


Michael Mulrooney

Jul 10 '06, 01:52 AM


I just raised rents this year by 5% and some of the homes I have had for over 5 years. I probably should have raised them over the years but I was always scared of the tenant moving out. Funny thing....I had a few people a little upset, but no one moved. So, be prepared to get an ear full or a coupl eof excuses but for the most part. No one goes anywhere if you are treating them right!


Edited Jun 26 2010, 03:00


Mark Davis

Real Estate Investor from New York, New York

Jul 10 '06, 11:48 AM


I think the historic rate is somewhere like 5% a year increase. I'm not sure that works in all markets. I'm sure in a cold rental market you would want to be more careful with your increases, while in a hot market, you could probably get away with raising the rent a bit more then that.


Edited Jun 26 2010, 03:00


N/A N/A

Jul 10 '06, 11:46 PM


I manage properties in 3 states. Each have different laws regarding how much and how I formally have to notify tenants. In California if you raise it by anything over 10% you must give 60 day written notice. Most states just require 30 day notice.

A good landlord checks for current market rates and makes rental increases accordingly. Remember it is a business and you need to be competitive. However, it is a business so you want to make money. I would make sure that you do an annual survey and pretend to be a renter. You quickly find out where you stand. If pretending to be a renter is hard, then go ahead and just ask the landlord what they have and what they charge since you are trying to determine what rates you should charge.

This is all important because NAR and other agencies are expecting the next three years to be higher than norms for rental increases. Rental increases generally are around 2% above CPI. that means around 5% these days. However, since the home market is slowing many landlords will get 5% to 10% in many markets.

if you have not kept up with this you eventually have to give someone a big increase and then you loose them as a tenant. We always increase each year even if just by a tiny bit to keep tenants aware of procedure.


Edited Jun 26 2010, 03:00


Michael Sherwood

Property Manager from Buffalo, New York

Jul 20 '06, 03:33 AM


I would say you should increase it 3-5% because you need to keep up with inflation over time as well as expenses increase.


Edited Jun 26 2010, 03:01


Medium_c_m_rental_finalMichael Sherwood, C&M Rental
E-Mail: [email protected]
Telephone: (716)243-2671
Website: http://www.candmrental.com


Wes Tuinstra

Jul 20 '06, 03:50 AM


But let me ask you all...are wages increasing by 3-5% each
year? How will people pay for the rents if they are not?


Edited Jun 26 2010, 03:01


Michael Sherwood

Property Manager from Buffalo, New York

Jul 20 '06, 03:57 AM


That is true unfortunatly. Thats why i say 3-5% increase if possible. In some cases you need to evaluate the market and see what others are doing.


Edited Jun 26 2010, 03:01


Medium_c_m_rental_finalMichael Sherwood, C&M Rental
E-Mail: [email protected]
Telephone: (716)243-2671
Website: http://www.candmrental.com


Jeff Takle

Real Estate Consultant from Somerville, Massachusetts

Jul 23 '06, 10:07 AM


IMHO, the market determines the rate increase if the property is or will be vacant. You will be competing against other vacant properties to get the pool of tenants so you need to price accordingly and get good tenants in there.

However, your assessment of the existing tenant's tolerance determines the rate increase if the property already has tenants in there and they are hoping/planning on staying beyond their first lease. You can often increase rents by smaller proportions each year, even if that pushes your rent slightly above market rates, because there is a huge inconvenience factor to moving. If your tenants want to stay another year, just up the rent $10. You make an additional $120 to spend on the property or pocket as income. I've never met anyone who'd move out for $10.

Might help to maximize your returns by a little bit here...a little bit there...


Edited Jun 26 2010, 03:01


Michael Sherwood

Property Manager from Buffalo, New York

Jul 27 '06, 02:14 AM


Yes the market determines the increase but also take into consideration that taxes also go up pretty much every year and that doesnt even include inflation :wink:


Edited Jun 26 2010, 03:01


Medium_c_m_rental_finalMichael Sherwood, C&M Rental
E-Mail: [email protected]
Telephone: (716)243-2671
Website: http://www.candmrental.com


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