Guidance on rent increases

[Dave Hart]

I have 3 rental properties in Chicago. I find that I’m only increasing rents when I have a turn (every 2-3 years).

I’m debating if I should implement rent increases for current tenants during lease renewal, even if it’s just $25/month to help keep pace with increasing costs and taxes. 

All my tenants are great. Pay on time. And are helpful and understanding when things go wrong (there is always something). I’m attentive to issues quickly and make quality fixes and updates. Overall, good working relationships on both sides. 

I want to keep tenants longer in general but also want to keep up with rents. 

Any thoughts on increasing rents for lease renewals? Is there a % increase that others use or rules of thumb?

Thanks

[John Warren]

@Dave Hart I have found that a small rental increase every year works well. Over time, you have to be careful that you don't over prioritize retaining tenants as this can turn into a big-time trap when you have long term tenants. Ultimately, you need to monitor loss to lease, which means keeping up with where rents are. I like to stay within 10% of the "top" rents with existing tenants. This means that some units just need a $5 or $10 increase, while others might need a $75 increase  or even a $100 increase. 

Chicago rents have been on fire the last few years, which has helped compensate for rising expenses. I wouldn't be nervous about turn over.