Raising rental prices

[Adriana Mendonca]

Hello everyone, we have a question about raising our rent this year. We have a good tenant, it's going to be their 3rd year. The houses In the area are a little bigger in square footage with a garage and are rented for $2,000-$2,300 per month (3 beds 2 bath houses). Our house is a 3/2, no garage, bigger lot and is rented for $1975. We are having a hard time finding the right price amount to fairly raise because it seems there are more houses available and sometimes even something better and cheaper than our house. We thought of making some improvements such as landscaping, creating a car shed on the side, fencing the lot etc, in order to compete with the other houses and raise our price. We thought of raising our rent from $1975 to $2075. What are your thoughts? Thank you very much! 

[JD Martin]

It sounds to me like you're already at market rates. You have a smaller house with no garage. You're renting for $1975 and houses with garages rent for $2000-2300. You also say that there are "more houses available and sometimes even something better and cheaper than our house".

Renters generally don't care about bigger lots. It sounds to me like you might be in a buyer's market, and you're going to run the risk of losing a good tenant who can rent something better than your house for cheaper. 

I'm generally not a fan of just leaving the rent as is but in your case here it sounds like that's exactly what you should do until/unless the market turns around. Most reasonable people won't leave a house they like for something cheaper if it's only marginally cheaper, but if you raise rents and there's plenty of supply out there for a lot cheaper you're going to have a vacancy. At $2k, a one month vacancy in order to get $2100 takes almost 2 years to recover from.