Raise the rent and risk getting bad tenants?
Two different houses. One, the guy has rented from me for 7-8 years. I've raised rent once, 3 years ago to bring it closer to market. He has bad credit and can't buy a house, but he can certainly rent a new one albeit with the foreclosure on his record it's harder. I am not big on dealing with hassle this year, but I also have it rented by $500 a month less than market. That's 6K a year...Raise his rent and risk him moving and dealing with crummy tenants or stay put?
Another rental, 3 software engineers each of which have six figure incomes. I think raising the rent on them by $200 (they've lived there for 2 years) isn't likely to cause them to move, they have chickens and such in the yard, they are comfortable there.
Raise their rent or not?
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#3 Managing Your Property Contributor
Raising the rent annually gets people used to it plus your costs go up each year. Talk to the first guy and let him know the place is well below market value and your costs have gone up. Then increase it what you are comfortable with-doesn't have to be to market value if he's taken good care of the property. The second home where the tenants have been in place for 2 years, raise it to market rent.
the other thing to keep in mind is vacancy. Having it vacant for a month will cost you more. That doesn't mean don't raise the rent, but balance the two.