Should You Increase Your Rent?
By JD Esajian on September 11, 2013
Depending on the location of your property, relative to the demand for renters in the area, you may be able to increase your rent. Whether you should do it or not, however, is a different story. Of course you want to try and squeeze as much money as you can from your tenants, but not at the expense of losing a good one. If you have a good tenant who has expressed interest in renewing the lease, you would be wise to do so at the current rate. If you add a hundred dollars or so, you may get more money, but you would lose the stability of a good tenant.
If you are considering an increase, look at the local competition. See what other homes in the area are renting for and what amenities they have to offer. Be careful not to add value to your property where there really isn’t. Just because your property has rented quickly at the current amount does not mean it will at a higher one. If you found the sweet spot, meaning you have created demand with a reasonable price, you have the perfect scenario. If you try to increase your rent, you may find the demand different and have a tough time renting.
If you are far enough out from the lease expiring, you can always put your property on Craigslist at the higher number and see if there are any bites. You never want to have the highest rent on the street. Renters will run from your property and look for more inexpensive options. Find the number between affordability and demand. That will be your perfect rental amount. Coming up with that is an inexact science, but you should have a good idea if you look at comps and do your homework.
Remember, a good renter is hard to find. Just because you can make more money every month doesn’t mean you will have a better experience. Take this into account the next time you want to increase your rent.