Part I - When to raise the rent
There are several theories and opinions as to what is the best way to deal with rent increases. Some landlords go by the rule that they increase the rent every single year.
Some landlords increase the rent even more often, no matter if it might be illegal or not. Obviously that is not recommended. That will get you into problems eventually.
A way to look at it correctly is to put your self in the tenant's shoes. You just moved into your new
apartment and within the first year your landlord is already increasing you. You might say, okay Ill accept this one. Then next year the exact same happens and you get another rent increase. You realize something;
the rent will go up every single year! Either you now move out, or choose to stay. The reason to stay might be out of laziness not having to look for another place, but it will cost you.
See where I am going with this? Yearly rent increases will create a high turn over of tenants in your building and it will scare your good tenants away (The ones who can very easily find a new place I might add). This will give you extra work in doing showings but also by the law of averages create the risk of loosing a good tenant and taking in a bad one.
There is of course such a thing as inflation which you obviously should try and keep up with but besides that you always have to think of the reactions your good tenants will have.
There are also other situations where yearly rent increase is a good idea. For example if the market is booming and rental rates go up at a high rate. If this is the case you would be foolish not to increase every year. This guide is directed more towards normal markets.
So, when it should I increase my rent?
Good question. I will give some useful tips in the next article.
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