Craig is a DIY landlord. He’s asked how often he should increase rents. When he told us what he’s charging for rent, we were surprised at how low it is. He’s worried that if he puts up the rents, he might lose his tenants.
We told Craig it’s time he put his rents up, and keep putting them up regularly. We think it’s worth considering that:
- If Craig’s property was managed by a professional property manager, they’d probably increase the rents every six months.
- Good tenants can afford an extra $5 – 10 a week (or more for high-rent areas). If this amount is too much, they may not be the best tenant for Craig.
- It’s easier to increase a small amount every six months than to do a large ‘adjustment’ out of the blue.
- The longer Craig leaves a rent increase, the more his rents will be out of line with market rates. This will affect Craig’s cash-flow and his ability to borrow for future investments.
For other DIY landlords who haven’t upped their rents in a while, we recommend you do your research. Find out market rents for the area, or get a rental assessment from a real estate specialist. If your rents are well behind market rents, work out an increase schedule you feel comfortable, and put it into action.