Do You Really Need to Increase Your Tenant's Rent?

Any landlord will tell you that when all is said and done, the primary objective for investing in rental properties is to make money. In fact, we generally want to squeeze every last penny out of our properties, and that means increasing the rent from time to time. However, give careful consideration about how much to raise a tenant's rate. Also, if you have a stellar tenant, consider not raising that person's rent at all.

Increasing the Rent

Your rental rates should be in-line with the going rate in the area. Renters will do their homework on what is a fair deal, so you better do your homework as well. There are lots of ways to find out what other landlords are charging for properties similar to yours. You can scour the classifieds in the newspaper, or you can check out any one of several websites that allow renters to search for rental properties. This is valuable research to do every now and then because it provides useful information about how much money you could be charging your tenants in rent and whether your current rents are too high or too low.

Many factors can affect rental rates, like increases in property values in the area. For example, if your rental units are in an area that has seen increased property values, other landlords may be charging new tenants much more than some of your current tenants are paying. If this is the case, you must decide whether or not to raise a current tenant’s rent to match what a new tenant would pay to rent the same unit.

Weighing Your Options

The answer on whether to raise rent depends on many factors. Look at your tenant's payment history and how she has treated your property. If you have a perfect tenant, consider not raising the rent at all.  A “perfect” tenant is someone who has been in the property for a few years and has never made a late payment. Also, this tenant treats your property like a home and maintains it with pride and care. Someone who’s been renting from you for that long may be paying far less than you would charge a new tenant, but it’s hard to put a price on the extra value a tenant like this brings to your property. It might not be worth the risk of losing that tenant by trying to collect a few hundred extra dollars.

If you do decide to raise the rent for such a tenant, give careful thought to the amount of the increase. There's always a risk that she might decide to move out if the rent becomes too high. While you might find another tenant to pay the going rate, you run the risk of having the unit empty for a few months. Worse, you could end up with a bad tenant who doesn't pay the rent on time or who takes poor care of the property.  


Raising the rent is a stressful decision for both you and your tenant. If you've weighed the options and concluded that now is the right time, prepare yourself for negative feedback and having to defend your decision. Communicate with your tenant about the increase in property values, and other understandable reasons, such as increases in taxes, maintenance costs or capital improvements to renovate the living space. While the tenant will likely be unhappy with the increase, you can ease the tension with clear, professional communication.

POSTED December 01 2014 2:00 PM

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