You’ve rented your property for several years, and you haven’t raised the rent. This is doing your property investment a disservice. For many landlords, the idea of raising the rent is anxiety-inducing.
Raising the rent doesn’t have to be stressful. Take a measured and thoughtful approach while weighing the pros and cons of raising the rent for your rental properties.
These rent increase tips will help you decide if now is the right time to increase your property’s rental rate.
1. What Does the Market Look Like?
Don’t make decisions about your rental properties in a vacuum. Look at the market and what other similar rental properties are renting for. Use a rental calculator to estimate the value of your property in the market. It will consider several factors.
Neighborhood location and quality
Historical rent trends
Rental home qualities
Proximity to points of interest
Local market conditions and economy
2. What Does the Law Say?
Thankfully, North Carolina doesn’t have rental control laws. There are no limits on how much you can increase the rent at a single time. There’s also no law dictating notice requirements.
Just because there’s no legal requirement doesn’t mean you have no responsibility. As a responsible landlord, you should communicate with your tenant about possible rental increases and when they will go into effect.
3. Is It the Right Time?
Look at your lease contract to determine if it's possible to raise the rent. You can only raise the rent when the lease expires, and it’s time for renewal. If you have one-year lease contracts, you could theoretically raise the rent every year. However, this isn’t always a wise course of action.
Your lease contract should outline the specifics of rental increases.
How often you can raise the rent.
How often you can reassess the rental rate.
The limit on how much you can raise the rent at any one time.
How you must notify the tenant of the increasing rent.
4. Your Relationship with the Tenant
The market supports a rental rate increase, the law says you can, and your lease is ending. All signs point to yes; you can raise the rental rate on your property. However, the analysis doesn’t stop here.
Just because you can, doesn’t mean that you should.
If you have a great relationship with a wonderful tenant, then you may not want to risk that by raising the rent. If you know your tenant can’t afford a rental increase, you may want to keep it the same to ensure they stay. Consider the cost and risk of seeking out a new tenant because the current tenant left.
5. Benefits of a Rental Increase
The benefits of raising the rent may outweigh the cost of finding a new tenant. If you started with a rental rate below the market rate, you have a lot of making up to do. Raising the rent lets you catch up to the market and maximize your ROI.
The rent increase can also help cover other related costs that are rising. This includes property taxes, HOA fees, utilities, insurance, or mortgage payments.
Work With an Expert
Navigating the rental rate increase waters can be intimidating, helping to work with an experienced expert. Working with a property manager can give you access to more research and analytics tools for a more accurate assessment.
Our team of knowledgeable property managers can provide you with rent increase tips and a market analysis. Then they can work with you to determine if the timing is right to increase the rental rate for your property.
Contact our team today, and we can assist you with market research and rental rate assessment.