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5 Reasons Why You Should Raise the Rent

While raising rent probably isn’t on any landlord’s list of fun ways to spend their day — given that tenants won’t exactly respond to the news with happy excitement — it’s a necessary part of property management.

Here are the top 5 reasons to consider raising rent.

1. Keeping Up With the Market

One of the best reasons to raise the rent is keeping up with the local real estate market. A 2013 report on the rental housing market from the U.S. Census Bureau indicates that the rental market continues to tighten across the country, with prices increasing as demand rises. The September, 2013 report from the Bureau of Labor Statistics indicates that the rent index continues to increase by .02% per month, as it has for some time. In fact, the vacancy rate is the lowest it’s been in more than a decade at about 4.2 percent, says Reuters.

Taken together, these statistics all indicate that when you decide to raise rents, you’ll be in good company. One of the easiest ways to determine whether your rental rates are commensurate with local rates is by using our rent comparison tool. It’s easy-to-use and will allow you to evaluate your rental rates as compared to other, similar rental properties in your area.

2. Neighborhood Enhancement

As neighborhoods change and improve, your rent should follow suit. When new businesses and services come into an area, it can make a community much more attractive, changing a location from simply acceptable to desirable — bringing property values up along with them. Your rental rates should reflect this. Features to consider include:

  • New businesses, such as grocery stores, eateries and coffee shops
  • New services, such as libraries and post offices
  • Public transportation upgrades or new bike trails, running paths, green spaces and parks

3. New Employers

When a large company moves into an area, it’ll bring increased job opportunity, increased incomes and a reduced unemployment rate — all factors that help raise housing prices, values and, accordingly, rental rates. People want to live near where they work, so your property will  become more desirable.

4. A Rising Local Economy

Housing markets across the country are experiencing growth as the economy continues its slow, but steady, recovery. In mid-2013, housing prices were up by 18.4 percent over the past 16 months, according to a report in The New York Times. Raising rent to keep up with this increase in housing prices makes financial sense.

5. Property Improvements

When the property owner makes improvements, raising rent to reflect this added value is a no-brainer. Whether they’re re-doing the kitchen or bathroom, replacing the carpet or tiles, putting in a new HVAC unit, or landscaping the exterior, changes that add to the property’s appeal cost money — and that money should be recouped through higher rental rates.

Breaking the news about raising rent may not be an experience any landlord or property manager looks forward to, but it’s a necessity. Our past blog post, The ABC’s of Raising Rents and Keeping Tenants, offers tips to help you through this sometimes challenging process.

 

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3 Responses to 5 Reasons Why You Should Raise the Rent

  1. Jorge A December 23, 2013 at 4:38 AM #

    I don’t necessarily agree. I just left a home over the summer, paying $1050. The owner put in laminate floors and advertised the home for $1200. However, the home was vacant for 2 full months. That means he’ll need 14 months to recoup his losses, and I’m not even factoring in the material cost for the flooring. I’m speaking strictly as a renter, but I think property owners are often greedy.

  2. Darris December 31, 2013 at 6:10 AM #

    We need a land value tax so landlords won’t be able to arbitrarily increase prices without providing better service. They would have to charge according to the value of the building instead of the value of the land.
    They didn’t have anything to do with the land value.

  3. oregon111 January 2, 2014 at 2:01 AM #

    I just raised it on my roomates and here is why – other places are going up, so I deserve to get market rate. When I bought, money was tight and I expected rising inflation to help me out.

    If you rent, inflation will ALWAYS be your nemisis – which is why people buy if and when they can.

    Even if you buy a dumpy condo that used to be a crappy apartment – at least you own it and you dont have to worry about paying double in a decade or two.

    Or just buy a piece of land so you can legally sleep in your car – rent is and alway will be burning your hard earned money