Not that you need convincing. Well, maybe you do…

There are many reasons to raise the rent. Not one of which is because you want to be a mean and nasty landlord. Don’t feel guilty. Raising the rent is necessary for several reasons. Let’s break them down:

1. Your regular expenses have gone up.
You definitely need to raise the rent if your regular monthly expenses have gone up. This could be a number of expenses: property taxes (like me in my example), insurance, HOA dues, property management fees, or even the mortgage payment (if you have a variable interest rate or recently made a refinance to a shorter term, for instance).

2. You’ve remodeled or otherwise improved the property.
Did you spend money remodeling or otherwise improve the property? Or are you planning on making some major improvements? If so, you’ve increased the value of the property and you likely need to raise rent.

3. The market supports it.
Get a rent estimate from Cozy and look at the comparable rents. Are you seeing similar units renting for much more? Ask your property manager in the area what they are charging for similar units. If rents are rising all around you, the market is trying to tell you it’s time to raise your rent.

4. To ensure your tenant expects it put a clause in the lease.
Always raise the rent by at least $25. Do this even if there is no other reason for you to justify a rent increase.

Why? Simple. So your tenant will come to expect it, and so you will be able to negotiate down from there.

If you don’t make this move first, then you won’t have any wiggle room if your tenant (who you want to keep happy) leads off negotiations by asking you to lower the rent for good behavior. Since you’ve thrown the first punch, you’ve now got some room to pull back once the tenant starts in on trying to negotiate better rent.

No one is going to fret too much over $25–you won’t lose them. And if they balk, have a discussion and negotiate something favorable for both of you.

5. Your tenant is leaving.
Finally, if your current tenant is leaving, this is the time you must raise the rent. You need to test the market again and start high with your offer. If you end up right back where you were that’s okay. At least you didn’t lose rent. And this is your one and only chance to reset the rent. Go big if the market supports it.   We can help!

How Much to Raise the Rent
So how much should you raise the rent by? That depends. We recommend letting us check our MLS for comparables.    You can also check Rentometer.com for additional input

You want to make sure you are getting the best value for the property. But you also don’t want to limit the number of prospective tenants. There are a few factors for you to consider which you should let a professional guide you.

Things You Can Do to Justify Raising Your Rent (aka Add Value)
As a landlord, the best kind of rental increase you can hope for is one that’s based on some added value you’ve brought to the arrangement. After all, other increases are typically forced upon you by external factors.

1. Improve/remodel the property.
Adding some new paint, carpet, and fixtures might just be all you need to justify a decent rent increase. These thing costs less than $1,000 in most properties and can be done quickly in between tenants or possibly even when you have someone in it.

Beyond basic repairs, a bathroom or kitchen remodel can certainly help to improve rents. But don’t make major remodels before you understand your market enough to know how those remodels will have you stacked up against comparable units. It doesn’t necessarily pay to have a bathroom twice as nice as anything in your market.

2. Reconfigure the property.
Can the unit be subdivided into multiple units? Can a portion of the unit be rented out as a temporary rental (i.e. Airbnb)? Can you add an additional bedroom or bathroom?

These questions are, of course, best asked before you purchase a rental property. But it doesn’t hurt to attempt to look at your rental unit from a different perspective once you have it. Always be questioning how you can add value.

3. Add-on services and appliances.
Offer to take care of cable TV, internet service, landline phone, and other services for your tenant. They might be willing to pay a premium to avoid the hassle of multiple bills. If you have multiple units, you could potentially qualify for a discount.

Additionally, you could lease appliances (washer/dryer, TV, etc.) to your tenant for a small monthly fee.

Is it Legal? Do Rent Control Laws Prevent Me from Raising the Rent?
“so long as a landlord follows the Fair Housing laws (non-discrimination of protected classes), then a landlord can raise rent at the end of a lease term.

Landlordology.com has a great state by state guide on the legality of raising the rent, along with some handy example letters you can send tenants regarding the raise in rent.

The bottom line: Raising the rent is just a part of life. Don’t be afraid to do it. And always be looking for ways to make your property more valuable to justify an increase in rent.