How Often Should You Raise Rent?

As a landlord, how often should you raise rent? Setting the right rent amount for your rental property can be tricky. You want to earn as much as possible, but you also want to attract tenants who will be responsible and pay on time.

In general, we recommend raising rents annually at the rate of inflation. In the United States, that means around 2% or 3% per year. However, if you live in an area with a particularly hot rental market, you may be able to charge more than that.

Other factors that may impact the amount you charge for rent include: 

It’s not always clear how often you should raise rent and by how much, but there are some general guidelines to follow. Keep reading to learn the basics of how often you should raise rent and why it’s so important your tenants pay a fair market rate for their units.

Reasons for Rent Increases

There are several reasons why you should raise your tenants’ rent on a regular basis. First, inflation and real estate market trends mean that homes lose value over time, even though maintenance costs increase. As such, you can charge more for each unit over time without making your tenants unhappy.

Perhaps more importantly, however, is that you then have more money available for maintenance and improvements. Upgrading your properties can help attract new tenants or keep current tenants happy, so it’s probably a good idea to raise the rent from time to time even if inflation doesn’t demand it. 

Things to Consider Before Raising Rent

There’s no set time when you should raise the rent on a unit. Many landlords have a regular schedule for raising the rent each year. Others prefer to wait for specific circumstances that warrant it, such as when a tenant’s lease is about to expire.

To keep your investment property profitable, you might want to raise the rent periodically. But there are several factors to consider when asking yourself the question “How often should you raise rent?” including local laws that minimize how much you can increase rent each year.

Consider the following as you decide if you should raise the rent, as having the right strategy is key to keeping your current tenants while attracting future paying occupants. 

Do Market Research

The first thing you need to do before raising the rent is to see what other properties in your area are charging for similar homes. You can’t just pull a number out of the air, because if you charge too much, you’ll drive away potential tenants and have a hard time finding new ones.

In general, market conditions will play a major role in determining how often and by how much it makes sense to raise your rents. If the market is hot and demand for rentals is high, you may be able to increase rents more frequently than if demand is low.

Evaluate the Tenant’s Payment History

The best renters pay their rent on time every month, take good care of your property, and cause little trouble for you or other tenants. These are the tenants you want to keep in your rental unit for a long time.

If you have a tenant like this, then you may want to avoid increasing their rent unless there’s a good reason to do so. For example, if your mortgage rate increases significantly because of rising interest rates, you may need to increase the tenant’s rent so you can still make a profit from your rental property.

Alternatively, if your tenant regularly pays bills late, you might want to consider increasing the rent in order to cover the costs of collecting late fees and returned check fees. A moderate increase in your tenant’s rent should cover the costs of a few late fees and bank charges for returned checks each year.

Consider the Last Time You Raised Rent

In an ideal world, you’d be able to raise your rent every year without any problems. However, sometimes it takes a few years before you can safely raise rents again. For example, if you raised the rent last year and lost several tenants because of it, then you might have to wait a few more years before doing it again.

Research Local Laws and Regulations for Raising Rent

Check with your city or county to see if there are any laws limiting how much or how often you can raise the rent. In some cities, when rents rise above a certain point, there are restrictions on evictions so tenants have more security. In other cities, there are limits on how high rents can go in certain areas.

You’ll need to consider notification periods before raising the rent as well. Most states require at least 30 days notice before landlords may raise their rents. 

Conclusion

For landlords, making sure that rent is keeping up with—or exceeding—the rate of inflation is crucial. Of course, you don’t want to price yourself out of your target market, but if you’re not at least keeping pace with the rest of the economy, you’re not making as much money as you could be.

SIGN-UP FOR PAYRENT

Start collecting rent online in less than 5 minutes.
  • Control when and how renters pay you
  • Automatically remind tenants when rent is due
  • Accept bank transfers and credit cards
GET STARTED FOR FREE
>

Leave a Comment

PayRent is on a mission to build a rent collection app that fosters a positive and productive relationship between renters and landlords. We focus less on transactions and more on the people behind them.

Do You Find This Information Useful?

Sign-up for our newsletter and get great content like this delivered to your email.
Subscribe
SUBSCRIBE NOW
close-link

Subscribe to Our
Email Newsletter

Receive timely and relevant articles directly to your email inbox.
SUBSCRIBE
You can unsubscribe anytime.
We respect your privacy
close-link
FREE TEMPLATE DOWNLOAD

Create a Custom 
Rent Collection Policy in Minutes

Get instant access and generate your iron-clad rent collection policy.
DOWNLOAD
close-link

SIGN-UP FOR PAYRENT

Start collecting rent online in less than 5 minutes.
  • Control when and how renters pay you
  • Automatically remind tenants when rent is due
  • Accept bank transfers and credit cards
GET STARTED FOR FREE
>
close-link

Discover the Truth About UFOs

Top secret documents reveal ET encounters the government has been hiding
freshmarketer CTA
SUBMIT
close-link

Donate Today

To the Center for Kids Who Can't Read Good
LEARN MORE
close-link

Protect Yourself From Robots

Smart seniors get their robot insurance from Old Glory Insurance
freshsales CTA
SUBMIT
close-link

Interested in PayRent?

Get a custom price quote when you schedule a demo.
*We won't share your information outside of our company
REQUEST A DEMO
close-link

Protect Your Evictions

PayRent gives landlords the control to block
all or partial payments from their renters.
LEARN MORE
close-link

Protect Your Privacy

PayRent allows landlords to accept payments without
ever sharing their personal information with tenants.
LEARN MORE
close-link

Automatic Rent Reporting

PayRent reports rent payments to
all 3 credit bureaus at no extra cost.
SIGN-UP FOR FREE
close-link

Track Renter’s Insurance

Require Insurance and Track Documents with PayRent
LEARN MORE
close-link

Accept Credit Cards

PayRent makes it easy for Landlords to accept
Bank Transfers and Credit Cards.
SIGN-UP FOR FREE
close-link

Save Time With PayRent

Automate invoices, payments, receipts, late charges
and credit reporting with PayRent
LEARN MORE
close-link