How to properly increase rent on your income property. Determine rent value, serve notice (how?), give 30 or 60 days notice depending on whether it is more or less than 10% increase.
Increasing Rent on Your Income Property
If there’s one thing many tenants dread, it’s a rent increase. Unfortunately, with the cost of maintaining your income properties and other extenuating circumstances, it’s often unavoidable. If you do decide to increase rent on your income property, you must be aware of the proper procedure for doing so. We’ll go over the basics here.
While there are some definite steps to take no matter where you are, it’s important to familiarize yourself with your area’s specific rental regulations and tenant laws. A real estate attorney can help you a great deal with dotting the i’s and crossing the t’s. Here are other things to be aware of before increasing rent.
- You probably can’t increase rent during your tenants’ long-term lease. If they signed a contract for a year stating that they’ll pay X dollars in rent, then that is their set rent until their contract is up. You can’t ask for more in the middle of a leasing period
- Determine proper rental value by consulting a professional or reviewing other comparable rentals in the area. It’s important not to overcharge, but you can certainly match other comparable properties in the area. Reviewing your local real estate listings will give you a realistic rate for an increase.
- Give your tenant proper notice, in writing. Rental increases require the tenant be notified within a certain window of time, often 30-60 days before the increase will take effect, depending on the amount. In California, this can depend on whether it’s more or less than a 10% increase in the past 12 months. Consult your contracts and local laws for proper notification stipulations.
- Consider your areas’ laws and rental regulations, particularly with regard to rent control. If your property is subject to rent control, then you may be restricted from raising rent. If necessary, consult an attorney.
- Be prepared for possible negotiation. If a tenant objects to the amount of the increase, they may come back to you to negotiate the terms of their lease. If you have good tenants and don’t wish to lose them, you may need to be flexible.
If you’re planning on increasing rent for your income properties, these are the actions you must take. If you have additional questions or concerns about the legality of your intended actions, please contact Alliance Property Management. A professional property manager can help you answer these questions and refer you to a trusted attorney.