How much of a rent increase do most landlords use when the lease is up for renewal, should it be a certain dollar amount or based on a certain percent? Thank you for your time.

Mine are usually ten bucks. More if the unit just experiences more than average wear and tear. With the rent increase letter, I point out some of the improvements I made last year, and start to discuss the next year’s improvements ( in a vague way.) If I did the non-sexy, unseen by tenant eyes stuff, like put in a bunch of attic insulation while they were at work, I ESPECIALLY point that out. Tenants like to feel they are ‘getting’ something for their money. I don’t complain about my costs, like property taxes, going up, cuz, well, they haven’t, AND Tenants don’t care so much about if I make a profit, they want to know THEY are living in a better house for that extra money. So, I show them the value, in the letter with rent increase.

I’m going to be doing a few things every year to keep my houses in good shape anyway. The tenant doesn’t need to know that the Shademaster honeylocust I just planted in the back yard only cost me 25 bucks, cuz I watched sales, they just know they got a wonderful new tree that is already providing some shade. They gladly water the tree on their dime, and that ten bucks a month seems like a deal, cuz now they have shade!

I do ten bucks cuz it’s a nice easy number. ( 20-30 if I seem to have so many maintenance items popping up with their family, and then that extra money goes to hardening the property and all those little wear and tear items.) My properties are all SFH, each a little different, so I can justify having different rents at different units, I figure, anyway.

BUT, I also watch market rates. I haven’t been at this very long, but I have seen some years where average rents for similar houses was actually down. I think I have just had one year where no one got a rent increase. I was able to attribute that to the property tax cuts our state was experiencing, ( a little voter persuasion,) still reminding them how their home is better than last year, and this year, I’ll be working on ...

No easy answer here...

If I have great tenants, I may go 3 years without a rent increase. If I have marginal tenants, I might increase 6%/year. Overall I'd look at two things...the consumer price index and the local rental market...what are others in your area charging?

Sam,

My lease is clear: this lease renews automatically on it’s anniversary date each year with a 2.9% Cost of Living increase.

We send them a text reminding them the new amount of $xxx will be autodrafted on the first.

No chasing or waiting, no additional paperwork.

Over the past 10 years that 2.9% has kept is on track.

We DO bump up at turnover.

Do not fear making an increase. Your res EXPECTS IT.

BRAD

I don't automatically increase rent. I look around to see what the tenant could get for the same rent. If I raise rent, they are going to at least consider moving, so I don't want them to find a lot of good options for moving.

But the consumer price index is a good guideline.

A better strategy is to evaluate your market and to determine what the price should be.

Sometimes, a good strategy is to price at the low end of the fair market value, to keep good tenants. But it is the market that should determine the price, not an automatic increase.

I do rent surveys on Zillow and make sure I am the best deal for what they get WHILE increasing rents annually at 2% (usually $20).

I look at comparable rents in the area. And then raise it well below, call it an “annoyance raise”, one that tenants find annoying but won’t move out. I don’t want my tenants moving.