Careful consideration essential before raising rent for tenants

Q: We have owned a rental home for almost 10 years. My husband won’t raise the rent. He believes that if we do, we’ll lose the tenants. I told him that we need to raise the rent just to cover the costs rising due to inflation.

If we rent to a new renter, we would probably get at least $300 more per month. What do you think? Should we keep the rent as is or is it OK to raise it?

A: We have some friends who have lived in the same two-bedroom apartment for 20 years. Up until a few years ago, the owner had never raised the rate.

When the landlord decided to raise the rent from $900 to $1,000 per month, our friends asked if he would repaint the apartment and replace the carpet. In the first 17 years of living there, they had never asked for any repairs.

As a landlord, you always want good, stable tenants, and most long-term landlords I know are happy to take a little less in rent in order to have a great tenant who will stay in the property for a long time.

But there are very few tenants who expect that their rent will never increase, especially over the course of a decade. And yet, if you’re planning to raise the rent by 10 percent or more all at once, you need to look at what your lease says about rent increases.

Some leases will specify an annual increase of a certain percentage, say 2.5 percent or 3 percent or even more. Sometimes those rent increases are limited by city or state ordinances or “tenant’s rights” guidelines. There are some tenants who may move if you raise the rent substantially all at once, but most people are accustomed to a yearly increase.

What you have to decide is whether the benefit of higher rent outweighs the potential costs of repairs to the home and/ or hunting for a new tenant.