- Raising Rents Can Be Difficult For Some Landlords. Here Are Some Important Factors To Consider As Real Estate Investors Before Raising Rent...br br Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on some important factors to consider when raising rents.br br There comes a time for every landlord when the rent has to be raised. It is not a pleasant subject from the tenant’s point of view, but it must not be overlooked by Landlords.br br Real estate costs rise over time, from property tax bills, to insurance premiums, to mortgage rate increases - so landlords sometimes need to raise tenants' rental payments or leasing fees to maintain profitabilitybr br Why Is It hard for some Landlords to Raise Rents?br - fear of confrontationbr - fear of shaking the boatbr - fear of possible vacancybr - Not sure how to justify the increasebr - Maybe rent is high enough vs. market rentbr - Existing tenant can’t afford the rent increasebr - Fear of damaging a relationshipbr br *** Have to remember, this is a business so your bottom line is the focus.br br Market Forces That Affect Rent Increasesbr - Interest rates - unless its a fixed rate - will increase mortgage - forcing higher rentsbr - Unemployment rates - higher unemployment equals more rentersbr - Businesses that are nearby - brings renters from out of townbr - Rental Availability - other properties for rent - supply and demandbr - Average income of the area?br br Additional Factors That Affect Rent Ratesbr - High maintenance propertybr - High maintenance tenantbr - Scare a tenant into leavingbr - How is your rental being treated?br - Quality of current tenant vs. costs for finding a new tenantbr br Types of Leasesbr Annual Leases - can only raise rent when contract expiresbr Month-To-Month - charge a premium monthly rent, allowed to raise rent every month if you likebr Multi-Year - Scheduled rent increases - but cannot change in middle of agreement without tenant approval.br br Scenarios:br - Annual increase with a new tenant every yearbr - Set annual rent increases with a long term tenantbr - Fixed rent agreement with a long term tenant - usually appropriate for tenants unhappy with initial increasebr br Nominal vs. Percentage Rent Increasesbr If your rent is 500 and you get a 5 increase, that's only $25 per month (not worth moving). If your rent is 1200 and you get a 5 increase, that's $60 per month (now we might start checking rent ads).br br So, you cannot state rent increases based on or a certain dollar amount because it depends on the base amount..br br Raising rents may not be an easy task, but it's often necessary if you intend on actually earning a positive cash flow on your real estate investments. It’s important to remember that there are many external factors that influence rental rates for your property. In many situations, you will have to justify your rent increases to your tenant, so it’s important you can explain it with competence. Always remember to be fair and honest.