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Step 1
Determine the market value of your rental. In other words, what are similar units renting for in your area.
You must have a valid reason and motive to raise the rent. If you do it just because you feel like it, your tenants will become frustrated and possibly scared away. This is the opposite of the effect you are looking to achieve. -
Step 2
Once you have determined the market value of your rental, compare it to your current rent.
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Step 3
Another important aspect to consider is the tenant themselves. Is this a tenant that you want to keep? Do they pay on time? Do they complain a lot? Do they take care of the property? If the tenant is desirable, then you may not want to offer too large of an increase.
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Step 4
After determining the value of your apartment and your desire to keep or get rid of the tenant you need to determine the amount of the increase. It is usually best to keep your rent in line with the market or slightly below to keep good tenants. A small yearly increase of $5 or $10 per month will be met with a yawn, but will increase your monthly cash flow. An increase of $15 to $20 will be met with some skepticism, but is doable. A larger increase of $25 or more will guarantee some comparison shopping and complaining.
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Step 5
After deciding on the amount of the increase, write a short and professional letter with the increase details. Don't give out specifics and keep it generic. It should say something like the following:
Due to increases in taxes, insurance and utilities your rent will be increasing $10 per month from $485 to $495 effective on May 1.
Be sure to give a minimum of 30 days notice. I would suggest 45 days so that the tenant has plenty of time to think about there choices.
The above example would need to be given to the tenant by March 30 to be effective, but I would suggest giving it to them by March 15. -
Step 6
It is also a good idea to deliver it to them in person. This insures that they received it and are aware of the increase.
