The primary reason for raising rent is the increased cost of running your business. Everything should be taken into account, utilities, insurance, taxes, maintenance and repairs. If the rent on your property has been stable for quite some time, you may want to raise the rent to stay competitive, pay your bills and to hopefully make some money for your labor. And, if you have substantially increased the value of the property by making significant improvements, that, too, calls for raising the rent.
With a longtime tenant it's best to be honest about why an increase is necessary. Explain to them why an increase is needed and although you hate to raise the rent you decided that you must. Stress the fact that you want to provide the best environment you can for them. If they seem upset, explain that you've already cut costs as much as you can and this is the only option you have left to meet your expenses. If true, emphasize that fact that you haven't had an increase for quite a while, telling them exactly when the last raise in rent was and explain that you can no longer ignore increasing the rent.
Your tenant might not like the increase, but after thinking about the cost of moving to another place and finding out that similar apartments are in the same price range, most likely they will stay.
In general, rent increases range from about 4 to 6 percent. Some landlords on the high side would go up to 10 percent. Let the market in your area be your guide and be reasonable with the increase so your tenant does not feel you are price gouging or being greedy. Instead of periodically raising the rent, you might want to try set annual increases of 1 or 2 percent a year which you write into the lease.
When contemplating raising rent, you should also consider what it will cost you to advertise, screen, and prepare for a new tenant should yours decide to move.
Bradford Miller Law, P.C. focuses on real estate law, landlord tenant law, building code violations and estate planning. We are committed to providing you with expert legal support and approach every client with a focus on integrity, advocacy, and understanding.
At bradfordmillerlaw.com you will find helpful landlord information along with information about our firm. To discuss your pending or potential real estate transaction, your ongoing legal needs as a property owner or landlord, or your estate planning concerns, call us at 312-238-9298 for a FREE 15-minute consultation. Or you may reach out to us online anytime.
Posted by Bradford Miller Law, P.C.
Practicing in Real Estate Law, Landlord Tenant Law, and Estate Planning
134 N. LaSalle, Suite 1040
Chicago, IL 60602
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