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3 Reasons Not to Raise the Rent

Most people will tell you that raising the rent is a good thing. In fact, a lot of landlords and/or property managers raise the rent as a matter of course whenever the lease term comes up for renewal. But there are sound arguments against raising your rents.

1. A Good Tenant Might Leave

if you have a tenant in place that pays the rent on time, lets you know right away when there’s a problem with a water leak and is keeping up the place, why would you want to jeopardize that situation? By raising the rent, you may just force your good tenant out and wind up with a tenant that you wish you never signed. Good tenants offer value that goes beyond what they pay in rent each month.

2. You Disrupt the Rent-to-Income Ratio

When you started looking for a tenant, you likely had a certain rent-to-income ratio in mind. If you purchased a turnkey rental property, that company may already have a tenant in place for you that had to meet a certain rent-to-income ratio, such as three or four times what the rent is. But when you raise the rent, you’re disrupting that ratio. Unless the tenant is making more now than when they moved in, they may no longer be meeting that three or four times the rent criteria. This in itself may force the tenant out if they can no longer stay within their budget after your rent increase.

 

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