Anaheim Property Management Blog

Generally, self-managing owners keep the rent for their rental properties below market rents.  The reason is either intentional, the owner keeps the rent low to retain the tenants, or unintentional, the owner is either friends with the tenant, or intimidated by them, and does not even try to keep up with market rents.  If you don’t raise your rents to keep pace with the market, we find it has 2 consequences: the cost of goods and services increases, and you lose money; or the tenant gets used a fixed rent, and balks when you, or your property management company, finally increases the rent to the market value. There is a fine line and some art involved with increasing the rent on a rental.  Here is what we have found: if you increase the rent annually, even by a few dollars, the tenant expects, and is acclimated to the annual increase.  For example, if the current rent is $1,650, and prices have increased 3% during the year, you should increase your rent $49.50, or in this case, round up to $50 to $1,700 for the next year.  That is a total annual increase of $600.  The moving costs for your tenant (rent a truck, the time to box it all up, pizza and beer for your friends) would exceed that. We would recommend that even if you didn’t increase it $50, you should increase it $25.  The tenant is now below market, only has a $300 annual increase, but you have additional funds to pay for services or any issues with the property.  The tenant now expects an annual increase (if the market allows) so they will not be surprised when the rent increases in future years.  If they give notice to vacate because you seek a $25 a month increase, they were going to leave your rental regardless.