On average, how much do you increase rent every 6 months?
- Thread starter ned261
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I don't really work on percentages. I just keep my rate at market or slightly lower to keep the product competitive. I usually work on 12 monthly increases unless there is a sudden jump in market rate.
I have never NOT raised at end of 12 month period (though would do so if the market dictated it) and the least amount I have increased is $10.00/week.
I have never NOT raised at end of 12 month period (though would do so if the market dictated it) and the least amount I have increased is $10.00/week.
Don't work on percentages here either. The smallest amount we have ever raised the weekly rent (with current tenants, not a new tenancy) was $5 and the highest $30. The $30 was to long term tenants that we had allowed to slip behind market value. We thought they would probably balk at a $30 increase (even though it was still worth more) but to our surprise they didn't. They made noises about moving out but in the end they stayed. Obviously they had a look around and decided they were still pretty well off. Tenants who have been in place for a long time get out of touch with the market too, just like landlords.
Thanks Minx and alplant. I guess most people don't think of increases in terms of percentages, but if you want to input a value for the sake of the poll, then you could always just pick what you believe to be an approx. average increase, divide it by your current rent and multiply by 100 (then divide by 2 if your increases are per year, to get % per 6 months).
I used percentages in the poll because a $10pw increase on $200pw is obviously a bit different to a $10pw hike on a $400pw rental.
I used percentages in the poll because a $10pw increase on $200pw is obviously a bit different to a $10pw hike on a $400pw rental.
that got me to around 5%
I target a rental increase to ensure that I am at market rate. I have no set amount. Recently these have ranged from $10 to $30pw, however these may not necessarily be at a 6 or 12 month anniversary date. Half of my IP's are on a month to month lease and I increase where I see scope to. This might be after 6 months or 7 months or 8 months for example.
In this environment, I also do not lock into a 12 month lease without an increase in the lease on 6 months.
In this environment, I also do not lock into a 12 month lease without an increase in the lease on 6 months.
ooops I voted wrong. I said 5% when I actually only increase every 12 months. Sorry! I have a policy of increasing each year if the market allows it but never by a substantial amount. That being said I do take the number of working occupants into account. My share households would increase $5 to $10 per person which might mean a $30 increase.
My large increases come mostly with new tenants after renovating or when long term tenant leaves but I understand this is purely increases with exisiting tenants.
My large increases come mostly with new tenants after renovating or when long term tenant leaves but I understand this is purely increases with exisiting tenants.
I am like Lizzie, raising rents when the market moves. Too hard to give a ballpark historical percentage.
Because we self-manage, and because of the unusual twelve months we have just had, I met a letting agent today to have appraisals done on two houses that are coming up for new leases in January and February.
We knowingly left one of these houses under market, for reasons that I will not go into here, but suffice to say, with our fixed interest due to finish in July 2009, we can no longer allow the rent to be under market and will have to increase it from $350 per week to at least $400 per week. Agent is checking other houses available, but it will be at least $400.
Because we kept the rent under market it is going to be really difficult asking this tenant for the extra, but we have to look after ourselves now and cannot afford to subsidise her any longer, and if it means she moves, then that is what must happen.
I just hope that if she moves on, she understands that she has had the benefit of substantially under market rent for at least the past twelve months, and doesn't think we are being greedy landlords.
Because we self-manage, and because of the unusual twelve months we have just had, I met a letting agent today to have appraisals done on two houses that are coming up for new leases in January and February.
We knowingly left one of these houses under market, for reasons that I will not go into here, but suffice to say, with our fixed interest due to finish in July 2009, we can no longer allow the rent to be under market and will have to increase it from $350 per week to at least $400 per week. Agent is checking other houses available, but it will be at least $400.
Because we kept the rent under market it is going to be really difficult asking this tenant for the extra, but we have to look after ourselves now and cannot afford to subsidise her any longer, and if it means she moves, then that is what must happen.
I just hope that if she moves on, she understands that she has had the benefit of substantially under market rent for at least the past twelve months, and doesn't think we are being greedy landlords.
I'm with most. In par with market. No set percentage. I have increased $10 in 6 months then $35 the next with same tenant. But it's still $5 below market, so my tenant choose to stay.
In some place in Sydney's west 2 beds unit, back in late 2006 the average rent was $200-$230, now $300-$400. So I adjust to be in line.
In some place in Sydney's west 2 beds unit, back in late 2006 the average rent was $200-$230, now $300-$400. So I adjust to be in line.
For the purpose of voting in this poll I concocted a formula of sorts that gave me the averages of the two IP's we own. One we have had for 10 years and the other for 4. I subtracted the starting rent from the current rent and then calculated it out as if it had increased every six months instead of in fits and starts like it actually did. The result was interesting. I got 5% for the one we have had for 4 years and 3% for the other, which of course averaged out again should have been 4%, but did I vote 4%. No - silly me clicked on the wrong one. I clicked on 3.
Anyway mistakes aside, that was an interesting exercise. It shows the growth over two different time periods, and I guess that's why raising rent by percentages doesn't really work. Some years allow increases and others don't.
Edited to add ... Actually seeing as how we have owned one property twice as long as the other the mistaken click might have been more accurate that I thought. Enough, got to stop thinking now. My heads going round in circles.
Anyway mistakes aside, that was an interesting exercise. It shows the growth over two different time periods, and I guess that's why raising rent by percentages doesn't really work. Some years allow increases and others don't.
Edited to add ... Actually seeing as how we have owned one property twice as long as the other the mistaken click might have been more accurate that I thought. Enough, got to stop thinking now. My heads going round in circles.
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I didn't vote.
You can't put a fixed rate on this. It is market driven. I had 3 years when we first started investing where the rent did not go up at all for our first property!
I consult with the PM whenever there is a new lease to be signed.
Whatever the PM suggests the market will bear, that's what I go with. Of course, I always ask if we can get an increase.
All our current tenants are longer term except for one, and the general thing is we raise the rent a bit, maybe not the full market whack, but it is better than risking a vacancy for an extra $5 or $10 dollars.
By the time you factor in the vacancy and the costs associated with getting a new tenant, the extra gain is swallowed up, and you don't know whether the new tenant will be as good as the existing one.
Ok, just went back and confirmed annual increases in rent over my entire portfolio for 2008 & what is locked in for 2009.
There probably is some upside for 2009, but who knows what will happen with economy and impact on rents. So for now, these are the numbers.
2008 - 8.43%
2009 - 8.67%
There probably is some upside for 2009, but who knows what will happen with economy and impact on rents. So for now, these are the numbers.
2008 - 8.43%
2009 - 8.67%
We conduct statistical reports in the area and look at bond lodgements to see how much the cost has gone up and adjust rent to that amount. Only if there is an incease otherwise we leave them.
These are done every 6 months even with a 12 month fixed term lease in place.
You need to keep in mind that if challenged by the tenant a tribunal can rule against the increase especially if it is mid term so it needs to be backed up by statistical evidence. There is no rules on a % amount it's whatever the incease in market rent has been for that period.
These are done every 6 months even with a 12 month fixed term lease in place.
You need to keep in mind that if challenged by the tenant a tribunal can rule against the increase especially if it is mid term so it needs to be backed up by statistical evidence. There is no rules on a % amount it's whatever the incease in market rent has been for that period.
Xenia, not sure the market in Adelaide/SA around rentals, but how do you deal with setting rentals for a lease when rentals are increasing.
For example, today's price is $300pw, but after 12 months, your feeling and knowldge of the area's rental market is that it will be higher. Do you endeavour to re-set the rental at a higher price initially so you will not be too far away from the market rate at the expiry of the lease?
Hi Buzz altermately you go for as much as you can get, push boudaries! However you need to keep in mind that if it is based on future rent tenants will be more likely to go for properties that are based on current market value and you will be priced out!
Bulding regular rent reviews in the lease agreement will help with setting rent higher if the market rises. If the lease allows you to conduct reviews every 6 months then you will be able to raise rent according to the market and not miss out on income as you wait for a lease to expire!
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