Raising the rent on your Severn rental property is a normal part of the rental property business − your tenants surely expect it to happen at one point or another. And, unless your specific area has rent control policies in place, you are free to increase the rent on your property as you see fit.
After all, you are in the rental property business to make money, right?
If you are interested in learning about how to increase the rent on your Anne Arundel County rental property, read on for our landlord’s guide to rent increases.
In this guide, we will look at how to determine your property’s new rent rate, as well as things to be cautious of when it comes to increasing rent, so that you do not find yourself in any legal trouble.
How to Determine Your Severn Rental Property Rent Increase
You should consider several things before making the jump and increasing your Severn rental property’s monthly rent amount. Let’s look at some of the most important factors.
Compliance with the Law
Before deciding to increase your property’s rent, make sure your property is not located in a rent-controlled area. Though it may be in a seemingly small area, always double check to avoid any legal disputes.
Some states have legislation in place that limit the amount a property owner can charge for rent. In addition, these statutes may do any of the following:
- Limit the frequency of rent increases
- Regulate the timing of rent increases
- Determine reductions in services
- Permit special rent increases
- Limit the eviction process of some tenants
Maryland is no exception.
Before making a rent increase on your rental property, always make sure you are allowed to do so in the first place.
Calculate the Rent Increase
Since Anne Arundel County is not part of a rent-controlled region in Maryland, it is relatively safe to say you can increase the rent on your property when you feel the need to.
If this is something you are interested in doing, start by calculating the amount of the rent increase you want in order for it to benefit you. However, make sure to take into consideration how your tenant will feel about such an increase. By raising the rent too high, you run the risk of raising your rental’s vacancy rates.
Here are some handy tips for determining your rental rate increase:
- Know the Area. Research the local area and see how much other rentals are going for. More specifically, measure your rental’s rates up against properties that are similar to yours in terms of features, age, structure, and visual appeal. You want to remain competitive, but not overly priced. However, you do not want to underbid yourself either.
- Understand the Market Rates. You can never be totally sure what property owners in your surrounding area are thinking when setting their rent rates. This is why you should also look into the overall market rates to help set a competitive rent increase. Look at the national rent averages for similar properties, as well as trends in the rental market, to help you set a fair, yet profitable, rent rate.
- Use a Calculator. Another great tip for calculating a successful rent increase is to multiply the consumer price index by your current property’s rent rate. This will give you a good idea, in national terms, how much your property’s increase should be. Keep in mind, that while an average rent increase of 3 to 5 percent annually is considered normal, some places are expected to exceed that percentage by as much as 3 additional percentage points.
Blindly increasing your Severn rental property’s rent by an amount you think is sufficient is not going to get you anything but a vacant rental, or a negative cash flow (unless you are very lucky).
Don’t take any chances. Do the work and calculate a rent increase the right way.
Rent Increase for a Vacant Anne Arundel Property
If you own a vacant Anne Arundel County rental property and want to implement a rent increase before placing a new tenant, start advertising your property at a rent you think is appropriate for the market, and see what happens.
- Nobody Is Interested. If you find that your property is not receiving the attention you want at the rent rate you have set, chances are you have increased the rent by too much. People looking for a place to live understand the market, and know when they are paying too much.
- Everyone Wants In. If you find yourself flooded with interested tenants, you may start questioning whether you are charging enough. While there is not much you can do at this point, since the rent rate is set and that is what potential tenants are expecting to pay, you can always consider a rent increase come lease renewal time.
- Lots of Interest, But No Bites. Lastly, if you find that there is a lot if interest buzzing around your rental property at the rate you set it for, yet no applications are coming in, you may want to consider the way in which you advertised the property, the price you have set it at, and whether it matches up to the hype.
Determining whether to increase your Severn rental property’s rent rate can be a difficult task that should not be taken lightly.
Do your research, understand the market, and aim for the best rent rate possible, without turning away high quality tenants.
Legal Issues to Consider When Increasing Your Rent
So long as you do not raise the rent on your Anne Arundel County in a discriminatory or retaliatory way, you are allowed to increase the rent as you please. That said, look at some of the legalities behind rent increases that you should concern yourself with before getting into trouble.
If you increase the rent on your Severn property immediately after something has changed in regards to your tenant’s gender, race, national origin, religion, disability, or familial status, you can bet you will find yourself facing a lawsuit.
For instance, if you notice that your tenant recently had a baby, and you raise the rent shortly thereafter, your tenant may have a discrimination case against you. Avoid problems such as these by raising the rent according to the law, increasing the rent moderately, and ensuring that it in no way looks connected to any type of discrimination against your tenant.
If your tenant exercises their rights, and you immediately raise the rent, this may look suspicious. For example, if your tenant requests repairs be made, or forms a tenant rights group in your community to combat poor management, and you increase the rent, your tenant may have a case for retaliation in the form of rent increases.
Make sure any rent increases you enact are within a reasonable timeframe (e.g. at the time of renewal) to avoid looking like you are trying to force a tenant out based on their actions.
Deciding to increase the rent on your Severn investment property is a big step. It can make a huge impact on not only your life, but the life of your existing tenant as well.
Make sure to consider all of your options, research the surrounding area, and evaluate each tenant on a case-by-case basis before making this big change.
If you own Philadelphia, Laurel, or Washington DC rental property and are looking for an exceptional property management company to help you with things like market rates, advertisement best practices, lease renewal drafts, and tenant placement, contact Bay Management Group today.
At Bay Management Group, we have knowledgeable property managers experienced in handling rent increases. In addition, we can help with everything else property related such as collecting your increased rents from tenants, backing you in court in the case of a discrimination or retaliation lawsuit, handling maintenance and repair requests, conducting routine property inspections, and much more.