When to Consider a Rent Increase for Your Investment Property

DFW’s rent index has increased 2.44% in just 1 year. So you as a property owner may be asking “is it time for me to increase my rent rate?” Ask yourself why you are in this business. Are you in it only because you enjoy the industry or are you in it to make money?


Either way, maintaining your investment property’s annual profits (or increasing them), without experiencing any significant tenant loss is a delicate thing to balance. There is a process to changing your rent rate and you cannot just give your tenants notice and increase it right away. So what is the process you ask? Read below to find out!

Assess The Current Rental Market
It is still important to check out your local area. There may have been more or less of an increase than the national average which is about equivalent to DFWs rent index. The last thing you want to do is lose money by not charging enough or not being able to find tenants at all because you are charging too much.


Consider the following:

• How do current rates compare to similar properties?
• Do your amenities justify an already high rent amount?
• What is the demand for rentals in your area?
• What are current vacancy rates?

Check Out Your Current Tenants
Increasing your rental rates will bring in more profit than anything else with your rental. However, sometimes the assurance of having a quality tenant that pays on time, causes zero trouble, and cares for your property as though it was their own, is enough of a reason not to raise the rent every chance you get.

Consider things such as:

• The last time you raised the rent on each property and which tenants felt the increase?
• How valuable your tenant is to your rental property business?
• Whether you would be willing to lose such a tenant in the case they refuse to renew due to a rent increase?
• Whether you would be willing to negotiate if your tenant contacts you about the increase?
• What the legitimate reasons are for raising the rent that you can explain to the tenant?

Check Out The Law
If the lease agreement expiration for a rental is approaching, and you are planning on raising the rent upon lease renewal, make sure to follow these important steps.

• Ensure the rent increase complies with Texas laws and you provide your current tenant with proper notice.
• Make the notice official and in writing so that both you and your tenant understand that a rent increase will be in effect come lease renewal.
• Consider a courtesy reminder via email, letter, or phone to remind your tenant the lease renewal deadline is approaching.

Surrounding Area Growth
Is your rental property in a location that is experiencing growth? Are there new shopping markets, entertainment venues, schools, and parks popping up? Are employment opportunities booming?

If so, this is a good sign that you will be successful in raising your rental rates. Though you may lose your current tenant in the process, with such growth in the surrounding area, someone else is sure to want in on your investment property.

What is Your Overall Rate of Return?
Higher rent means more money and more positive cash flow. However, sometimes increasing your rent rates brings unforeseen problems that you may not be prepared to deal with.

For example, there is always the risk that you raise the rent on a tenant that has been loyal to you for some time and decides that the increase is too much. While this opens your property up to new tenants that may be willing to pay the increased rent amount, there is no guarantee this will happen right away, even if the market, location, and economy state differently.

In the end, the decision can be difficult. Finding the balance between having a profitable rental property business and increasing your cash flow can be hard, especially if you do not think things through all the way.

If you are unsure as to whether you should increase your rental rates, talk to the most knowledgeable property management company in town – All County Property Management Group. With expertise in all things property-related, including the current market trends, the legalities behind rent increases, and the likelihood of a successful rent increase.

So, contact All County Property Management Group today and see how we can help you with your rental property needs!