Rental increases this year

[thatdamnJoe]

Just about time for rental increase on one of my places. what % is reasonable?

 

[gifs]

10% I would say. I normally try to increase my rentals by about 10%. IIRC this is the maximum increase you can apply on an existing lease.

 

[Hoof-Hearted]

Depends on the size of the place. We're increasing smaller units 8% and the more upmarket one's 3%

 

[thatdamnJoe]

10% I would say. I normally try to increase my rentals by about 10%. IIRC this is the maximum increase you can apply on an existing lease.

what I had in mind too

wrt the max increase. Thats really up to the contract, and if it doesnt stipulate, you can ask what you want(doesnt mean you'll keep the lessee though )

 

[remybfg10k]

with the current economic conditions at 10% increase you run the risk of sitting with an empty house for a month or two, there was a good read on one of the financial sites, can't remember which one though

 

[diabolus]

Well here's what's happening in the USA right now:

http://finance.yahoo.com/real-estate/article/106480/Rents-Drop-Nationwide-as-Vacancies-Spike

Rents Drop Nationwide as Vacancies Spike

The economic crisis has opened up opportunities for apartment tenants. The inventory of vacant apartments is expanding, and rents are dropping quickly in major metros across the country.

This is more applicable to upper class kind of apartments, but you might even want to wonder if your rent should even go up . Granted, we're not as effected as the USA, but this might be a trend..

 

[Pyro]

You can try to swing 10%, the place we rented wanted to. It's insane to expect it though.

7% would be a good try - If people can expect a 7% increase on good times, you can expect your 'cut of this'.

If alternatives in the same area rise with less, you're tenants are likely to jump ship though.

A rough estimate would be link your rent to property value.

Say you take 9% of value per annum:
R400k -> 36k pa -> R3k/month

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The logic behind this is quite simple. The tenant doesn't care how much you owe on the place, or how much money you want, they only care how much it's worth -> it's value. You obviously also have to factor in taxes and levees. Perhaps take 7.5% of value pa + taxes and levees as rent.

 

[remybfg10k]

Found the article:

A bit old but still worth reading:

http://www.fin24.com/articles/default/display_article.aspx?ArticleId=2357256