Investors should be seeking a combination of capital growth and cash flow over the long term when they make property investment decisions, caution seasoned property managers. One of those professional landlords is offering key guidance on when to raise the rent and when to keep it – and the tenant – where it is.
Look at the inflation rate and cost of living
As well as making sure that you can legally increase the rent, investors need to apply some judgment. Inflation has been very low over the past 12 months and borrowing costs are at all-time lows, so it may not be justifiable to ask for an increase, even if it is allowable. That said, few tenants would give notice if the rental increase was nominal. It’s worth weighing up your judgment against possible consequences.
Vacancies can quickly offset rental increases
One such consequence is that you lose your tenants and the property is vacant for two weeks, or even longer. If you increase rent on your property by, for example, $20 per week, that will add an extra $1,040 gross to your annual cash flow. However, if the property rents at $500 a week and is vacant for two weeks then you have lost this advantage within a very short vacancy period.
Research the competition
The best advice when considering increasing rent on your investment property is to discuss the current market with your property manager and also research the competition. Ensure you compare like with like. What are similar properties renting for in the same area? If your property is a condo in a multi-dwelling block, you may be able to find out what a similar unit is renting for. The rent you are proposing needs to be in line with the competition. In some cases you may have added extras that tenants will value and can justify a slightly higher rent, for example an air-conditioning unit, a sunny aspect and great view, or an upgraded kitchen or bathroom.
Remember, when setting rents – as with all aspects of property investing – keep sight of the big picture. Property is a long-term investment.
CREW
About Me
- Jackie Goodlet, Broker
- GTA, Ontario, Canada
- A New Sales Record Has Been Achieved By The Jackie Goodlet Team Who Work Out Of The Whitby Office And Specializes In High End Resale And New Home Sales. According To Broker Dave Pearce The Jackie Goodlet Team Wrote More Transactions Than Anyone Else In The 30 Year History Of Our Firm. Their 255 Transactions Had A Total Volume Of More Than $185,000,000 (185 Million). With Over 25 Years Experience In The Business The Jackie Goodlet Team Has Acquired A Wealth Of Knowledge In All Areas Of Real Estate Including Resale, New Builds, Cottages, Lease, Condos, Vacant Land, Investment And Commercial Properties. With Exceptional Negotiating Skills We Are Confident We Can Save You Time And Money On All Your Real Estate Endeavours. We Look Forward To Hearing From You And Your Referrals Are Always Welcome And Rewarded!
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