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Why you need to Raise the Rent

Raise the rent every year. If you don't you'll have hell to pay later. Here's why.

Your costs go up every year, but you are afraid to raise the rent for fear that your long-term tenants will move or because you want to help them out. After a couple of years you start to get behind.

After a few years of not raising rents you are so far behind that you have to raise rents 25 percent to 50 percent in order to catch up. Your tenants will move for sure if you do that, even if they have to pay the same amount elsewhere.

The first thing you won't be able to do is maintain the property as well as you could if you were keeping up with inflation and taxes. You also don't make as much money as you think you should. This will be a double whammy when you go to sell the property.

Savvy investors look at the maintenance of the property when they decide how much they are willing to pay for it. If the property doesn't look good enough, it won't fetch good rents, hence the value is lower.

The second thing they look at is the rents. Too often you see advertised that "rents should be higher." Buyers immediately ask themselves, "well, then, why aren't they?" They begin looking for reasons and find deferred maintenance.

If you raise the rent a small amount every year, say five percent, it is too small an amount to make it worthwhile for your tenants to move, but large enough hat you stay even or even get ahead a little. Just be sure to do it every year. You owe it to yourself, your property and your good tenants.

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