In 2022, the average household in Indiana spent $972 per month on rent. Landlords must be careful about pricing so their tenants can afford to pay that amount while still affording other daily necessities.
However, property owners will often have to raise that cost based on different factors. Those include property taxes, rising utility rates, and overall inflation. Understanding how to calculate rental increases is a crucial skill that can significantly impact your earnings.
Let's dive into the essential steps for determining rental increases in the South Bend area.
Understanding Rental Increases
Rental increases are adjustments made to the rental price of a property. Contrary to popular myths, these increases are often driven by market rates and local demand. An owner may also make these changes to improve a property or increase profit.
Knowing how to correctly determine these increases is beneficial for both landlords and tenants. Tenants appreciate transparency and fairness. Landlords benefit from consistent rental income.
Step-by-Step Guide to Calculate Rental Increases
The process of calculating rental increases is straightforward. Here are some property management strategies to help you navigate through it:
- Perform a rental market analysis
- Look out for rental price trends
- Analyze property value
- Consider tenant retention
- Federal and state guidelines
- Create a notice
You can research similar property rental rates in the area through leasing platforms. Assess any improvements you've made to your property to justify rent increases.
Consider how an increase may impact your current tenants' decisions. Familiarize yourself with local and Indiana rental rules regarding rental increases, as well.
Once you've determined the new amount, provide tenants with a formal notice of the rent hike. You may want to provide the reasons behind the change.
Key Considerations for Rental Increases
In addition to following the steps above, there are several key factors to keep in mind while determining rental increases:
- Tenant's lease agreement
- Timing is everything
- Be reasonable
Check if your tenant's lease specifies how and when rent increases can occur. It's generally recommended to apply increases at lease renewal time. That way, you can make amendments and give the tenant a choice.
Annual increases should not exceed 5 to 10 percent. Excessive increases may lead to higher turnover rates.
Maximizing Your Investment with Full-Service Property Management
Using full-service property management in South Bend can enhance your rental experience tremendously.
Professionals in the field can help you manage all aspects of your property. They can determine fair rental rates and handle leasing management. You can focus more on maintaining your investment.
Final Thoughts on Rental Increases
Landlords should understand how to calculate rental increases to ensure a steady income flow from their South Bend rental properties. Using the appropriate strategies and knowledgeable management can maximize your rental income. Meanwhile, your tenants will be more satisfied.
PMI Machiana can provide real estate investment tips and management in the South Bend area. We help property owners with everything from residential marketing and tenant screening to maintenance and eviction. Reach out today to learn more about how we can help your investment thrive.
