Increasing Rent on Your Investment Property: Key Considerations for Making the Right Decision
As rental prices in Perth continue to rise, it’s natural for landlords to consider raising rents whenever possible, but it’s not always that simple.
When thinking about raising rents, there are a few key considerations to weigh up to ensure you make the best decision for your personal circumstances.
In our experience, a more strategic approach often leads to better outcomes.
The Risks of Rent Hikes
- Higher vacancies
When rent is raised too aggressively, it may push tenants to look elsewhere. With that in mind, are you prepared to lose several weeks of rental income looking for a new tenant for the sake of a small rent rise?
2. Additional leasing costs
If you decide to increase your rental price and your tenant does choose to leave, you’ll need to re-lease your investment property. This will include associated costs, such as online advertising, marketing and leasing fees, which can add up.
3. Losing good tenants
Not all tenants are the same. If you have a really good tenant that takes care of your property, you risk losing them if you decide to increase your rent.
When Raising Rent Does Make Sense
That said, rent increases are not inherently bad, and it’s important you’re receiving fair market value for your investment.
Under WA’s new rental laws, landlords can only increase rent once every 12 months, so it’s important to time any adjustments carefully.
With this in mind, if you’re thinking about increasing your rent, it’s best to speak with your property manager, who has the best understanding of the market.
They’ll be able to compare properties on a like-for-like basis and make an informed decision to determine a fair rental return for your investment property.
Remember, just because an investment property on the same street or suburb is being leased for $50 more than your own, doesn't mean you should increase your rent.
There are lots of factors that go into determining the fair rental price of a property including the type of property, layout, its age, size, backyard, and the type of appliances to name a few.
At Rent Choice, we partner with you to ensure your properties are not only earning, but that they’re managed with longevity and tenant retention in mind. If you’d like to review your portfolio’s rent-growth strategy or explore how to upgrade to improve returns, let’s talk.
