The best and easiest way to increase income from rental properties is by increasing rent. However this also comes with its own challenges which if not properly handled could backfire against the landlord.

While many landlords and property managers know that this is the way to go, they are generally afraid of the reaction of the tenants and the possibility of a backlash. There are also landlords that take rent increase to extreme by doing it regularly and significantly that the natural reaction of tenants is opposition rather than cooperation. But for those who get it right, an increase in the amount you get from your property is certainly desirable.

There are many reasons for increasing rent even though this is not something many tenants love to hear. One major reason is the effect of supply and demand on certain sectors of the housing market. In boom time when there are lots of construction projects going on and there are lots of people with good jobs or businesses to pay for houses, the middle and high end rental properties usually also experience boom time. When the economy is in a recession people scale down and the lower to middle sector of the rental market begin to experience greater demand. A strong demand market that does not have sufficient supply to meet its need for rental accommodation will give property owners and property managers the opportunity to raise rent.

Another cogent reason for increasing rent is the reality of inflation and price. In practically all economies, there are circumstances that make it reasonable and realistic to raise rent. It is interesting and also surprising to see tenants who have been paying the same rent for five or more years saying that they would like to see that trend continue for as long as they are living in that property. This is generally unrealistic since the prices of almost every other thing have been affected by inflation and the property investor also deserves to make a profit or at least earn reasonable income from his or her property.

Several years ago a property investor who had several rental properties had a family member who needed a rental property very urgently. He contacted his property manager to find out if any of the flats in his properties was vacant or would soon be vacant and found out that none was available. He was a very responsible and kind landlord. He had not increased the rents for over five years. He decided to rent a flat for his relation and made enquiry as to the cost from other property owners. It was this incident that opened his eyes to the fact that his rent was significantly behind the market rate. He increased his rent as well but with a small margin.

A property owner who desires to earn more from his property should also be responsible and responsive. You need to develop the type of relationship with your tenant that makes it easy for them to comply with your demand. This means that you should also invest in making the property habitable by responding to genuine demands for renovation and repairs. Most tenants are reasonable and they know that it is far cheaper to stay in a rental property than to rent a new one every few months or years. Most tenants are simply bidding their time to move into their own homes. When a property owner treats the tenant with respect and dignity he or she will likely get the same in return.

In addition, it is important to give a tenant a reasonable notice and to make the increase reasonable rather than sudden, significant increase. If there are clear terms relating to the length of such notices or the percentage of increase in your tenancy agreement, make sure you comply with those terms. In some states, there are specific regulations relating to increase of rent that you need to be aware of. However, as a general rule of the thumb a notice of three to six months or more before the rent becomes due should suffice. It is also wise to increase the rent in simple margins every two to three years rather than annually. Annual rental increase often breeds resentment and resistance from tenants.

There are times when you as a property owner might be opportune to remodel your property in a way that could generate additional income for you. This could develop due to the fact that your property is an old one where the space was poorly used and a few modifications could transform it into the rental property style that is in greater demand. A change of use could also present you with the opportunity to commercialise portions of your property for better returns. The key is to keep your eyes open for these opportunities and to act with knowledge.

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