Back in 2005 I converted the first house I bought into a rental property. I have made good progress in my journey to a $2million net worth since then, but I have had this nagging little worry that has been hanging about – to date I haven’t been able to increase the rent on the property.
This has real bothered me at times because my expenses on the property have gone up every year (insurance expenses, increased property taxes, repair and maintenance expenses) so the net is I have been earning less and less every year.
The first year I renewed the lease and didn’t feel like I needed to make a case of it – the renewal itself would save me several hundred dollars in rerent expenses.
The next year I was busy preparing for my assignment in China and ended up signing a new lease with a couple roommates (from the previous lease) that knew the previous rent so the rent was left untouched.
This past year I was still living in China and rerented the house out while I was back in the US for a visit so I jumped on the first tenant that was interested, but ended up agreeing to reduce the rent back to the rent I had been charging.
This year I vowed to raise the rent. I raised the rent amount by $100/mo on my initial ads. I still got a good response rate, but it was clear that their were other properties on the market that were a better deal. I waited a little bit and started re advertising it for $25/mo less. I finally got some traction, and yesterday I had a pair of professionals submit an application after I agreed to drop the rent another $50/mo.
However – that means I still was able to raise the rent $25/mo. While not as much as I would like, I hope this means that the property has finally hit that medium state where I should be able to continue to creep up the rental rate each year to improve our cash flow.
Its weird, I was able to raise the rent on our second rental property immediately after the first tenants after the rental conversion. However the increase maybe due more to me underpricing the rental to begin with rather than the benefiting from rental market rate increases.
