How to work out a rent increase
New rent = current rent × (1 + increase %)
A 5% increase on $1,800 is $90 a month, for a new rent of $1,890 and $1,080 more income over a year. The calculator also shows how far the current rent sits below what similar homes rent for, which is often the better guide to how much room you have.
How much is reasonable?
Compare your rent with current listings for similar homes nearby rather than applying a fixed percentage. A good tenant who stays saves you a vacancy, a turnover and a leasing fee, which together can cost more than a year of a larger increase. Many landlords raise rent modestly for tenants they want to keep and move to market rent at turnover.
Check the rules first
Rent increases are regulated in some places. California's Tenant Protection Act generally limits yearly increases on covered homes to 5% plus local inflation, capped at 10%. Oregon limits annual increases statewide to the lesser of 7% plus inflation or 10% for most homes older than 15 years. Many cities have their own rent stabilization rules. Almost every state also requires written notice before an increase takes effect, often 30 to 90 days depending on the size of the increase and the length of the tenancy.
A fixed-term lease normally cannot be changed until it renews unless the lease itself allows it. Confirm the current rules for the property's location before sending a notice.
To see what the new rent does to your returns, enter it in the rental property calculator.