Landlords, want a fast easy way to increase your cash flow? How about an increase in your rent collected? An increase seems like a quick, easy way to balance the books. So when is it a good time to bump up the rent? The answer I respond with is actually in two parts.
First, landlords can only raise rent on their tenants after a year of tenancy. Typical leases run for an entire year and then, if not renewed are considered on a month to month basis. This is the point you may follow the landlord tenant guidelines to raise it which is subject to regulated caps - or simply put - no more than the prescribed amount for that year. In 2015 the amount is 2.6%. There are instances where you can apply to the Landlord and Tenant Board for a rental increase sooner (interest rates have changed significantly, the necessity to refinance to cover costly repairs)
The second part of my answer to landlords is should you be raising the rent? Market conditions and comparable properties should be taken into consideration. If you raise the rent too much on tenants who may already be at the top of their comfort zone, they will most likely begin looking elsewhere. This could leave you vulnerable to unexpected expenses for advertising, paint and other maintenance or repairs just to fill your property all over again. Over time, consistently keeping your units filled is the best way to ensure your investments remain profitable.
Whether you choose to wait for the anniversary date of the lease or apply for an early rental increase, you should always consult the ltb.gov.ca site for more information. Here you can also learn how to properly serve a rental increase notice to your tenants and avoid any unnecessary conflicts.
Please leave me a comment if you found this information helpful.
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Glenn Brown is owner of My Rental Unit property management and has enjoyed success with multiple unit investing.