STRESS-FREE PROPERTY MANAGEMENT

Back to: Landlord Success: Proven Strategies & Practical Advice for Stress – Free Property Management

When is it time to raise the rent? In Alberta we can raise the rent once a year and we must give at least 3 months notice.

• When you raise the rent there is always a possibility that your tenants may move out. This could be a good or bad thing.
• Look at other rental ads and see what comparable properties are renting for to see if you are in the right price range. I always consider how long it has been since I have raised the rent on the property and what the current market conditions are.
• I, like everybody, want to maximize the rent, but I also like good tenants that don’t bother me much, so this is always a trade off.
• Once you have good tenants that are clean and tidy, don’t bother you much, look after your property and pay rent on time, it is good to keep them.  Some landlords say that they keep rent for these people just below market rent, so they stay for a long time.
• Some landlords raise the rent every year and try to maximize income especially in a hot rental market. These tenants understand what is going on and the second the market shifts lower; they want a discount, or they move out.
• There is a fine line between income and keeping the tenants happy. When Covid hit, all our tenants stayed and paid the rent on time every month.  They knew we had been treating them fair and they did the same for us. It is possible to make money and have good tenants and have everyone treated fairly.
• There is a cost to change tenants. You may lose a month rent between tenants.  Maybe the property really needs new paint or flooring, but the current tenant is happy with it and is not looking for improvements. Why spend 10K on a renovation to get an extra $100 or $200 a month in rent? Maybe offer to paint a room or 2 for the existing tenant, and if they see you looking after the property, they may take more pride in their home too.
• If you do decide to raise rent on a fixed term lease, give them at least 3 months notice before the lease comes due for renewal. This way when you sign the new 1-year lease you can start it at the new rate.
• If you do decide to raise rent on a periodic lease, give them notice 3 months notice. This can only be done after the first 12 months of the lease has been completed. 
• Always insure you provide written Rental Increase (see form in downloads). Keep a copy in your tenant file. Make sure you document this on the lease or create a new lease (keep your paperwork up to date).
• You can not request additional damage deposit if you increase the rent. Damage deposit is the same as one month’s rental amount as when they moved in.
• I like to have the initial rental increases discussion in person. This way I can gauge their reaction, sometimes they say “Yes, we have been expecting this for a few years”.  Depending on their reaction, they may be happy with more that you were going to ask for.  Or, maybe they say there is absolutely no way they can afford more as they are broke, and husband lost his job etc. Either way, decide and write a number on the form and hand it to them.
• As they have 3 months notice they may come back to you in 1 month and say that they can not afford the increase and they will be moving out. Get them to tell you that they are staying or leaving asap. Whatever the case is complete the appropriate paperwork in advance (either an updated lease, or a Notice to Vacate), Either way you want it in writing signed by them (give a copy to them and add one to your tenant file). This is important as the tenant may tend to change their mind and ‘FORGET’.