With inflation still high and rents steadily rising around the country, many Portland landlords are weighing the pros and cons of increasing the rent, and how to manage rent increases fairly. It’s a good question to consider. In our highly desirable city with its shortage of available rentals, the high demand has consistently pushed up the prices of what’s currently available. However, increasing rent can be a tricky business. By handling rent increases fairly and transparently, you can ensure that you don’t drive away quality tenants and cause yourself unexpected financial difficulties.
Here are some factors to consider before raising the rent in your Portland rental, and the best way to raise rents when you’re ready to move forward.
Remember Oregon’s Rent Control Laws
One of the most important aspects of raising rent in Portland is complying with the area’s rent control laws. Portland only allows rents to be raised by a certain amount annually: 7% plus the current consumer price index. With inflation still riding high, landlords have been able to raise rents by as much as 14% during some periods. However, new legislation may be on the horizon, further limiting how much landlords can raise rent per year.
You’ll want to be diligent about verifying local laws before deciding whether to raise the rent (and how much to increase it). Sometimes, a sharp enough rent increase alongside other factors might require you to pay Portland’s Mandatory Renter Relocation Assistance fees. A substantial change of lease terms or a rent increase of 10% or more over a 12-month period will trigger mandatory relocation assistance.
Consider Market Rates
When deciding whether to raise your rents, it’s also essential to determine how much you would raise them by. A good rule of thumb is to look at similar rentals with comparable amenities in your neighborhood, and gauge how much those units are renting for. Some areas of the city are more desirable than others, and tend to have higher rents. You can look at a guide to Portland’s neighborhoods like Alberta to get a sense of what might appeal to renters in your neighborhood and what you might be able to charge. Unless you’re offering a luxury rental with amenities that people are willing to pay more for, it’s important to make sure your rents are not outpacing current market rates, or else your unit might sit vacant.
Provide Advance Notice
In Portland, you must give at least 90 days’ notice of a rent increase. This notice must include the following information:
- The amount of the rent increase.
- The amount of the new rent.
- The date on which the increase will become effective.
Landlords who do not follow the letter of the law in rent increases can face steep penalties. As per the Oregon Bar, “Landlords who increase rent in violation of these restrictions can be found liable to the tenant in an amount equal to three months’ rent, plus actual damages suffered by the tenant. An offending landlord would also be responsible for paying the tenant’s attorney fees and court costs.”
Consider Smaller, More Frequent Increases (Rather Than A Single Big One)
Sudden significant rent increases can be a financial hardship for tenants. In some cases, it might even mean that they’re not able to afford the higher cost of rent and will need to find new housing. This causes difficulty for you as well as your tenants, because vacancies are costly and finding new quality tenants can be challenging.
Instead of a sudden sharp increase, consider raising the rent slowly but steadily to keep up with market value. Your tenants will be far more likely to absorb a 4% rent increase than a 14% one, and you’ll still increase your profits by hundreds of dollars per unit by the end of the year.
Invest Your Increased Rents Back Into The Property
If tenants feel that you have been neglecting seasonal maintenance and repairs, they will likely not be receptive if they receive a letter about a rent increase. If you know you intend to raise the rent when your tenant’s lease renews, you should make sure that you’re keeping your property in the condition suiting the rent price you plan on charging. This could mean sprucing up the exterior to improve your rental’s curb appeal and updating older appliances.
Consider Tenant Retention
Giving your tenants a positive experience is a crucial part of being a landlord. On the one hand, fostering a positive relationship with your tenants creates a better experience for everyone involved. On the other hand, a contentious dynamic between your tenants and you can result in several issues ranging from legal disputes to tenants withholding rent. It’s far better to ensure your tenants have a good experience in your rental, both with the rental itself and with their interactions with you. In this way you avoid the costs associated with tenant turnover, which can quickly add up.
Best Times to Increase Rent
Like many things in life, increasing rent is as much about timing as anything else. By finding the perfect moment to raise your rent, you can avoid ruffling your tenants’ feathers or driving them to vacate, while also increasing your profits to meet your rising costs.
The best times to raise your rents in Portland are:
Between Tenants. When you’re between tenants, you can set a higher rent for your unit without the difficulties that come with asking your existing tenants for more rent.
At the end of a lease. You cannot increase rental rates mid-lease. However, if your tenants’ lease is coming to an end and you’re within the timeframe of required notice, this is a good time to think about raising rent.
When Inflation Demands It. Sometimes, economic factors necessitate raising rents. If your rental’s ROI is suffering due to high inflation or other economic factors, raising the rent can help you keep your rental business afloat.
After improving the property. If you’ve invested money into your property, renters will often understand why you might want to increase the rent as a result.
Rent Portland Homes Keeps Your Rent Fair and Competitive
Increasing your rent can be a stressful situation. You don’t want to alienate your tenants or drive them to vacate the rental, but you also have to ensure that your rental stays competitive with market rates. If you’re wondering how to manage rent increases fairly and aren’t sure where to start, Rent Portland Homes by Darla Andrew can help. With our years of experience in the Portland Rental Market, we know how to price your rental property to make the highest return on investment while still complying with Portland’s rent control laws. For more information, call us any time at 503-515-3170.