Raising the rent

As a general rule, if you use property managers they will want to charge as much rent as possible. This is because they get commission as a percentage of the rents collected.

This can lead them to put pressure on to raise the rent of the property. This has a double benefit for them if they have other properties in the area, more money directly for your property and as an example to raise the rents on the other houses.

There is also a gain for you of course, more money in the bank! But there is also the danger of your tenants deciding that it is too expensive to live there now and deciding to go looking elsewhere.

Just some quick maths: if you get $300/wk and your property manager gets 9%, the split is $273/wk for you and $27/wk for them. If you raise the rent by $20/wk (6.7%) you stand to gain $18.20/wk or $946.40/yr @ a 52 wk year.

If your tenants decide to move out and your property isn't let again for 3 weeks. You loose $819 @ $300/wk or if let at the new rate $873.60

Now consider the risk / reward from your perspective, if your tenants are happy and you raise the rent, they may be fine with it and you gain $946.40/yr vs risking (assuming 3 weeks vacant, could be less could be more) $873.60 loss. So at the end of the year you would be ahead by $72.80.

Considering the risk from the property managers perspective. If the manager has 30 properties they are managing (most probably have many more then this). And their average income from each property is about what they get from you. So about 30*$27 = $810/wk. They are risking 1/30th (3.3%)  of their income vs 100% of yours for 3 weeks. The gains for them can multiply because of average rents increasing over all. If the property was vacant for those three weeks then the manager would only be out of pocket by $81 @ $300/wk or at the new rate by $86.40. But if let at the new rate they would also be ahead at the end of the year.

Thus there is a real incentive for the property manager to raise the average rents in an area where they have a lot of properties.

I am not saying don't raise the rent, there are many reasons to do so. But don't just take the property managers word for it. Do some research, look at your costs and weather or not you NEED to raise the rent. If your property becomes vacant for say 5 weeks rather then 3 weeks then that overall position of being ahead would take significantly longer then a year. Happy tenants that stay on and pay rent every week are better for you then getting a few dollars more each week.

Also negotiate, instead of one big jump do a few smaller jumps, i.e. $5 extra per week for 6 months, then up it again by the same amount....