Friday, May 16, 2014

Ask an Agent: Why is my rent going up?

It's the middle of the month, so we sent out lease renewals. One of the biggest questions I've been getting the last couple days is, "Why is my rent going up?" A lot of tenants believe that if they pay on time and aren't too much of a bother, their rent will stay the same. There are a couple other factors at play though:

  1. Property taxes: Property taxes are based on the appraised value of the property, so when home prices go up so do property taxes. The market in Texas (especially Dallas) is red-hot right now, meaning a lot of counties are increasing the amount they are charging home owners for taxes. Increased taxes=increased expense, and that gets passed onto tenants.
  2. Insurance: Insurance is another item that increases with property values. Since most insurances cover "replacement value" (how much it will cost to rebuild the house in case it is destroyed completely), the yearly premium goes up when the market does.
  3. Market influences: We have seen rents go up in neighborhoods by as much as $150 a month. While we usually do not want to raise good tenants to market value, we sometimes have to close the gap between market value and what the tenant is currently paying. Also, the vacancy rates are extremely low, meaning owner are having no problems finding new tenants.
There are some items you can do as the tenant to decrease a rent jump. The biggest thing is call your landlord and speak with them. Most of the time, owners would rather keep a good tenant than pay vacancy costs. Some of the items tenants can offer to do to bring down the rent is sign a longer lease or offer to pay for an improvement.

Want some more information on the current landlord's market? Read this article at MSN.

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