Although Arizona doesn't have laws governing how much landlords can increase rent, it's wise to tread lightly when you approach this aspect of property management.
Phoenix real estate rental prices have been propelled into the spotlight amid concerns over price-fixing in the industry and 30% increases in rent over the last two years. So, if you're a Phoenix landlord contemplating your annual rental increase, read on to find out how you can avoid the firing line in Arizona.
Arizona Regulations Governing Rent Increases
Your lease agreement is always the first consideration when calculating a rental increase. Under the Arizona Landlord Tenant Act, you may not increase your rent until after the expiration date of the lease agreement.
Unless your lease states differently, you must notify your tenants in writing at least thirty days before you increase their rent. If you have tenants with week-to-week leases, you must give them at least 10 days' notice.
If you have a clause in your lease that stipulates an annual percentage increase in rent, you must comply with it.
As long as you comply with the legalities, you have carte blanche when it comes to increasing your rental rates, but you should still consider the following pointers:
Survey the Market
Conduct a rental analysis of similar properties in your area to see what people are prepared to pay. Increasing your rent out of line with the norm means your property will attract fewer applications.
Housing is one of the major factors in tenants' cost of living expenses, so there's also a chance you could lose your existing tenants if they can't afford the rental increase.
If you wish to qualify for the benefits of being a Section 8 landlord, you should investigate the current rent limits for this type of housing.
Consider Your Monthly Expenses
You can't rent your property for less than what it's costing you every month. Make a list of all your related expenses to help you arrive at a profitable price for your efforts.
Some things to include in your calculations are:
- Mortgage repayments
- Property taxes
- Maintenance and repair costs
- Insurance
- Utilities
Hiring a property manager is a great way to keep your expenses low and get the guidance you need when increasing rent. If you are working with a property manager, be sure to include their monthly fees in your cost analysis.
It's best to set aside some money every month to create a maintenance reserve fund and to carry through any future vacancies.
Mastering a Rental Increase in Arizona
Calculating an appropriate rental increase is an important starting point for encouraging low vacancies and profitability for your rental business. Hiring a property manager is vital for ensuring you get it right.
Real Property Management Phoenix Valley can help you maximize your investment property in every possible way. We employ experts in every facet of property management, so tenants and landlords benefit from working with us.
Our services include free rental analysis, pricing, marketing, and property maintenance. Discover an easier route to success in property investing today.
