Higher rents equal higher values for real estate

*NOTE - This article was originally written in September of 2006 for the newsletter.

One of the biggest pitfalls in being a landlord is becoming complacent. When a landlord becomes content with the money they are making, their property management often begins to suffer. If a landlord does this they are not only throwing away profits today, they are throwing away the profits they could have made tomorrow.

Generally speaking, rents should be raised every year. Annual increases will vary, but 3% is a good average. The cost of living goes up every year and so should rents. Keeping in touch with what rents are going for near a property is crucial. Rents should keep pace or even exceed the average rents in an area. These higher rents will provide additional income and money for upkeep and repairs

Additionally there is another pitfall landlords must avoid. Despite what some landowners seem to think, spending money on repairs and improvements is not a waste. These repairs and improvements help to justify premium rents. Higher rents increase the value of the property. Not only that, but when a property is in better condition it is worth more. Even if the property will not be sold anytime soon, this increased equity position will enhance the ability to refinance as a means to pay for improvements, buy more properties or improve the mortgage structure.