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How to Conduct an Annual Rent Increase for Your Waco Investment Property

With the end of 2020 quickly approaching, you are likely getting your financial statements in order, while estimating your costs for 2021. As any fellow landlord will tell you, your property taxes, homeowners insurance, HOA fees, maintenance fees, and utility fees will rise year after year, making an annual rent increase necessary with each lease renewal.

Most property owners understand the need to increase the rent for their property (or properties) each year, though they find the process difficult to navigate. Some municipalities across the country set the annual percentage that landlords can use to increase the rent, but not here in Texas. With the exception of properties receiving the state’s Housing Tax Credit, as a landlord, you have the right to terminate or raise the rent as you see fit, but that doesn’t mean you should. Consider these helpful tips:

Determine the Median Rent in your Area Based on the Property’s Value

What is the typical rent charged for homes that are in the same location and condition? Have you recently made any major updates to your rental home? Do you plan on making any more? One rule of thumb is that rent should be .08-1.1% of the property’s overall value, though this percentage can increase based on the demand in any given area. If you are renting to a new tenant, it would be wise to fully assess your property’s value to ensure you are beginning a new lease for the appropriate amount.

Consider the Tenants you Currently Have Living Within your Rental Property

If you currently have tenants that you are pleased with, figuring out that “magic” number can be a burden. You do not want to price out an individual or family who pays on time, and takes excellent care of your home, but you do not want to lose money either. Here’s the thing: tenants do expect their rent to increase each year, within reason. The key is providing a percentage that is both affordable and fair. Industry experts place this amount at 1% – 3%.

Know the Law

Texas requires tenants to be notified of rent increases in writing at least 30 days prior to the increase taking effect – which is truly a common courtesy. Note that while Texas does provide you with the opportunity to raise the rent as you see fit, increasing the rent as a form of discrimination or retaliation is illegal. Rent increases can never be used as a means to force tenants out, especially on the basis of race, gender, sexual orientation, religion, country of origin, age, disability, etc.


Lease management, property maintenance, rent collection, and legal proceedings are challenging to say the least. As a locally owned and operated Property Management company, we have the expertise needed to help landlords make the most of their investment. We are proud to provide our services to countless fully-satisfied property owners across Central, TX, and Waco, TX, and would love to hear from you. Give us a call, today: 254-651-0576.

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