From finding a good tenant to keeping it for a long time, there are certain things one must consider when renting out a property. A time comes where you may want to increase the residential rent other than the annual increment.
In such conditions, most of the landlords either lose their potential tenants or cannot increase the rent at all. Whether you are doing this for years or you are a new landlord, follow this post and I will show you how to announce an increase in the rent without losing your good tenants.
Analyze the Market
The very first step is to conduct a thorough research of the rental market in your area. Make sure not compare a residential property with commercial properties to determine the rental market. To conduct a successful analysis, compare the rental market and your tenants side-by-side.
- Rental Market: Determine if your rates are similar as compared to similar properties in your area? what is the average vacancy rates in the area? Also, examine if your property has more luxuries or amenities than most of the properties in your area?
- Potential Tenants: Getting good tenants is the dream of every landlord. When was the last time you requested a raise in rents? If that wasn’t long ago, are you willing to risk your relationship with the tenants? For this, it is recommended to only increase rent for tenants who are already paying less than the others.
Provide Adequate Reasons Behind Rent Increase
When you have notified the tenants of the rent increment, expect a come-back justification from his side. No tenant will behave carelessly and present you with a thank-you note when you request an increase in the rent. You can put up these understandable reasons for this increment
- The expensive utility bills
- Increased property taxes and federal fees
- Increase in janitorial
- Maintenance and repair costs and more.
Furthermore, if you are willing to employ capital improvement plans on the property that will also improve the living standard of the tenants, it is an understandable reason to increase the rent.
How Much Rent Should I Increase?
Demanding an unusual amount of rent increase is simply unfair. Typically, the rent increase should range between one to seven percent. Staying within this incremental limit will not cost you losing any tenants. The best way to determine the best rental increment is to find the average rental increase in your area. If a 10 percent increase in the rent doesn’t make a difference in your area, you may have this much increase without losing the tenants.
Communication is the Key
Increasing rent without losing tenants directly adheres to the saying, “Communication is the key to success”. No resident will be happy after receiving rent increase notice. Therefore, communicate with the tenant with clear yet professional reasons.
Also, comply with the listed notice requirements in your rental or lease agreement to avoid any conflicts with the tenants. Provide the tenant with a printed notice with understandable reasons to increase the rent.
Follow the above steps and you are most likely to increase your property rent and meet up with the added expenses you have been experiencing lately without losing the tenants. Good tenants are hard to come by. No doubt, increasing the rent can be full of a hassle for both you and tenants. Make sure to only ask for a considerable rental increase because losing tenants can end up losing a lot more than the rental increase.
In case of further questions or suggestions, get experts guidance here.