When Should You Raise Your Rent?
Raising the rent for your rental property can be quite tricky at times. This is especially true if you are dealing with good tenants. You may be afraid that if you raise the rent too high you could lose the tenants – or end up with a vacancy. Or, if you don’t raise the rent, you could be cutting yourself short – especially if you experience a rise in insurance, homeowner’s fees, maintenance costs, etc.
If you find yourself struggling with the decision on raising the rent, you aren’t alone. But, luckily, we’ve got some tips to help you out.
Make it automatic
To raise the rent gradually without causing too much disruption to the rapport you have with your tenants, make the increase in rent automatic. Each year when the lease is up for renewal, add in the new rental fee amount. Keep it low and simple, say 3-5% each year. A slight increase is less likely to startle your tenants – and if it is expected.
Offer a discounted increase
If your rate increase strikes your tenant as too much – and you’d really like to keep them – perhaps you can offer a deal. For example, if your tenant is willing to sign a new lease for an extended term, then you will agree to a discounted rental rate increase. Instead of, say 6% increase, you will offer them a 3% increase to sign a two-year lease.
Talk to your tenant
Your tenant knows you own the property and that you have expenses, too. More often than not, you will find that they will be willing to accept a rent increase. Just sending out a notice can seem cold and can leave the tenant with bad taste. But, talking with the tenant and treating them as though they matter (because they do), possibly seeing there is anything you can do to make the home more comfortable for them, etc. will increase your chances of keeping the tenants – and get you an increased rental rate.
You should consider raising your rent when your expenses go up. You can do this gradually at a low rate annually. Or, wait until you are between tenants and start the next tenants with a significantly higher rental rate. The choice is ultimately yours, but you will want to do your best not to jeopardize the situation. You are the landlord – it is your property but being greedy could cost you good tenants.
Do what is right to protect yourself and your property while taking into consideration your tenant. They will appreciate the treatment and will be more apt to pay the increase.
Marina Shlomov, a managing partner at ALH|Podland Realty & Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out at www.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube,Bigger Pockets and REI Club and LinkedIn.
