As yearly leases expire, building owners and property managers are always faced with the tough decision of whether to raise the rent for new tenants or existing renters. They must consider how to do it and the repercussions if they decide so.
Communicate In Advance
Notify your tenants earlier before. This will give them time to ask questions. Since you may have a closer relationship with them, it’s important to tell them why you’ve raised the rent. This shows you care for their welfare. If your property is managed, consult the manager and consider what the lease says about increasing rent.
Consider the Economy
There are rent calculators you can use to help you raise the rent. Are the property taxes, utilities, and maintenance costs up? Before raising the rent, do your math and find trends indicating a higher return on investment. Are other property owners in your neighborhood raising the rent? If so, you shouldn’t be left behind.
Some areas tend to be built with many houses and apartments. However, this is not applicable everywhere. In other areas, the demand for housing may be higher, but housing may be scarce. It is easier to raise the rent in such an area because the demand is higher than the supply. If there’s a scarcity of renters, you could consider raising rent for new tenants first.
The Market Rate
Before raising the rent, check the current market. Analyze the unemployment rates and housing market. Also, know your neighbor’s average rent because your renters know how much they charge. Your rent benchmarks should always reflect the area’s market rates. If the employment rates are dropping, you might get more vacancies; thus, it’s not the right time for a rent increment.
Consult the Experts
Increasing rent for the first time can be nerve-wracking. Maybe you have lost renters or seen someone else lose them due to rent increases. You may be hesitant to do it, even if it is necessary. You can consult property management company Aurora, CO-based, to help evaluate your situation and implement a rent increment. Property managers know how to do it without much struggle.
Adding Amenities and Utilities
Make a list of the amenities on your property. Do your neighbors offer the same? Do you have a fitness room, a dog park, a pool, and many others? With these amenities, you can raise rent easily without fear of renters moving out, and if they do, you will get others quickly. If you don’t have many amenities, you could consider adding them to get a valid reason to raise the rent.
Think About Your Tenants
Raising your tenant’s rent without considering your relationship first is not a good idea. Yes, it is a business decision, but you have to go slow on the matter. You can raise the rent gradually to ease your tenant’s burden. Give your tenants enough time to contact you and raise their concerns. With their ideas, you can tailor a rent increment plan that your renters will like.
Property owners should aim at maximizing profits. They should look for ways to raise rent without upsetting or burdening their tenants. Always look at the economy, the lease agreement, and housing availability. Rent increment is not easy, so consider working with a property manager.