At Virtual Rent, we understand that good, long-term tenants are hard to come by. As a landlord or property manager, you want to reduce turnover costs while maximizing rent. There is a lot to consider when you increase rent on your tenants. The last thing you want is good tenants leaving the property in favor of a lower priced rental. Here are a few tips to consider before you send the rent increase notice.
To increase rent, keep in mind the rental price point.
Our FREE RentMatch Comparison report allows you to understand your rental market trends based on actual rental units rented in your area. Regular review of the RentMatch Comparison report can answer key questions like “Am I charging too much? Too little? Are the rental prices trending up or down? What is my perfect price point for this leasing period?” We offer our RentMatch Comparison reports for free as a part of our service. We will provide you with this report at the start of our service and at least annually for your convenience. We can also provide you the RentMatch Comparison report upon your request for you to keep an eye on the trends as they are occurring. Rent comparison is extremely important to your long-term profitability, but compiling one yourself can be time-consuming and incomplete. Once you’ve determined your Perfect Price Point, it’s time to put together a Plan of Action.
- Project your upcoming operating costs. If your operating costs have increased significantly, raising the rental rate of your property can help offset those costs. Calculating the percentage increase of your costs will make it easier to explain to your current tenants why you must increase rent.
- Be legal. In most cases, state rental law and/or your lease agreement will dictate both when and how to communicate a rent increase. Check with your state Landlord Tenant Act laws and your lease agreement to determine the amount of notice you need to give. In many jurisdictions, 30 days’ notice is the minimum requirement. Keep in mind the tenant rights when you decide on the rent increase.
- Reach out to your tenant at least 90 days before the lease is up to let them know that you plan to increase the rent if the lease is renewed. This gives your tenants the opportunity to adjust their budget and prepare for the increase. If he or she doesn’t plan to renew the lease, you will have time to start marketing and showing your rental to minimize the vacancy.
- Put the information in an official written notice to the tenant that includes the new rental amount and the date it becomes effective. Send the official notice of rent increase to the tenant via certified mail, or hand-deliver it to the tenants at the rental property. Call your renters to deliver the news the same day you mail the written notice. Be friendly, professional, and polite but firm.
- Keep a copy of the rent increase notice for your records. As a courtesy, send the tenant a follow-up email, letter or phone message reminding them of the new rent right before it is due.
- Humanize the rent increase. In all your communications with tenants be professional, friendly, and firm.
- Build trust and human connection. Improve the value of your property by making some upgrades. Ask your tenants what upgrades they’d like to see.
If raising the rents is uncomfortable for you at first, remember you are not your tenants’ adversary. You are a service provider, and the tenants are your customers. You always should work with them in a friendly and professional way, while still enforcing the rules and defending your boundaries.