It is difficult to come by good tenants. They are unlikely to give you any trouble because they always pay on time, and this makes you go an extra mile in ensuring you retain them. But for you to maximize your profits and still keep up with the ever-increasing market rates, it is proper to raise your rental rates. Doing this is tricky, and you have to do it tactfully so that you don’t lose or hurt your tenants.
Here is how you can achieve this.
Assess the market
Do your assessment focusing on the market and the tenants. Concerning the market, you need to ask yourself some questions: Find out:
- If your rental rates compare to other similar properties –if you already have a higher rate, do the amenities you offer justify this difference?
- If the demand for rental units in your area is sustainable.
- The units that are in high demand.
- If it is suitable for you to increase rent on units that are in high demand compared to others.
Concerning the tenants, ask yourself:
- Who are your most valuable residents?
- Can you risk losing them?
- Can you exclude these high-value tenants from the rent increase for you to keep them?
Also remember, you need to run a background check on your potential tenants before allowing them to rent your premise. You can get a client screening report from reliable sources.
Communication is the most crucial aspect of your plan. No tenant will be happy with a rent increase, but with clear communication, they are likely to understand your position. Ensure you adhere to the notice requirements in your leases. Forward your increase in a typed notice using transparent, understandable language. Target to address your reasons for increment in the notice before complaints arise. Make plans for your next increase and incorporate it in your leases so as not to surprise your tenants. This will give your tenants sufficient time to budget for the increase. This also prepares them psychologically.
Have a backup
After you have announced your increase, get ready to tackle any negative feedback with transparent, legitimate reasons for your actions. Justifiable reasons may include higher utility costs, and repair and maintenance cost. You may also be considering financing improvement projects for your property to enhance your tenants’ living conditions. Also, consider addressing the length of time since your last increase, particularly if you have taken long since you last raised rents.
Raising rents can be tricky and demanding for both you and your tenants. But if you follow a well-planned process by assessing the market, communicating with your clients, and creating a backup plan, you will get through it successfully.
About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky Snowball. Information for this article was provided by professionals at Rentec Direct.