As a property owner, there will eventually come a time when you will need to raise the rent on your investment in order to continue generating a viable return. Yet, this can at times appear difficult, as you want to ensure that you don’t scare your tenants away when doing so.
In fact, not generating an increased rental income can oftentimes make a property appear less appealing. But doing so without suffering a loss of tenants can seem like a hard balancing act. The good news is that it does not have to be, provided that you follow a few simple tips.
First, you will need to know what the current rental market rate is in your property’s general area – as well as the value of your specific tenants. For instance, how does the rate you are presently charging compare to other similar properties. If you are already charging a higher amount, do the extra amenities that you provide justify the difference in price?
Also, what is the present demand for rental units in that particular area? Are the vacancy rates high or low? If you own more than one property, are you getting more requests for rental units from prospective tenants – and if so, is there a specific type or size of rental unit that is more in demand than others (for instance, two bedroom versus one bedroom)?
You should also consider when the last time was that you raised your rental rates – as well as whether or not you are willing to risk the loss of your tenants in order to raise the rate. For example, if the tenants you currently have are paying the rent on time every month and keeping the unit in tip top shape, are you willing to risk them moving out in return for the higher amount of money you can receive?
If so, you will need to be prepared to back up the reasons that you have for raising the rent to your tenants, as you may receive some negative feedback from them once you announce the increase.
The way in which you communicate a raise in rent can literally make or break the deal. While no tenant is ever happy with having to pay more, going about it in a tactful manner can go a long way in helping them to understand why the increase is happening.
Working with a professional property manager can help you in working through this process so that you can be alleviated of the time and the stress of having to do so yourself. For more information on the many benefits of turning over the day to day duties of managing your investments, give us a call.