How to Raise Your Rental Rates
Raising your rental rates as a landlord can be the trickiest part about this gig. The last thing you want to do is lose good tenants with budget constraints after thoroughly vetting them. At the same time, inflation is real and there’s no point in being a landlord if you’re not going to benefit financially.
The key is striking a balance and approaching the process with open communication. Need some advice? Read on for guidance on how to raise your rental rates without losing quality tenants.
Keep the Price Hikes Consistent
You do not want to spring a huge rent increase on tenants who have been loyal to you for many years. Make it so that it is expected from the start with smaller, gradual increases and then it’s easier for them to accept and manage. As this Landlordology.com article notes, “A good rule of thumb is to raise the rent about 3-5 percent a year.”
Another suggestion they make, however, is to reward excellent tenants with deals like waiving the rent increase in exchange for signing for another year or two. When one considers how high maintenance the screening process is, this is often worth it. Plus, you can always raise the rent when these tenants ultimately move out.
Give Plenty of Notice
As we mentioned, “springing” anything on renters is never a good idea. If you give them notice–such as 60 days in advance–this is appreciated on their end and also lets them show their hand, so to speak. It will be a good way to judge if they are going to stay or go. Keep the letter professional but feel free to give an explanation as to why you need to do this.
It’s not necessary but if you have a rapport with them, they’ll appreciate this. Of course, buttering them up with compliments couldn’t hurt either! If you’ve already gone the extra mile by being responsive with issues, maintaining the property, and special touches like birthday cards or holiday gifts, the rent increase is more likely to be well received.
Even if you have a rather informal relationship with your tenants, you must put this notice in writing–no texts, voicemails, emails, or phone calls or you could find yourself in a legal bind. Check out this Balance.com article if you’d like a sample of what this letter should look like.
Do Your Due Diligence on Rates
Hopefully you spent a lot of time researching rental market rates and asking other people in the business to appropriately price your rental property from the start. There’s nothing worse than losing good tenants because they think they’re being ripped off, but you also don’t want to lose money because you didn’t charge enough.
And just as with finding this balance from the start, you need to make sure you look thoroughly into if, when, and how much a rent increase should be. Research online, ask experts in the field, and consider even doing an analysis/report. You’ll feel much more justified when you have the numbers to back the increase up.
Know the Laws
The extensive amount and high level of detail that goes into real estate laws is probably the hardest part about getting into this field. There’s no way around the fact that the law tends to favor renters. If you do not follow the letter of the law when doing things like rate increases, evictions, etc., you could find yourself losing tens of thousands of dollars in court.
If the property is rent-controlled, there are very specific rules as to how much a rent increase can be and often you can do it.
And remember that these types of laws vary from state to state, so either hire a lawyer or get extremely familiar with your state’s laws–ideally, you should probably do both. When it comes to screening processes, be sure that your services are FCRA-compliant.
Tenant screening services from SmartMove provide the level of detail you need to make an informed decision about your new tenant–while following FCRA regulations. Get peace of mind while running background checks and find a person you can trust to take care of your property.
Landlords often get a bad rap for being money-hungry, uncaring individuals. The truth is, the renter/landlord relationship can be a fantastic one as long as there is mutual respect. Once you have this foundation, a well-planned rent increase should be no problem at all.
Identity Magazine is all about guiding women to discover their powers of Self-Acceptance, Appreciation, and Personal Achievement. We ask that every contributor and expert answer the Identity 5 questions in keeping with our theme. Their answers can be random and in the moment or they can be aligned with the current article they have written. In that way, and as a team, we hope to encourage and motivate each other, thus inspiring you to Get All A’s.
1. What have you accepted within your life, physically and/or mentally? Additionally, what are you still working on accepting? Now, we’re talking about resignation, rather stepping into, embraced, and owned.
I have accepted that it is impossible to please everyone. I struggled for years to fit in with what I thought were the “cool kids,” but in the end I was unhappy because I felt I could never be my true self.
I now accept that to be my true self, as an individual, means that not everyone will like me, and that I can’t please everyone. But I now understand that being myself brings to me the most fulfilling relationships.
2. What have you learned to appreciate about yourself and/or within your life, physically and mentally? On the other hand OR in contrast, are there elements of who you are that you’re still working on appreciating?
I have learned to appreciate my family more, flaws and all. When I was young, my parents had a very busy life, and struggled to just make ends meet in our family. As a result, I became resentful that they never spent enough time with my siblings and I.
Now I appreciate them more, because they worked so hard for our family, and I am grateful now that I can have a stronger relationship with them as an adult and have a truly fulfilling relationship with them.
3. What is one of your most rewarding achievements in life? Tell us not only what makes YOU most proud but also share the goals and dreams that you still have.
The most rewarding thing I have ever done was when I decided to study abroad in Barcelona for a semester. I really felt like I broke out of my shell. Being in an unfamiliar place where you can’t speak the language is difficult, but I gained so much confidence in myself that I can achieve my dreams in life. I still have a passion for travel. I would love to become a travel writer one day and circle the globe!
4. Of course, we all have imperfections, or so we think. In truth, we are all perfectly imperfect. What are your not-so-perfect ways? Likewise, what imperfections and quirks create who you are–your Identity?
Sometimes, I get self-conscious that I’m too weird for people. For example, I love to spend the day inside reading books instead of partying all the time. Despite staying home, I’m actually love being with people. So a lot of extroverts don’t understand that I enjoy time alone too.
Not everyone gets that that is just me! I also have what I guess is a strange sense of humor. Some people call it an intelligent or witty sense of humor, and so sometimes my jokes fall totally flat. But this is all okay, because like I’ve said, that’s just what makes me, me!
5. “I Love My…” is an outlet for you to appreciate and express all the positive traits that make you…well…YOU! In fact, sharing what you love about yourself will make you smile, feel empowered, and uplift your spirit and soul. (We assure you!) Therefore, Identity challenges you to complete the phrase “I Love My…?”
I truly love my ability to connect with people through writing. To me, it’s one of the most magical things out there. It’s pretty crazy that you can create a made-up character or story and someone, somewhere, will feel like they are understood. It’s an incredible feeling.
That’s why I enjoy reading. Even if I just write personally for myself, I feel empowered that I can indulge in my imagination. Finally, I love my ability to have deep conversations with people. When people open up, I feel like our souls just meet in a space of harmony.
When we expose our humanity to each other, I think it’s just a very beautiful thing. Also, I can’t forget, I love my cat, Pancakes! There is simply no better pet out there.