As a landlord, you need to make sure that your rental rates are competitive with other rental properties in the area. There is a delicate balance between charging too little and not making enough of a profit, and charging too much, which will alienate renters. In today’s post, we’ll share some tips to help you determine the best time for raising the rent, assessing the appropriate amount of the raise, and figuring out how to do all of this without raising complaints from your tenants.
At Rental Research Services, we understand that you want to find tenants who have good rental backgrounds, pay their rent on time, and won’t abuse your property. Whether you have been renting your property for many years, or you are brand new to the field, we can help. Be sure to contact us for all of your tenant screening needs!
Determine the Reasons for the Raise
There are a number of factors that you need to consider as a landlord when contemplating raising your rental rates. One of the most important factors is to be familiar with the law in your area. If you live in a rent-controlled region, then you will not have any say in whether you can raise the rent at all. If you are allowed to raise the rent, then be sure that you can justify your decision. There are many things that you have to manage in your rental properties, including property taxes, HOA dues, insurance premiums, and maintenance. Determining the costs associated with each of these factors will help you to determine if you’re charging enough rent to cover costs and make money as well.
Include Automatic Rent Increases
One of the easiest ways to increase the rent without alienating your tenants is to make it a standard part of the lease renewal. Typically, rental agreements are in increments of years, not months, which means that any increases should not be surprising for your tenants. While it is pretty standard to set an increase of three to five percent a year, you will want to make sure that you keep an eye on the rental market to ensure that your rates remain competitive. If you choose to raise the rent by several hundred dollars with no warning, then you may need to be ready to handle a vacancy.
Give Your Tenants Reminders
From salon and dental appointments to work obligations and travel plans, it is customary to receive reminders of the plans you have made. Lease renewals should be no different. While your tenant likely knows when their lease is up, their daily life can be filled with a variety of activities that may temporarily remove that item from their mental calendar. Be considerate and send them a reminder approximately 60 to 90 days in advance so that they have time to make any necessary preparations for their higher monthly rent. If the minimum requirement is 30 days in your area, then you will have extra time to send additional reminders.
Familiarize Yourself With Market Comps
While you don’t work as a real estate agent, it is beneficial for you to be familiar with the comparable rental prices in your area. This knowledge will help you to determine what would be an attractive and competitive price for your rental property. If you’re not sure how to find the comps in your area, then check real estate websites as they usually have these types of tools. You can be sure that potential tenants are also comparing available rentals in the area, so you want to make sure that your rates are competitive.
At Rental Research Services, we want to help make your job easier by providing the tenant screening you need for your rental properties. From criminal checks to traditional background checks, we can give you the insight you need to determine whether or not you will accept a tenant application. Call today to learn how we can help with tenant selection and provide the peace of mind that you need.