Good tenants are like gems to a property manager. They keep the business going. According to RealtyBiz, these high quality renters are unlikely to give you trouble since they always pay on time, thus you go exert all efforts to retain them. However, it will come to a point when you need to raise your rental rates, as you need to maximize profits as well as keep up with the increase in market rates. Raising the rental fee is then a great balancing act on your part since you never want to hurt nor lose your tenants. Here are the ways to do it, as suggested by RealtyBiz.
1. Make an assessment of the market
You need to evaluate the market and analyze it from two sides:
- On the market side
- Is your rate comparable to other similar properties? In case you have a higher rate than the rest, do the amenities justify this difference?
- Is the demand for your rental unit sustainable in your area?
- Is the unit in high demand?
- Is it sustainable for you to increase rent on units that are in high demand compared to others?
- On the tenant side
- Who among your clients do you value most?
- Are you willing to take the risk of losing them?
- Can you exclude your high-value tenants from the rent increase for you to be able to keep them?
2. Communicate your plan
This is the most crucial part of your plan. It is natural for a tenant to become unhappy with the rental increase, but if the communication is clear, there is a great chance for them to understand why you intend to do it. Make sure that you follow the notice requirements in your leases. Send your notice for an increase in a typed, transparent and easy to understand letter. Cite your reasons and be ready to address issues in case complaints arise.
3. Have a backup
Once the increase has been announced, be prepared to tackle negative feedback. In justifying, use legitimate and transparent reasons for your action. Among the justifiable reasons are: higher utility costs, repair and maintenance costs, and improvements to enhance tenants' living conditions. You may also cite the length of time since your last rental increase, especially if it has been quite a long time since you last raised the rent.
