Most landlords resist raising rent on their properties. That’s because they anticipate that it’ll lead to having their tenants move out. Nonetheless, the truth is that rent growth is part of market reality.
Residents shouldn’t expect to pay the same sum of money for rent year after year. Moreover, for property owners that dread losing a tenant upon raising the rent, there is an array of useful strategies they may use for fostering a beneficial understanding for both parts.
The assistance of a professional property manager
For numerous reasons, the help of a professional property manager is essential. Firstly, that will contribute to keeping your rent up to the average market rate. Secondly, it goes without saying that you won’t be required to negotiate with the tenant in person, and that eliminates the emotional factor of the relationship, keeping it professional. Last, but not least, an experienced property manager will help you save time on meaningless conversations with your tenants that won’t have any tangible results.
You should always discuss with the property manager current market conditions, comparing different rates. Always ask for advice before considering raising the rent, and collect conclusive market evidence. The property manager will then be able to provide evidence and explain to the tenant the increase in rent. As an owner, it’s your aim to show your tenant that it’s simply not just a squeeze but instead a justified increase based on market conditions.
If your current rental return is established at $400 per week, collecting evidence may indicate that the market facilitates a growth to $420 per week. If your property manager has already proceeded with the negotiations, and they’re in full bloom, it’s time you offer your tenant a discount. Everyone loves receiving discounts, and this scenario doesn’t make an exception. You may outline that, upon lease extension, you’ll increase the rent by only $10, which is less than the current market rate, in order to reward their loyalty. It’s a golden habit to reward loyalty, and if you do it, you’ll relish the fantastic bonus of signing an extended lease.
Stagger the raise
Your tenants appreciate being treated nice, particularly if they’ve been living on your property for a while now. Hence, if you’re not willing to provide them with a notable discount, instead, you could stagger the rental raise. In the scenario mentioned above, when negotiating a 12-month lease, by increasing the rent with only $10, you can win your tenant over. However, another alternative to that is adding up an additional $10 after six months’ time to make the transition acceptable. Concurrently, do bear in mind that each proposal concerning rent rise should be put in writing by your property manager.