Retaining Tenant when Raising your Rent
It is a sinking feeling to lose your good tenants when you decide to raise rents. It is your desire to hold on to your good tenants who are well behaved and pay on time. You are not sure whether you should raise the rent at the time of renewal of the lease agreement. Here are some great tips to make sure that you can hold on to your tenants when you are raising the rent.
Resort to a nominal annual increase
It is more likely for a tenant to consider moving to another place when he finds he has to pay a much higher rent after renewal of his lease agreement. An increase of monthly rent by 5-7% is taken in the stride by the tenant as he understands the compulsions of the landlord. There are also the hassles of packing and moving that make him stay in his place if he feels that the increase is not too steep. If you are fearful of losing your good tenants, it is a good idea to increase monthly rent by a small margin every year.
Keep communicating
It can be shocking for a tenant to learn about the rent increase at the time of lease renewal. Even sending a text message or an email may sound rude to your tenants. It is a good idea to always discuss your plans with your tenants in advance so that they are mentally prepared to absorb the rent increase at the time of lease renewal. You should apprise tenants about how costly repairs and maintenance of the property has become so that they are ready for increase in rent every year. However, be a good listener and pay ears to their request and grievances if you are planning to increase the rent.
Notice reduces shock value
A tenant should not learn about rent increase at the time of renewal of lease agreement. It also does not look very professional to tell your tenant to pay increased rent from next month at the expiry of the lease agreement. You can lose a good tenant if you try to increase the monthly rent without issuing a notice in advance. Always take your tenant in confidence and let him know by how much his rent is going to increase after the expiry of his lease agreement. It is always better to communicate the message verbally during a casual conversation even though you must give a written notice for rent increase to fulfill legal formalities.
You are not obliged to give reasons of rent increase
As a landlord you are not under any obligation to explain the reason behind the increase of rent. Justifying rent increase by citing increasing costs of everything looks like you are feeling bad about this increase. If you do not feel like giving reasons for rent increase, it is enough to covey the fact in writing and in conversation. If you are doing it in a right and polite manner, you can be reasonably sure of your tenants taking it in the right spirit. Of course, it is difficult for your tenants to cope with increase in rent, even they know that it is a necessary step to keep getting high quality services from you as a landlord.
If you’d like to talk more about the value of inspections, or you need help with Everest Property Management, please contact us at Everest Realty.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
