If you haven’t raised your rent in the last few years, consider this: according to the Bureau of Labor and Statistics, the rent index is currently rising at an annualized rate of 3.6%. So you’re probably overdue for an increase.
At the same time, you may worry that by increasing your rates, you’ll lose good tenants. It doesn’t have to happen that way, especially if you follow these simple guidelines.
Do your homework
Assess the current rental market in your area and the value of your specific tenants. Some key questions to ask are:
- When was the last time you raised rents?
- How do your current rates compare to those of similar properties?
- What is the demand for rental units and what are the current vacancy rates?
- Should you increase rates only on in-demand units (for example, one bedroom vs. studio)?
- Which of your tenants are the most valuable and would you consider excluding these individuals from the increase to ensure you keep them?
Once you’ve determined how much to raise rent and on which units, be ready to address negative feedback with justifications for your action. Legitimate reasons include:
- increased property taxes and fees
- higher utility costs
- increases in janitorial, repair and maintenance costs
- improvement projects designed to enhance tenant living spaces
Be sure to note the length of time since the last increase, especially if you haven’t raised rents for an extended period.
Announce the increase in a typed notice on letterhead in concise language. Consider making explicit some of the main reasons you are raising rent to address complaints before they occur. Be sure that you adhere to the specified advance notice requirements in your leases and that you make yourself available to tenants should they wish to discuss the increase with you in person.
Raising rent isn’t fun. But it can be made easier if you have the help of a company like Herman Boswell. Our professionals are experts in both real estate and tenant management and can see to all the details that go into raising rent the right way. For the peace of mind you deserve, contact us today!