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?

Be prepared

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.

Communicate clearly

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!

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Raising rent is not easy to do. In fact, it can be almost as difficult as asking for a raise from your boss. But strategies do exist that can help you move beyond the angst.

The first thing you need to know is that you do not need to explain why you are raising the rent to your tenants. Your one legal responsibility is to inform renters in writing A) that an increase is coming and B) how much that increase will be.

That said, following are two simple but highly effective ways you can adjust tenant rent so as to lessen the psychological impact it will have on both you and your tenants.

Strategy 1: Make small increases at the time of lease renewal automatic

Most tenants expect a slight rent increase at renewal, usually in the amount of $20 to $50. But if you suddenly add $200 or more after not having raised the rent for a long period of time, you’ll very likely receive some negative feedback. A good rule of thumb is to increase rent between 3% and 5% a year.

You might consider making an exception to this if you have a good tenant you’d like to see stay on. In that case, you might waive the rent increase if they renew for another year. You can always make up the difference by raising the rent when that person finally moves out.

Strategy 2: Send an increase notice 60 days before lease end

Sending a rent increase letter this far in advance lets you know what the tenant’s intentions are. If he or she doesn’t plan to renew the lease, you have time to start marketing and showing the place without having a vacancy period.

You’ll need to state what the new rent will be and the date it becomes effective, which would be the day after the lease ends. If you have a fixed-term lease, you could include or attach a new lease with your letter or email. If you have a month-to-month lease, the tenant won’t need to sign a renewal since it automatically renews every month.

Herman Boswell understands that successful landlording not only requires substantial infusions of time and energy, but also good business and interpersonal savvy. That’s why our real estate professionals are ready to share their expertise with you when you need it.

\You have a life to live and investments to protect: let Herman Boswell help you on the road to better property management today!

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