When you raise the rent on your tenants, it can be a difficult thing regardless of your reason.
You shouldn’t raise the rent for no reason, but expenses or the cost of living – raising is a reasonable cause for a rent hike.
However, it’s important to keep in mind that raising the rent might cause the tenants to move out due to no longer being able to afford the rent.
But how can you break the news painlessly? Here are a few things to note.
You should do your research into the market values of similar properties so you know what you’re talking about. It’s a lot easier to sell a rent increase if you can prove to your tenant that it isn’t any higher than typical market price. If they know that they won’t be getting a better deal on rent anywhere else, they’re more likely to be agreeable with the rent increase. If you aren’t sure if you are pricing your rental right then request for a rental evaluation report for free – on us!
Take a document confirming the rent increase
If you can’t negotiate on the rent increase at all, take an official document that will serve as notice to the tenants. However, not being willing to negotiate puts you at higher risk of the current tenants moving out, leaving you with little time to find new tenants. Prepare yourself for this.
The great way to handle this is to serve them notice letters ahead of time.
Explain the rent increase to them
Most people are rather understanding when you have a valid reason for why you’re doing what you’re doing.
Be reasonable and explain everything to them in detail. Taking this professionally will not only help you build your reputation, it will also change the way your tenant deals with you.
Explain to them that the cost of living has gone up and, as a result, the market price for rent has gone up as well. They still might try to end the lease because they can’t afford the rent increase, but they’re less likely to be hostile or angry if you explain the situation to them. Otherwise, they might think you’re doing it for no reason.
Provide them with ample notice and have them sign it
You should always provide your tenants with ample notice so that, should they want to stay, they have time to make any necessary financial adjustments or adjustments to their budget so they can afford the new increase.
You should also have them sign the notice as well as signing it yourself, this way you have tangible proof that they were notified in a reasonable time and agreed to either pay the rent or terminate their tenancy. This way, should legal action be necessary, you are prepared.
Provide tenants with market comparisons
Just like being aware of the market prices can help you in your decision to increase, it can help your tenants decide to stay.
If the comparable properties are priced at the same or slightly more, they’ll know you aren’t trying to rip them off. Even if the rent in other properties is just slightly under yours, they may choose to stay for the convenience of not having to move.
Increasing your rent prices on current tenants can be challenging and uncomfortable, but all the tips we’ve shared with you are a few professional ways to go about it that can help you avoid confrontation and make the whole process seamless.
Renting your property is not as easy as it looks. There are several hoops that you need to go about in order to keep up with your business.
Raising the rent may be one of your pet peeves as you don’t want to lose tenants and keep your home vacated but you’ve just got to deal with it. Use all the tips mentioned in this article and let us know how it goes.
If it’s still something that you just can’t deal with and is fed up with it, we suggest you speak with a property management expert and request for consultation.
So has this been one of your toughest rocks along the way? What did you do? How did you handle it? Share it in the comments below!