Successful landlords will tell you that keeping great tenants in your property is paramount. When you have a tenant that’s a dream and pay their rent on time every month, you’re maximizing your investment. However, this means you’ll eventually need to face the delicate balance of keeping your current tenant happy while also ensuring your property remains profitable.
This guide will help you navigate the process of increasing your tenant’s rent without losing them.
Should You Raise the Rent?
You should do a rental analysis on each of your properties each year, regardless of whether you have a good tenant. To do this, you should consider several factors:
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Historical rent trends
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Neighborhood quality
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Home features
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Location
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Market Conditions
If you work with a property manager, they can provide you with a full rent analysis. Once you have your analysis, you’ll be able to determine whether your current rent is fair or if the current market conditions support a rent increase.
Consider Your Lease
Many landlords soften the blow by including a rental increase and its process as a provision in the lease. This puts the tenant on notice of a possible increase when they sign the lease. Have the lease spell out when and how the notice of an increase will get delivered.
Consider Your Tenant
Think about how long the tenant has lived at the property and when was the last time you raised the rent. Are you willing to risk the tenant leaving if you raise the rent? Does the cost of finding a new tenant outweigh the potential increase?
If you have a low maintenance renter that takes great care of your property, you may find that it’s worth it to not raise the rent or only raise it a minimal amount. In other situations, you may be willing to risk the tenant leaving for the potential increase in profit.
Know the Law
For many states around the country, landlords are limited in how much they can increase the rent at a time. This is called rent control. Texas doesn’t have these types of regulations.
However, you must abide by the lease terms for the length of the lease. This means you cannot raise the rent mid-lease. You also can’t increase the rent as a form of discrimination. This means trying to force tenant’s out by increasing their rent on the basis of race, gender, religion, age, disability, sexual orientation, or country of origin.
If you decide to increase the rent, you’re required to give at least 30 days’ notice prior to the increase taking effect.
Communicate With Your Tenant
No one is happy when they find out that a bill is increasing. This is made worse when the increase is a sudden and jarring surprise. You can avoid unpleasant reactions by openly communicating with your tenant early on.
While the law may only require a 30-day notice, you could begin communicating with your tenant 60 or 90 days out. This gives you and them time to agree on a new lease with the adjusted rental rate.
Justify the Increase
One way you can help your tenant to agree to the increase is by justifying it. Your tenant won’t be happy about the increase, but at least they’ll understand it. You could include possible increased expenses:
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Increased maintenance costs
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Increased utility costs
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Increased property taxes and insurance costs
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Length of time since the last rent increase
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Preparation for improvements to the rental space
Consider Increasing Your Tenant’s Rent
For some property owners, the idea of increasing your tenant’s rent and the possible confrontation that comes along with it is a dreaded aspect of being a landlord. This is when a property management service can be helpful. You can step back and let the management firm handle the entire process for you.
Contact our team today and let us help you through the process of managing your rents.
