As a rental property owner, you make a profit based on the rent you charge each month. Depending on your individual situation, there may come a time when you need to increase the rent to continue to make a profit. It is not uncommon for rental property owners to raise the rent amount but how do you do so without losing good tenants? Consider the important factors below before you consider raising the rent.
Why are You Raising the Rent?
If you already have great tenants, then raising the rent might raise some eyebrows. You don’t want to lose your tenants, so really question why you are raising the rent. Some property owners raise the rent due to mortgage issues. If you have a mortgage where the interest rate is not fixed, and your monthly mortgage goes up, this will force you to raise the rent. Looking at why you are raising the rent can help to justify your reasoning to the existing tenants.
What Percentage of Increase are you Considering?
If you want to keep your current tenants, consider raising the rent a small percentage. If you go big and raise the rent 20% or more, the current tenants may be unable to afford your property. Consider how much you can raise the rent to earn a profit without pushing out good tenants. Quality tenants are hard to find and if they see that you are increasing the rent by a big percentage each month, they may be driven to move out. This would leave you with an increased rent payment need plus no renters.
Rent Increase Letter
When raising the rent on a rental property, you want to do so tactfully. Take time to create a rent increase letter and inform your renters of the upcoming changes. Give plenty of time for the renters to be aware of changes and take appropriate steps to stay on or decide if they wish to move out. Of course, you want them to stay, so be sure to word the letter in a friendly manner, making yourself available to any questions or concerns they may have due to the changes.
Overall, it is important to consider your tenants. When you have good people living in your property, it is being taken care of well and providing you with steady income each month. Weigh the pros and cons when considering raising the rent so you can be sure you will be able to maintain your renters for years to come.
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