How to Raise your Rents Ethically without Freaking Out your Tenants
Inflation – it’s the way of the world. The price of bread increases, the price of milk of increases, and the price of rent increases. There isn’t a tenant who isn’t going to balk at a rent increase, and unfortunately landlords have been decreasing their profits to mollify their tenants for years. Here are some simple ideas to Raise Your Rent Ethically.
Forewarned is Fair warned
These are words to live by in the landlord game, and not just with regards to rent. It’s always a good idea to request 60 days notice of any changes, in writing. In this situation, you’ll be notifying your tenants in the lease that their rent will increase by $x on x date. When you go over the lease with them during signing, make sure to underline this point.
Sixty days prior to their lease renewal, send out a letter stating that their rent is due to increase to $x on x date. In this letter, don’t simply say “Your rent is increasing.” Include some sort of explanation. “Due to the rising cost of water…” “Due to rising real estate taxes in [city]…” “Due to an increase in local marketing rent rates…” This will make your situation more real to the tenant, and soften the blow of the increased rent.
Follow Your Schedule
If your lease states that you will increase the rent on September 1 by $50, mail a notice on July 1 to the tenant stating just that and personalizing the situation. Some tenants will have a hard time making a rent increase and will need extra time to make it work. By all means, work with these tenants; however, be mindful of the fact that sticking to policies is what makes for great landlord-tenant relationships.
Neglected Rent Increases
Sometimes rent doesn’t get increased for a long period of time and falls significantly below market. Unfortunately, it may take a considerable rent hike in order to bring the rent current. With situations like this, often maintenance on the unit is neglected as well. In this situation, it is advisable to send the tenant a letter advising what you are going to do, and inviting them to contact you. There’s always a risk that the tenant will leave with a large rent increase, but with proper communication you may avoid that circumstance.