Raising the rent is an often uncomfortable, yet important part of being a property owner. Most property values appreciate over time and you may be losing money if you don’t periodically adjust rent. But, increasing the rent doesn’t mean you have to gouge your renter. There is always a way to do it smoothly while still getting fair market value for your rental. Here are a few tips to help you raise your resident's rent graciously and avoid potential conflict.
Give Advanced Notice
The best thing to do to mitigate any potential conflicts is to let your residents know ahead of time that the rent will be going up at the end of the lease term. That way there are no surprises when the lease is up and the rent increases. Many residents expect a rent increase and a friendly reminder is always helpful. It also gives them time to make alternative arrangements or plan their finances if they are not expecting the bump. Try to give them 2-3 months’ notice. If that’s too far in advance, then at least 30 days. Any more than that is unnecessary but less than that may put them in an uncomfortable position.
Be Empathetic but Firm
It’s important to be empathetic to the struggles of your residents. You never know what people are going through and it's always best to be aware of your resident's needs. If a renter is going through a difficult time financially, see if you can come to some sort of agreement that benefits both of you. That being said you’re still running a business. If you end up underwater trying to help, your residents will go down with you. So, it’s important to be gentle, yet still stick to your bottom line and do what needs to be done to keep your business running smoothly.
Be Willing to Compromise
In business, it often pays off to strike a deal. You may not get exactly what you want, but if you’re willing to be fair, you’ll get what you need. For instance, if you have a solid resident who always pays rent on time and doesn't cause issues who can't afford the rent increase, you may consider striking a deal. It may be worthwhile to knock $50 or $100 of the increase in rent to avoid vacancy, the turnover process or risk bringing in an untrustworthy resident. Or if you must increase the rent for financial reasons, you may consider other incentives – like installing a washer-dryer or offering a free month at the end of the lease – to soften the blow. It will go a long way toward building a solid relationship with your residents if you’re willing to meet them halfway.
Be RealisticIt’s important to make sure the increase is reasonable if you want things to go smoothly. If you’re expecting your residents to pay a rate that is above and beyond what the market calls for, there is no reason to think they will stay. But if they look around and see that all the comparable properties in the area are looking for a similar price, they will have no reason to leave. Most residents expect an increase periodically, and those who do not should learn to expect it. As long as the price you are asking is in line with the rest of the market, they have no reason to be upset with you for raising the rent.
Do it in Writing
As a general best practice, send a rent increase letter to the resident informing them that the rent will be increasing. This adds a layer of professionalism and neutrality, and also provides documentation in case the resident decides not to comply. In addition to mailing a letter, you could also tape one to their front door, just in case they aren't in the habit of getting their mail. Be sure to include your contact information in case the resident has any questions.
Raising rent is never an easy conversation. But if you use tact, you can get through it without issues.