Raising the rent isn't easy. It's a task that requires business savvy, market research and the people skills to navigate negotiations with tenants. Whether you're contemplating raising the rent for the first time in years or new to real estate and questioning how much to charge, the process of raising the rent needs to be handled delicately. Scott Safadi of Cal Bay Property Management recommends doing your research before making any big decisions.
So how do you conduct that research? Start by investigating rent prices in similar apartment communities in your area. Check out at least five other rental property prices within two or three miles of your property. When you compare, make sure you are looking at units with the same number of bedrooms and bathrooms as your own. Use rentals that are of a similar age as your property, too. For best results, be sure to compare properties that are visually similar to your rentals.
When you're ready to raise the rent for your existing tenants, be sure to give them plenty of advance notice. Put the notice in writing and keep a copy for yourself. It's a good idea to send the notice via certified mail. That way you know the tenants received the information. Hand delivery is also an option, if you're open to a discussion at their door.
It's possible that the tenant will get upset at the change and in price and want to negotiate with you. The best course forward is to remain professional and explain your reasoning for raising the rent. Your tenant may choose not to renew their lease, but that is a risk you have to take. Negotiate if you want, but remember to always keep things light, professional and friendly.
Of course, there are times when landlords should avoid raising the rent. It is illegal for landlords to raise rent in retaliation or to discriminate against a tenant. If you have a history of conflict with a tenant, be sure to document your desire to raise the rent and your logic for doing so.
There's no magic formula to make raising the rent easier. That said, if you do your homework and handle the change as professionally as possible, you'll reap the rewards and few of the drawbacks.
- Scott Safadi, Cal Bay Property Management
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