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When it comes to increasing rents, there are some tricks of the trade that landlords and property owners should consider before making a decision. Although the topic seems pretty straightforward, unless the properties are positioned in markets that are in high demand, like anything else, effectively pricing your rents with suitable timing and tact needs to be part of your equation. Otherwise, you may end up with higher vacancies and disgruntled tenants.
For most owners, maximizing cash flow and ROI is a major objective. The standard mentality typically goes something like this: Rent the property. If the tenant renews, then increase rents. Repeat. While this philosophy has merit, there are many instances where more details are worth examining. “Keeping up with inflation” can only hold a certain amount of weight, and most tenants want to make sure they are getting proportional value as their rent costs increase.
So, what is value in a tenant’s mind? For many owners, the thought of continuous investment for a property that may be deemed “just fine” is a hard pill to swallow. However, small consistent acts at times can be just as impactful (and very inexpensive) to a tenant when you decide to increase the rents.
Being consistently responsive: One reason many individuals opt to rent properties is to ensure the owner is responsible when something breaks, leaks or worse. Depending on the lease, typically a large majority of the obligation falls on the owner. The last thing a tenant wants is poor response time when issues due arise. In fact, one of the biggest complaints tenants report is regarding slow maintenance. The faster you can address a tenant’s issues or concerns, the easier it will be to defend your desire to up the rents.
Keeping up common areas: Normal wear and tear is something that cannot be avoided and should always be a part of any owner’s operating cost. Making sure the property’s common areas are kept up at all times is a major component of perceived value in a tenant’s eyes. It also establishes to the tenants that the owner has pride in their property. When the common areas begin to look drab or run down, this can also affect the tenants’ desires to do their part, with the justification that “If the owner doesn’t care, why should we?” Keeping common areas clean, light and modern and adding a new amenity every so often can make a huge difference when it comes time to raise the rents.
Convenience: The world doesn’t appear to be slowing down anytime soon, and making a tenant’s life as streamlined as possible is a smart idea if you plan on increases. Consider electronic-signatures leases, 24-hour maintenance portals, online payment options and package centers. All of these provide tenants the ability to move more fluidly in our fast-paced society. With that said, there still are many individuals who are not as “wired in,” or wanting, or able, to adapt to all the ever-changing technical advances we are seeing. Make sure you have options like P.O. boxes if these tenants want to drop off or mail rent and 24-hour phone lines to help with those who still like to speak to a human being.
Seasons: For many tenants, the time of year plays a major factor in a potential rent increase, especially the holiday season. It’s not uncommon to see many more delinquencies during this time. As people juggle their finances, adding another unexpected economic uptick can at times be the difference between keeping and losing a tenant. Thus, it is also smart to consider this when structuring any increases. After tax season during the springtime is typically an ideal time, since people tend to move more during this period. It also provides the owner with more likelihood of a faster placement if a tenant does decide to move out, versus the winter months when getting properties filled is historically slower-paced.
In the end, taking these simple strategies into consideration before implementing a rent increase can really benefit you and justify the decision. The majority of these cost no more than what standard upkeep would be, and several are more service- and timing-specific that total absolutely nothing out of pocket. For most people, just the thought of moving makes them cringe. If you are able to give your tenants perceived value and excellent service consistently, you can bet your timing for rent increases will be much more welcomed.