Raising Rent: How to Successfully and Legally Raise Rates
Rent is the most important concern to a landlord. While setting up an initial rental price is straightforward, choosing to change the rent is an often difficult decision. Fortunately, raising rent can be a simple process when tackled in three main parts: examining the environment, assessing your tenants and learning the local laws. It may seem like a lot of preparation, but being thorough will guarantee a successful and legal implementation.
- Examine the Environment
As a landlord, you may already be up to date on the local housing market. Whether you are or not, taking another look to evaluate your environment is helpful. Observe what your competitors are doing. Is the rent higher or lower than yours? If rent is lower than what other properties are offering, then you can make up for this discrepancy by raising rent to match. Is the rent the same? You could examine the quality of the housing. Perhaps your property offers more to potential tenants in comparison to your competitor’s property, such as having a laundry room.If the quality of your housing is higher in comparison, then a rise in rent may be necessary.
- Assess Your Tenants
Take a close look at the lease you have with your current tenants. The lease will stipulate a condition where you cannot change the rent during the lease period. With that in mind, you can prepare for the potential increase in rent by observing your tenants. Are your tenants satisfied? If they are happy with the property, then they may be more inclined to pay a higher rent. Raising rent without a thorough understanding of your tenants may lead to vacancies, which in turn will lead to loss of income. It is always worth speaking to your tenants and addressing any complaints they may have. Increasing their quality of life will make them more amenable to change.
- Learn the Local Laws
Now that you understand your market and your tenants, you should look into your local housing laws. It is important to figure out the exact amount you can legally raise your rent by. You should also look into the specific period of notice you are required to give to your tenants before you can change the rent. There are some laws that have specific stipulations to the delivery of the notice. Some require it in writing. All of these details should be taken into account in order to insure their legality.
Raising rent is a daunting process made easier by tackling it in parts. Observing the market, your tenants and the local laws are three steps you can take. Rent is a major source of income, so it is in your best interests to know how exactly you can achieve a satisfactory outcome.