| Landlords have to raise the rents on their rental | | | | secured a rented property for the next two |
| properties sometimes, as their costs (mortgage | | | | years! |
| rates, insurance premiums, property taxes, etc.) | | | | Tip 5: Research Market Rents Carefully and Beat |
| go up, and as market rents rise. It can be a | | | | the Competition... Barely |
| tricky and unpleasant conversation to have with | | | | Moving is expensive, and tenants would have to |
| your tenants, so here are a few ideas to help | | | | start all over with a new rental agreement and |
| make the conversation smoother and more | | | | new landlord. If your rent is less than local market |
| successful. | | | | rents, try raising it to just under the local |
| Tip 1: Timing is Everything | | | | average, so that it doesn't make fiscal sense for |
| Don't raise the rent in winter or fall! It's drastically | | | | your tenant to move. For example, if you |
| harder to fill rental properties in the winter, so | | | | currently charge $875, and area rents for |
| wait until spring when you'll be able to find a new | | | | comparable rental homes is $1,000, raise the rent |
| tenant to sign a rental agreement much faster. | | | | to $975, and when your tenants balk, tell them |
| Tip 2: Advance Notice: More is More! | | | | that they're welcome to check out the house |
| First of all, most states require you to give | | | | across the street available for $1,000, or the |
| tenants written notice 30-90 days in advance of | | | | house a few blocks over available for $1,250, or |
| raising rent, which is something you need to | | | | the one up the street that's also $975, and |
| research in your state. Additionally, however, | | | | explain that their rent is still below area market |
| having the conversation sooner rather than later | | | | rents. |
| gives you a chance to find a new tenant BEFORE | | | | Tip 6: Consider Alternatives to Raising the Rent |
| the old tenant moves, creating a smooth | | | | It's possible that raising the rent is not worth the |
| transition with no costly vacancies. | | | | trouble, if it means losing a particularly good |
| Tip 3: Do It in Person | | | | tenant. If you have a great tenant, consider |
| There are a thousand good reasons why you | | | | approaching them (in person, of course!) and |
| should have the conversation about rent increases | | | | talking over a few possibilities. First of all, explain |
| in person, but the bottom line is that the tenant | | | | why you might need to raise the rent (higher |
| will be far likelier to agree to it if you put on your | | | | taxes, etc), which most reasonable people |
| big kid pants and show up in person. People feel | | | | understand. Second, gauge their reaction to the |
| less comfortable saying no in person, and you will | | | | proposed rent increase. Third, if they look |
| find that you make a far more charismatic and | | | | panicked, tell them that they've been great |
| persuasive case if the tenant can see your face, | | | | tenants, so you're willing to cut them some slack. |
| watch your hand gestures, and see that you're a | | | | Consider offering them a new rental agreement |
| person with your own bills and expenses on the | | | | that phases in a rent increase over the next 12, |
| rental property. | | | | 18, or 24 months. So, maybe the rent will stay |
| Tip 4: Offer Tenants the "Assurance" of a Longer | | | | the same for the first six months, then raise by |
| Rental Agreement | | | | $25 for the six months after that, and another |
| If the tenants hesitate when you tell them you | | | | $25 the six months after that. Make sure they |
| have to raise their rent (and of course they will), | | | | know that you're working with them, and trying |
| this is actually a golden opportunity. Tell them that | | | | to keep the rent affordable, because they've |
| you understand that they have their own bills and | | | | been such great tenants. |
| their own concerns, and that you're willing to | | | | Raising the rent on your rental agreement isn't |
| extend their rental agreement from 12 months to | | | | the fun part of being a landlord, but it is a |
| 18 or 24 months, so that they can have a | | | | necessary part if you intend to actually make any |
| written assurance that you will not raise their rent | | | | money. Consider each rent increase on a case by |
| again for a year and a half or two years. Sign a | | | | case basis, be fair, be honest, and remember that |
| new rental agreement with them, with the new | | | | securing another, longer-term rental agreement |
| amount and the extended term, and you just | | | | may be more valuable than an extra $15/month. |