Don’t Be The “Bad Guy”
Savvy property owners know the best way to secure market rents is to provide a clean, well maintained, and safe space in which their tenants can enjoy all the benefits to the property outside of actual ownership.
All too often we see property owners making the mistake of not raising rents in relation to the market and falling behind for fear of turnover or not wanting to be perceived as the “bad guy”.
The 5 Keys To Raising Rents
Here are the Buckingham Investments keys to raising rents the right way:
1) Consistency – Raising rents incrementally and consistently as market conditions allow is especially important in areas with rent control. Any deferred increases will not allow for owners to keep up with rent growth or inflation. Once you forego an increase it is unlikely that you will catch up prior to turning the unit, thus lost revenue generation.
2) Timing – Annual increases allow tenants to know what rent increases can be counted on at a certain time of year. Coinciding with seasonality for when demand is higher such as spring & summer is a best practice as no one wants to deal with turnover in periods of low demand such as around the holidays in November and December.
3) Market Conditions – Always base increases on current market conditions by conducting rent surveys in the area through online platforms such as rentometer.com. Be sure to assess current vacancy rates and whether rental rates are increasing or softening. One strategy that inevitably results in higher turnover costs is…
4) Be Creative- Consider offering small improvements or upgrades to the condition of the units which will secure market rents. Deferring maintenance can be a costly mistake if you expect your renters to pay competitive rental rates.
5) Transparency – Tenants may not be aware of all the necessary expenses to keep the property well maintained in which they live. Explain to tenants that expenses are increasing by referencing specific examples such as maintenance costs, property taxes, insurance, and utilities.
At Buckingham Investments we find that it is best to be fair with renters as ultimately keeping the best ones is good for your bottom line. You will be surprised how amenable your tenants will be towards paying a competitive rate for the peaceable enjoyment of a nice and well-maintained environment in which to call home.