How to Raise Rent Without Losing Your Tenants
As Tampa property managers, we understand that good tenants are hard to come by. They pay on time and they never give you any trouble, so it’s only natural that you would want to do everything possible to try to keep them as tenants, and raising rent just doesn’t seem like the first logical thing you would want to do. But in order to keep up with the rising market rates and to maximize profits, raising your rates is an absolute must. If strategically and tactfully employed, raising the rental rate of your property will not cause you to lose your tenant.
So, how do you do it?
CONSIDER YOUR COSTS.
Have your costs gone up in the last year? Property taxes, insurance premiums, utilities, and HOA/CDD fees are all examples of variable costs that can effect the going rental rate of your property. If your operating costs have increased significantly, raising the rental rate of your property can help offset those costs. Calculating the percentage increase of your costs will make it easier to explain to your current tenants why you must raise your rental rate.
DO YOUR HOMEWORK AND KNOW THE MARKET.
Are there any specific features about your property that would allow you to charge a premium? Are tenants willing to pay more for a property that is comparable to your property? What are the going rental rates in your area? This type of information is very important to be familiar with to determine if and by how much you should increase your rental rate, and will give you leverage when informing your tenant that their rent has been increased.
TEST THE WATERS.
If you are unsure if your tenants will be willing to pay your increased rental rate, try advertising your property at the new rate to prospective tenants. If you find that these prospective tenants are willing to pay the increased rent, this supports your decision to raise rent, and gives you an advantage because you know that if your current tenant is unwilling to pay the new rate, you will have no problem leasing it out to another who will.
COVER YOUR BASES.
It is very important to make sure that there is a stipulation in the lease agreement that allows you to increase the rental rate of the property at renewal. This is very important to have in your lease because the laws in Florida regarding the rights of a landlord to increase rent are very strict. This information should not be a substitute for professional advice. If you are unsure about your lease agreement or any other details about your rental property, please seek the advice of an experienced and knowledgeable Tampa property manager.
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