Should You Raise Rent on Current Tenants?
In recent weeks there have been some very important events that could have large term effects on the American economy. Falling gas prices, lower unemployment rate and even the normalizing of relations with Cuba could all be seen as a having potentially large positive consequences on the American economy. However, the future of the American economy is still uncertain. Some believe that if gas prices continue to fall the economy will suffer and the slow done in China’s economy could have negative efforts on the world economy. These global and national issues may not be on the minds of every rental property owner or manager but what might be is when and by how much should one raise rent. This question becomes even more complicated when applied to current tenants that are up for renewal.
There are some important questions you need to answer when you’re thinking about raising rent on current tenants.
What are the legal restrictions on how much you can raise rent
Different cities may have different laws about how much notice you must give before you raise rent and how much you can raise rent on a current tenant even if your building is not rent controlled
Get an idea of how willing your tenants are to pay to stay
Are they happy with their rental or are they often complaining
Do they have enough space or they might need something bigger
Will the rise in rent be too high for them to afford
Check local listing to see comparable prices for rent.
One of the first things tenants will do when they hear rent is rising is check local listing to see if moving is worth it. If your rental unit is comparable or even slightly higher than local listings it is likely tenants will have no problem absorbing the higher rent rather than paying moving cost to live in a comparable unit.
It might also make sense to have this information handy to show tenants that the price of their unit is fair market price.
Minimize financial risk by assessing cost benefit analysis
Have an idea of how long your apartment might sit on the market for if you tenants do decide to leave
Raising Rent is an important part of property management and should be handled with care and sensitivity.
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
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