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Free Bonus: Get a free template of notice of rent increase at the end of the article.
Raising rent on your tenants can sometimes be difficult asking your own boss for a raise. The difference however is that you don’t need to justify a reasoning to do so with your tenants. You still need to know when and how to raise rent correctly. If not it is highly likely you will end up either getting a very angry tenant or losing a tenant resulting in an idle property.
So here are 3 simple steps to follow to raise rent easily.
1. Automatically include a small rent increase at each lease renewal period
Most tenants are expecting a slight rent increase when a contract ends and its time to renewal again. Most expect a $20-60 increase, but if you spring a $100 or more increase on them after not having increasing rent for years, you will most likely get some negative response.
A good rule of thumb should be between 3 to 10 percent every renewal. Raising the rent should be a standard practice when a lease is up for renewal with the current tenants or when you have a turnover of tenants.
Landlords can only increase rent after the first 180 days of the tenancy
If you have a brilliant tenant (one that pays on time and maintains your property), you should try your best to get him/her to renew the lease. This may even mean waiving the rent increase if they renew for another year or so.
A brilliant tenant is worth far more than any rent increase.
2. Send notice 60 days before you increase the rent.
Sending out a written notice for rent increase must be served to a tenant. It must state the following: how much the rent is increasing by and the day the increased rent is due. This must be done no less than 60 days. This 60 days helps you to know what your tenant’s intentions are. If he or she doesn’t plan to renew the lease, you have time to start marketing and avoid having an idle property.
In the rent increase letter, which you can send through regular mail or email, ask that your tenant read the new lease, sign it and send it back to you. Explain that you’ve highlighted or underlined any changes.
For a fixed-term tenancy, landlords can only increase rent if there is a provision to do so in the fixed-term tenancy agreement.
It may even be a good idea to thank your tenant and compliment them on their good traits, such as paying the rent on time or taking care of the property.
4. Know the market rates
Your expense should not dictate what you should charge for rent; it should be what the market does. You cannot expect to keep a tenant if you're charging significantly more than other similar rental properties in the area.
As long as your rental rates are similar to other rentals in the area, follow the laws and guidelines carefully, you'll wonder why you were ever stressed about this process.
The absolute best way to determine market rate is by looking at ACTUAL rent prices of comparables in your area.
Related article: Updating your rental property to the most effective prices
Click here to download a free notice of rent increase online template
Extra Bonus: Collect and track your rent online
You can save a lot of time by collecting and tracking rent online using Kitt. It will be easier for you and your tenants to communicate and notify such as increasing the rent. You can also access a free marketplace to analyse vital data points to help you make better decisions. You can use sign-up and use Kitt to start collecting and tracking rent at any time (even if you're in a middle of a lease).
Find out more at www.kitt.io