Increasing Rent: How to Go About Raising Prices For your Property
If you are a condominium rental property owner, you are leasing your facility to make money. Over the years, you may offer a set price only to find the market has changed. When a property is located in a hot area, the rental price can be increased which helps you to earn more for your condo. But how do you go about increasing the rent, especially with long-standing tenants? Weighing the pros and cons is important in order to make the right business decision for an increase in property rent.
Waiting Until the Lease is Up
For long-term renters, it is best to discuss a rental increase when the lease is about to be up. Chicago property management company experts will tell you that surprising your tenant off-guard can be detrimental to your cash flow. Consider speaking to a tenant a few months before their lease is up. Discuss the increase and find out their thoughts.
If they plan on leaving, then your Chicago property management team will need to look for more tenants. If you have a long-standing relationship with the tenant, perhaps you can come to an agreement and increase the monthly payment only slightly. This is totally up to you. It is important to consider that losing a repeat tenant may cause a loss in revenue for some time until the unit gains a new tenant.
A good tenant can be hard to find. It is certainly important to consider if losing certain tenants is worth an increase. Property management groups recommend a 3 to 5 percent increase when changing a monthly price point. Determine if this small amount is worth losing a long-standing tenant or if you are willing to wait on an increase in order to maintain continual revenues.
Friendly Rent Increase Letter
When considering a rental increase, you must inform tenants. A friendly rent increase letter can be presented to your tenants outlining the reason behind the increase. The tone of the letter must be warm and do your best to word the letter so that your tenants do not consider moving to another location.
Know Your Limits
As a rental property owner, it is also important to know the laws regarding increasing rent prices. If you have rent-controlled housing, then your options to increase the price are going to be more restricted. Consider how frequently you are allowed to increase the rent in your region, if the rental agreement allows you to increase the rent during the lease terms and if there is a maximum limit for an increase.
If you have a qualified property manager in place, they can help determine your options. Successful managers stay on top of the latest developments, laws, and regulations of the rental property industry. They will have the information needed to help you be successful in raising the rental price if that is what you wish to do.
Overall, it is important to weigh the pros and cons. Speak to your property manager and see what your options are. Take time to think about the change before committing to secure the integrity of your business.