Say you’ve already looked at cutting expense and you want to look at increasing rents. Maybe you just bought a property and you want to increase rents. The only way to do it is to have everyone sign a new lease agreement. Can anyone suggest different ways or reasons to increase rent? One way that I can’t think of is to remodel or update. Another might be because of normal 3 – 5% per year (depending on market) rent increases.
What I’m looking for are “win-win” situations where the tenant would smile and be happy to increase their rent because of some real or perceived additional value.
Market rent for your area has increased
Expenses have increased (property taxes, insurance, etc) and you’re passing those costs along to the tenants
You’re the LL and it’s your perogative
I’ve heard of people adding surcharges to the rent amount. Say your water isn’t separately metered…some people have added a water surcharge to the rent (or trash, etc).
Tenants usually aren’t going to just smile and happily hand over more of their money to you. If you make some type of property improvement, you’re going to spend enough to where it will take a while of your new rent increase to offset the cash outlay on your part.
Some states will have laws as to how much you can increase rent too.
The way we’ve been able to increase rent in our building has been by rehabbing vacant units. They were rented way below market rent before we purchased the property. We updated the vacant units and raised to just below market rent.
You’re going to have a very difficult time getting tenants with unexpired leases to volunteer to sign new leases with higher rents. It won’t matter what you say, they’ll say no. Beyond that, rents are set by the market, not the landlord. If you raise rents above market, your tenants will leave. Personally, I raise rents when there is pricing power in the market and lower it when rents in the market are under pressure. The goal is to keep the units filled while getting the highest rent possible (market rent).
like what was said before rents are set by the market. In most markets the number of properties up for rent are increasing. If you are already above market, you are probably better off leaving rents where they are.
If you raise the rent too much then your tenants will move