When to raise rent, and especially for a long-time tenant, can be a difficult question for a landlord and property manager. Each week veteran landlord and property manager Hank Rossi answers questions from other landlords and property managers around the country about their rentals.
Dear Landlord Hank,
We have some long-time, great tenants who always pay on time. How do you know when to raise the rent for these types of tenants? Of course markets are different across the country, and when we bring in a new tenants we raise rates, but how do you handle the older, long-term ones you want to keep?
-Landlord Tim
Dear Landlord Tim,
Great question, Tim, and a tough answer.
I won’t let a desirable, long-term tenant go over a rent increase.
But when our fixed expenses increase I talk to the tenant individually.
How to raise rent for a long-time tenant
It goes something like this:
“My expenses have increased annually and you haven’t had a rent increase in ‘ X’ years. I really want you to stay, but I need to raise your rent ‘X $’ starting in three months. Can you handle that?”
And then I wait for them to talk. Don’t you say anything even if you have to wait for a few minutes for them to think about it. They may be calculating if they really do have the budget for your rental increase.
Also, you need to know if there is anywhere else they can go that is comparable for less money.
I’m also willing to negotiate an increase for a great tenant. If they really can’t afford the full rental increase, maybe they could pay half of your desired increase.
The rental market will also influence my decision to raise rents.
I want to be at least competitive with other rentals with the same location and amenities.
I have let tenants talk me out of an increase too, on rare occasions.
Great tenants are golden. But so are wonderful places to live, with comfortable surroundings, safety and responsive management that makes an effort to keep the ship and all passengers running smoothly and happily.
Sincerely,
Hank Rossi
Other recent Dear Landlord Hank posts you may have missed:
How Do You Know When To Change Property Managers?
Where Do You Draw The Line On Normal Wear And Tear?
Dear Landlord Hank: Do You Conduct Rental Inspections? How Often?
Dear Landlord Hank: How Do I Motivate My Tenants To Conserve Water?
Is An Old Drug Conviction A Big Deal?
Dear Landlord Hank: Should I Give A Tenant More Time To Pay?
About the author Landlord Hank:
“I started in real estate as a child watching my father take care of our family rentals- maintenance, tenant relations, etc, in small town Ohio. As I grew, I was occasionally Dad’s assistant. In the mid-90s I decided to get into the rental business on my own, as a sideline. In 2001, I retired from my profession and only managed my own investments, for the next 10 years. Six years ago, my sister, working as a rental agent/property manager in Sarasota, Florida convinced me to try the Florida lifestyle. I gave it a try and never looked back. A few years ago we started our own real estate brokerage. We focus on property management and leasing. I continue to manage my real estate portfolio here in Florida and Atlanta. “ Visit Hank’s website here.
Photo credit Sarinyapinngam via istockphoto.com