Increasing the rent on your residential investment
Raising the rent can be a particularly touchy subject as you have to walk the tightrope of upsetting your tenants and ensuring your maximum investment return.
Most of us have read the newspapers and property magazines and heard that rents are increasing at a steady rate. For some people you may be left thinking you’re the only person who hasn’t increased your rent.
The truth of the matter is that you are not an isolated case. Thousands of investors have held back on increasing rent due to the risk of vacancies and the ability to quickly find new tenants.
If the above description sounds like you, many investors will know how you feel. You would sometimes procrastinate about raising rents, as just the risk was just too great..
At the end of the day if you're only increasing the rent with each new tenant you are costing yourself a lot of profit which could total many thousands of dollars per financial year. If you have multiple rental properties, this grows to quite a significant amount of income over a relatively short period of time.
High quality tenants are those who pay the rent on time and take care of your property. For an investor these types of tenants are the golden key. In these cases it may be worth minimising rental increases to keep them in your premises, but not at least considering a rent increase is probably a poor decision.
So how do you increase your rent?
The key to raising your rent without losing or annoying your tenants is relatively straightforward. Initial approaches about increasing the rent does not start with a letter sent to your tenants.
You have to think of your tenants as your customers. Therefore you must consider the level of customer satisfaction you are delivering and maintain the high standards to avoid losing your quality tenants.
The best way to have a good relationship with your tenant is to ensure your property is well maintained. Beyond this you must ensure that you react promptly and fairly to any issues raised by the tenant and try to keep up a good relationship with them beyond just collecting rent.
Try to increase the rent in more frequent smaller amounts rather than one lump sum. When you can try to give extra notice for rent changes or eviction periods.
All these small tips can help you have a smoother relationship with your tenant and meet both of your personal goals.
For more advice, contact Alert Property Group