There are a lot of things to think about when it comes to renting out your property. How often will you update the decor? What kind of amenities should you include? But one of your most important decisions is how much rent to charge. And if you’re looking for some guidance on that front, look no further. In this blog post, we’ll discuss how to Increase rent for your property.
Take a look at the market value and see what other properties are renting for in your area. This is an important step because it will allow you to set a realistic price for your property. You don’t want to price yourself out of the market, but you also don’t want to under-price either.
Key Takeaways
- Make sure your property is in good condition and on good terms with your local government.
- Make sure your property is in great condition and is clean. The more attractive the space, the more likely tenants will be willing to pay higher rent.
- Offer discounts for long-term leases or rent-to-own agreements.
Table of Contents
When To Increase Rent
Generally, we advocate rising rents at the pace of inflation every year. In the United States, this equates to about 2% or 3% every year. Nonetheless, if you reside in a really competitive rental market, you might be capable of charging more.
If you’re an investor, take in mind that a rent roll is essential in any business, In this article, we explain why it’s important for investors to know what they’re getting into before they buy into a property or fund.
Informing Your Tenants
If you are landlord, you are required to inform your tenants of any policy changes 30 or 60 days prior to the change taking effect. This gives your tenants enough time to evaluate their options and decide whether or not they will stay at the conclusion of the lease—enough time for them to provide you with 30 days’ rent increase notice that they will be vacating your property.
You may also want to consider giving tenants at least 60 days’ notice when informing them of a policy change since this will provide them with more time to evaluate the information and make an informed decision.
How much to increase rent by?
When it comes to renting price, less is more. The best practice for rent prices is to make them on a consistent basis (such as 2% or 3% each year). Provide plenty of notice—at least 60 days in advance if possible.
This will help your tenants plan for the increase and set aside money from other sources in order to pay it. It will also help you avoid the possibility of a tenant who has trouble paying the increase and ends up abandoning their apartment.
Tenants’ Rights Regarding Rent Increases
As a tenant, you have certain rights when it comes to renting increases. The landlord may not raise the rent in the middle of your lease term unless you agree to the increase. The landlord cannot raise the rent in retaliation because you exercised a legal right.
In order to increase the rent, your landlord must follow proper notice procedures outlined in your written or verbal lease agreement. If there is no written agreement, then the landlord must provide at least 60 days’ notice before increasing your rent.
How to increase rent for your property
Step 1: Research the market rent
Before you can increase rent for your property, you need to know what other properties in your area are renting for. This means looking at online listings, searching through real estate magazines, or even just asking around at local restaurants and shops—you want to get a sense of what’s considered “fair” or “average” for the neighborhood.
If you’re not sure where to look, start with sites like Zillow or Realtor.com. These sites will give you a general idea of what similar properties are renting for in the area, but it’s important to do some digging yourself before setting your price too high or too low. If a certain neighborhood has a history of being expensive, then be sure that you’re pricing accordingly and not trying to compete with higher-end properties that won’t be interested in renting yours anyway.
Step 2: Decide when to raise the rent
Once you’ve decided on a price, it’s important to set up your rental agreement as soon as possible. Once you have an agreement in place, you can start the process of raising the rent when it’s time (which will vary depending on how long your tenant has been paying). This can be done either by increasing their monthly rent by a small amount each year or by making one large jump (depending on what’s most convenient for both parties).
Step 3: Notify your tenant that you are raising the rent
Serve the Rent Increase Letter Before the Deadline
Once you’ve decided on the rent increase and established your terms, it’s time to notify your tenant that their monthly rent is going up. The best way to do this is by serving them with a Rent Increase Letter, which will outline how much their new rent payment will be. Make sure you give them at least 60 days’ notice before the increase goes into effect so they have time to review the document and discuss any questions they may have with you or other members of their household.
Rent Increase Letter Sample (past image of the sample for the US here)
Be Aware of Rent Control & Section 8
The Section 8 program offers subsidies that help low-income families pay their rent. Under the program, tenants typically pay 30% of their adjusted monthly income to a landlord while the government pays most of what’s left over.
However, the Section 8 program does not cover security deposits. A low-income tenant who rents with this assistance may have difficulty paying a deposit on their own.
Section 8’s required inspections can be another disadvantage of renting under this program. Your local public housing authority will send an inspector to your property before a tenant moves in and every one to two years after that, even if there hasn’t been any turnover among residents.
During your unit’s inspection, a HUD inspector will check many areas of the home to look for health and safety risks. These include sanitary systems, lead-based paint, water supply sources (including frozen pipes), electrical outlets/wiring and smoke detectors.
How to Reduce and Handle Complaints?
When you’re managing a rental property, you’re sure to receive complaints from time to time. While most of them are valid, some can be unwarranted. Regardless, it’s important to handle them in a professional manner in order to maintain your reputation and keep your tenants happy.
Here are some tips for dealing with complaints:
1) Be prompt with responses – If a tenant complains about something, make sure that you respond as quickly as possible. If the complaint is valid, address it immediately so that it doesn’t turn into an ongoing issue.
2) Apologize if necessary – When a tenant has a legitimate complaint, apologize for any inconvenience and offer them any compensation that is due (i.e., free rent for a month or two if their unit was uninhabitable for part of the month).
3) Don’t argue back – If someone files a complaint against your company or property, there’s no need to defend yourself. Simply listen and take notes so that you can address their concerns accordingly.
How to Raise Rent Without Losing Tenants
When you’re a landlord, one of the biggest challenges you face is finding a way to raise rent without losing tenants.
Rent increases are a tricky thing for everyone involved. Tenants want to keep costs down so they can afford basic necessities like food and shelter. Landlords want to make sure they’re getting what they need from their properties—and that includes covering their own expenses as well as making money on their investments.
But if you want to avoid getting stuck in the middle of this issue, there are a few things you can do to make sure your tenants understand why they need to pay more and why it’s worth it for them.
Here are some tips for raising rent without losing tenants:
Increase the rent every year, no matter how small
This is the simplest way to get your tenant’s attention—and it works. You can increase rent every year, even if your costs have stayed the same or decreased. This will help you avoid the problem of large annual increases that make it difficult for tenants to keep up with their budgets and plan their finances accordingly.
Build good relationships
This is easier than it sounds. When you have a good relationship with your tenants, they will trust your advice more and be more likely to agree with you when it comes time to raise the rent. You can build relationships by being friendly and helpful when they first move in, by getting to know them and their families over time, and by always treating them with respect.
Tell the Rent Increase News by Phone
If you have a good relationship with your tenants, it’s best to tell them about the rent increase in person. This will avoid misunderstandings or hurt feelings that might occur if they hear the news from someone else.
Reduce rent if they renew their lease on a long-term basis
If you offer long-term leases, your tenants may be more willing to stay if they can get a rent reduction. This is especially true if they are not financially able to move elsewhere.
Discuss desired upgrades with tenants and consider them
Before you raise the rent, talk with your tenants about what they would like to see in their units. You may be able to use some of these ideas for free or at a reduced cost.
7 Renovations Ideas to Increase the Value of your Property
1. Remodel the Bathroom
A bathroom remodel can be a great way to increase your property’s value. You can add a new shower, tub, sink, and fixtures with a little cost beyond the materials. Keep in mind that in many areas of the country, people are looking for homes with updated bathrooms.
2. Renovate the Kitchen
A kitchen renovation is another way to increase your property’s value. You can add a new countertop, cabinets, backsplash, and appliances for a small cost beyond the materials. If you have an older home with outdated cabinets but good bones, consider painting them instead of replacing them entirely.
3. Enhance curb appeal
Enhancing your home’s curb appeal is another way to increase its value. This means improving the outside of your home, such as adding new landscaping or painting it a different color. You can also add a porch swing and other outdoor furniture to make it more inviting.
4. Install New Floors
Installing new flooring is another great way to increase the value of your home. If you have old hardwood floors that are in good condition, consider refinishing them rather than replacing them entirely. You can also tile your kitchen or bathroom if you like the look and feel of this type of flooring better.
5. Make easy fixes by painting and updating
If you have a few walls that need painting, consider doing it as an easy way to update your home and increase its value. You can also add new lighting fixtures and cabinets if you want to make the space look more modern.
6. Create an Open Floor Plan
An open floor plan can be a great way to increase your home’s value. This type of layout allows for more natural light and better flow throughout your home. You can also add built-in shelving, cabinets, and counters if you want to create an open kitchen or dining area.
7. Add Other Popular Amenities
The addition of certain amenities can also help increase your home’s value. These include things like a finished basement, garage, and patio. If you have the space and want to add these types of rooms, they can be extremely beneficial for selling your home down the road.
Increasing Rent in California: Things to Be Aware of
Discuss reason laws and regulations specific to California property owners
The Tenant Protection Act of 2019 went into effect on January 1, 2020. Among other things, this act changed how rent increases are handled by landlords like you—specifically: it banned no-cause evictions and made provisions requiring that proper notice be given before an increase takes place.
The New Law
The Tenant Protection Act of 2019 (AB-1482) was passed in response to housing and homelessness issues in California. The act went into effect on January 1, 2020; it will remain so until at least 2030.
It’s a good idea for landlords to bookmark the complete law, but we broke down the most important parts here.
Updated Rent Increase Cap
This act made significant changes to the rent control law by imposing a new cap on increases.
The bill limits the amount a landlord can raise rent to no more than whichever is lower:
- 5% plus the Consumer Price Index (CPI, the yearly change in cost of living)
In most parts of California, the CPI is 2.5%, which means that landlords can raise rents by 7.5% every year but are usually limited to a lower percentage increase—usually around 5%.
These changes do not affect how much you can charge your tenant as a late fee; they still cannot exceed the amount listed in their lease agreement.
Limited Increases
The bill also limits the amount by which a landlord can raise a tenant’s rent, preventing excessive increases. In order to increase rents at all, landlords must abide by this rule: tenants who have been in their apartments for the entire term of their lease cannot be charged more than two times what they previously paid per month; tenants whose stay is shorter but still substantial (for example 2 years out of 4) may not pay more than 200% more than they originally agreed upon.
How to increase rent for your property FAQs
When can a landlord not raise the rent?
In most areas without rent control, there is no limit on the amount your landlord can increase the rent. However, in all states, landlords must follow certain rules when increasing rents: they may not simply raise their tenants’ bills at will—the timing and manner of such increases are governed by statute.
What is the average rent increase per year?
The Tenant Protection Act of 2019 (AB 1482) restricts rent increases in any 12-month period to no more than 5% plus the percentage change in CPI, or 10%, whichever is lower.
For increases that take effect on or after August 1, 2022—and only in the event of inflation—all applicable CPI figures will be equal to or greater than 5%.
Can a tenant refuse a rent increase?
A lease was signed by both the renter and the landlord.
The lease terms may be amended at the end of the lease period (typically one year). It is up to the renter to accept or reject the new terms.
Conclusion
No one wants to feel like they’re overpaying for their rented property, so it’s important to do what you can to keep your renters happy while also making a profit. Luckily, there are some easy ways to increase rent without causing an uproar – and we’ve listed them here for you. If you have any questions or would like help implementing these tips, give me a call or schedule a free consultation today. I’d be happy to assist you in increasing the rent on your property fast!
