| Being a landlord requires management skills, sales | | | | time to re-rent the unit if the tenant chooses not |
| skills, and negotiation skills as you are constantly | | | | not to renew. |
| working with people (your tenants). One sensitive | | | | 5. Have the rent increase conversation with them |
| subject for both the landlord and tenant can be | | | | verbally or in person. This will give you the |
| "How much is the rent going to be?" Once the | | | | opportunity to read their reaction to the increase. |
| tenant is living there, raising the rent is important | | | | It is also more difficult for them to say no to |
| but can be a delicate decision. | | | | your face. |
| Keep in mind that you must keep your | | | | 6. If the tenant is hesitant about the increase, |
| investment real estate business growing. To that | | | | immediately see if they will accept the increase if |
| end, you must keep your rents increasing at pace | | | | you set the lease renewal to 18 months (locking |
| with the market and your rising costs. Raising the | | | | their rent for that time) in exchange for the rent |
| rent is simply part of managing your business | | | | increase. This is actually an even better win for |
| smartly. Done correctly, it can be an easy and | | | | you as the landlord, as you have just locked them |
| stress-free process. | | | | in as tenant for 6 extra months (and you got |
| Although every rental situation and each tenant | | | | your rent increase). |
| landlord relationship is different, I think raising the | | | | 7. When talking with your tenant, Use your best |
| rent depends upon a couple items: | | | | sales techniques to show them why they should |
| 1. Is the tenant paying a fair market rent? If the | | | | both stay and accept the rent increase. At the |
| rent is currently lower than market, it may be | | | | end of the day, be honest. If the increase is |
| easy to raise it slightly as most tenants will realize | | | | related to increases in your costs, explain how |
| they are getting a good deal where they are | | | | your costs have changed. Most tenants can |
| currently living. Plus they will not want to take on | | | | understand that taxes, insurance, or utilities do go |
| the added expense and time of moving. | | | | up. |
| 2. When making your decision, ask yourself: "If | | | | 8. Lastly, if they are a great tenant consider |
| the tenant decides to move because you are | | | | simply leaving the rent at the same amount for |
| increasing the rent, can you re-rent the | | | | another year. I would, however, let them know |
| apartment for minimal cost and minimal or no | | | | that you thought about a rent increase but |
| vacant months?" If you increase the rent by $50 | | | | "because they are such great tenants, you have |
| and the tenant decides to leave and you are left | | | | decided to not change the rent for another year". |
| with a vacant $1200 per month apartment, was | | | | This will set up the idea in their minds that you did |
| the increase worth it? | | | | them a favor and will get them to expect a rent |
| 3. Consider that if you are increasing the rent in | | | | increase next year. |
| the spring, generally you can be more aggressive | | | | Having your rents keep pace with your expenses |
| because it will be easier to re-rent that apartment | | | | and market rents is an critical part of running |
| in May than in December (at lease in colder | | | | investment real estate business. Although it can |
| climates). | | | | seem intimidating at first, if you just take your |
| 4. If you are actively managing your lease | | | | time and think through the process with each |
| renewals, you must be talking with the tenant | | | | tenant, it can be a simple process when lease |
| 60-90 days prior to the lease renewal about their | | | | renewal time comes around. |
| plans and any rent increases. This will give you | | | | |