Real Estate Blog

Keeping rent prices at market value is as important to property maintenance as any other component of upkeep. Most rental property owners realize this is just a reality of the business. Unfortunately, tenants aren’t always as understanding, and they’re certainly never pleased. With that in mind, we’ve compiled a few key considerations and best practices for property owners to make the transition as smooth as possible.

Keeping Costs in Perspective

Costs don’t determine rent; costs determine whether or not property owners stay in business. Don’t forget that rent has as much influence on overall property value as maintenance and conditions. A property owner who allows rent to fall below market is essentially allowing their property to deteriorate, just as if they allowed property to fall into disrepair by neglecting upkeep. The market shows renters what is reasonable when they sign, and the market norm is the standard by which rent should be measured. Don’t worry about being accused of gauging when keeping up with the market, because chances are, better deals aren’t out there; however, the bottom line is that tenants have some control on prices as well because rent that is markedly higher than the market standard will result in vacancies and no income at all.

Scheduling the Increase

If the property in question is a building of multiple units, and the plan is to increase rent for all of them, don’t bump them all up at the same time. When planning for eventual rent increases, also plan a schedule that staggers the order in which units will have those increases. Additionally, to avoid being labeled a “Scrooge,” it is never a bad idea to plan to implement these changes after the holiday season is over. For example, if there are 20 units in the building, consider planning the increase for two units each month for ten months, maybe February through November.

Another consideration should be providing tenants a service or provision that comes at the same time as their rent increase. If regular maintenance or necessary repairs will be occurring in the same timeframe, try to plan those events to line up with the news of rent increases. “Your rent is going up” will always sound more reasonable when it’s paired with “but you’re also scheduled to get a shiny new [insert appliance] this month.”

As you can see, a few strategic practices can make a significant difference in the way an increase in rent is perceived by tentants. We’ll be covering more in the next installment of this series.