Raising the rent is an important component in managing one’s property. In order to run a successful business—whether you manage one property or dozens—raising the rent comes into play.
There are a variety of reasons to raise the rent. Some might make a landlord feel like they’re being harsh or unkind. A hike in the monthly rent isn’t something most tenants take to happily. Instead, it can cause significant difficulties in their lives.
Where tenants’ concerns involve finding a safe and affordable place to live, landlords must look beyond that realm and delve inside the business aspects of property management. They must do what is in their best interests as property managers—and that often means raising the rent.
It’s important to keep up with the local real estate market. As property values rise, rents can, too. The vacancy rate in the United States is the lowest it’s been in more than a decade, indicating that even with increased rents units are being filled. This is a big plus for property owners.
Additions and improvements in the community where you own rental property should be recognized in the amount of rent required for each unit. For example, if the neighborhood boasts upgrades like new small businesses, improved city services like public transportation or a new post office, or a new park, it’s important that the amount of rent charged reflects these upgrades. Be sure, however, that the units reflect the upgrades, too, whether that means improvements in building maintenance or management or a facelift to the exterior of the building.
Whenever a large company relocates to an area where you own rental properties, it’s time to raise the rent. These new companies mean less unemployment and raised property values. Raising the rent means you are keeping up with the commerce in your area. It also makes good financial sense to do so.
A Rising Economy
As the economy rises, so should rental prices. Housing markets across the United States are on a steady rise. This should be reflected in the rent landlords charge.
When a landlord has made significant upgrades to a property, it should be an indication that the rent is about to go up. This doesn’t mean it should go up for routine maintenance, but when real improvements the tenants will benefit from being made, it should be reflected in the rent. Some common upgrades that indicate a rent hike might include a new kitchen or bathroom. Central air conditioning is a luxury and demands higher rent. Replacing carpet with tile and landscaping the exterior of the building are perfect justifications for raising the rent, too. Once again, this is a good business practice.
There are, of course, different laws in different regions that limit how much of an increase a landlord can require. Familiarizing oneself with these laws and practices is imperative to running a successful property management business. The bottom line is that serving as a landlord is a business endeavor, and raising the rent is simply one of the financial tasks that must be implemented.
This article was written by the Rentometer Content Team. The Rentometer Blog features fresh takes and insights on rental housing topics, services, and technology. If you liked this article, subscribe to Rentometer's email newsletter to stay up-to-date on the latest trends in rental housing.