How to Raise Rent Without Losing Your Tenants

Joor1-300x265It is no myth that good tenants are hard to find and if you are lucky enough to have decent tenants that do not cause too much trouble, take care of the property, and make all the monthly payments. You do not want to loose them, but you are running a business, and turning up profits year after year is important. Profits equal income minus expenses and if your income stays constant the margin of profits will begin to dwindle; your income comes through rents and you will have to increase it every year, there is no way around it. Here are a few ways to do this without irking your tenants.

Make it gradual

Your increase in rent should not be too much of a pinch for your tenants, so do not wait till the end of year and spike up rent by $200. That will probably drive them away, instead raising rent by $40 or $50 a month every year is a good idea. Send in a letter to the tenants explaining how costs have increased over the year and also put in a line about how much you enjoy having them as your client. If you are honest, they are sure to understand. Give them about two months to prepare themselves for the hike and make sure you also send in an updated contract so that you can make it official.

Be reasonable

Real estate is a slow business and seeing hard profits take time; keep that in mind when you are raising rent. When your costs increase and your income reduces, raising rent should not be a knee jerk response that can drive away your tenants. They are probably facing a similar, if not the same kind of economic crunch as you are.

If your clients still feel that the rent is too much and they leave, let them go, but only after negotiating and getting to know their side.