As a company who has been in the business of real estate and property management for almost three decades, the topic of rent increase is something Metro Real Estate is very familiar. With the fluctuations in the market, it's natural for landlords to consider raising their tenant's rent. As less homes become available, and all-cash offers and price wars bump many prospective homebuyers out of the running, it would seem to be in the best interest of the property owner to raise rent. Or is it?
Thoughts to Consider Before Raising Your Tenant's Rent
While the thought of more income may be appealing to you, there are some things to consider before raising your tenant's rent. In some cases, you might actually lose money by raising rent.
1. Will Your Tenant Be Likely to Leave if You Raise the Rent?
In the event you raise your tenant's rent so much that they can no longer afford to live at your property, you have to consider what effect this will have on your finances. If you can afford to be without rent for a month or two, it might be in your best interest to raise the rent. Consider the time it wil take you to find a tenant, repair the property to attract the next best tenant, and advertise for a tenant. If being without a rent check will cause economic hardship, then it is not in your best interest to raise the tenant's rent.
2. Consider the Relationship You Have With Your Tenant
It can sometimes be difficult to form a solid relationship between tenant and landlord. Finding the "perfect" tenant who respects your home as their own, keeps up on repairs themselves, doesn't overly call you for minor problems, pays the rent on time if not early, avoids neighbor complaints, and continues to want to live in your home over the long term, is not always possible. But if you find a tenant or tenants who at least offer a few of those qualities, it may be in your best interest to keep them happy and not raise the rent. Think of what you may have to replace your home with-the new tenant could be worse, cause problems, neglect the property, be a burden to your neighbors, thereby affecting your relationship with them and getting phone calls to address situations, pay late, or have to be evicted.
3. Be Realistic About Why You Have Rental Property
If the purpose of rental property is to be a second or third source of income to you, and raising the rent is a necessity, then you may not have a choice. But if raising the rent causes more hassles, stress, time, and money than you can reasaonably afford to spend, then re-evaluate your need to raise the rent. You are allowed to write off expenses on your taxes which can sometimes offset the need to raise rent.
4. Be Thoughtful Toward Your Tenant
Again, a respectable relationship between landlord and tenant goes both ways. If the tenant is in between jobs but still making payments, just had a brand new baby, is struggling with a temporary challenge, you may want to consider how difficult it will be for that person to find a new place to live. Your tenant may have interactions with the new prospects or know people and may damage your reputation, thus making it more difficult to replace them. A little consideration goes a long way.
5. Have You Followed Your Lease and Considered the Rights of the Tenant?
There are certain laws landlords must follow, and if you do not follow them, you could be subject to fines or judgments against you. A good property manager has an intact lease with his or her tenant, providing valuable measures for both sides. Raising the rent without notice or a lawful time limit could be against the policies set forward in your lease. Be sure to carefully read your provisions or consult with a lawyer.
Do You Need a Property Manager?
If the thought of dealing with a raise in rent is too much to handle, Metro Realty, the Property Management Company can help. We specialize in the sales, leasing, and management of properties in the East Bay and beyond. We have an experienced team of agents, managers, accountants, and marketers ready to prepare and market your home. We have made a career out of finding the right tenants and keeping you informed while we do all of the leg-work, leaving you to deposit the check. Plus, we have outlasted the market influxes and can give you personal advice about raising or sustaining the rent.
Call us today! 925-556-1976!
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