It’s time to raise the rent. Maybe the demand for apartments has grown in your region, taxes went up, or the properties needs repairs. Maybe you were apprehensive about charging market value on your earlier investment properties and now you want to gradually increase your passive income since you can afford to take the risk of a vacancy. Whatever your reason, and no matter how long you’ve been an investor, you may still face trepidation about raising rent.
“In order to get higher rents, you have to offer something better than everyone else in the area,” says Laura Stack, a Long Island, NY-based landlord. Fortunately, possibilities abound to add value to your apartments so your tenants don’t feel the sting of the increase.
If you’ve always put the burden of mowing the lawn on tenants, rethink that philosophy before raising the rent. Adding in-ground sprinklers and hiring a landscaping service means you won’t have to worry if your tenants are — or aren’t — taking care of the grounds, and they will appreciate the services, too.
Also consider improvements you can make to the rental property that your tenants will love, and will, simultaneously, raise the property value if they leave. “Outdoor living space is a huge design trend, and can be added for a reasonable price,” Stack says. “Ponds or waterfalls are inexpensive, but have a great return as they are relaxing and appealing to tenants.”
Pay Fees for Amenities in MDUs
Many townhouses and condominiums offer amenities to tenants for an added fee. You can cover those fees as part of the rent increase, pointing out the convenience of a single bill to pay rent and fees, and the opportunity to spread an annual fee over monthly payments. This works even better if the complex is planning upgrades, such as a new pool, new washer/dryers, or renovations to the event room.
If you own several properties, negotiate with a housekeeping service for a lower rate to provide cleaning services to all your properties. Then offer your tenants weekly housekeeping at lower rates than they could find on their own.
Add “Smart” Technology
A home alarm system, automated lighting, and monitored flood or fire sensors are just a few of the “smart” home systems you can add to a property that may lower homeowners’ insurance while improving your tenant’s quality of life.
These systems may also help a property sell faster, or improve its resale value, with a low upfront investment.
Take the Sting out of a Rent Increase
As a landlord, it’s justifiable to raise the rent after four or five years to cover property tax and insurance increases. “To take the sting out, remind your tenants that you haven’t raised the rent in so many years,” says Stack.
You might also remind tenants of capital improvements you’ve already made to the property, or share solid plans to fix small, nagging problems that aren’t urgent but will create a nicer place to live. Remember, any improvements you make today can also make the property easier to rent in the future, so if you choose upgrades carefully, everyone wins.
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