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When Should You Raise Rent for Investment Properties?
Being a property owner is one thing and running a business is another. The main source of income that comes from investment properties is the monthly rent that is received. In the case of vacation property, the rent can flucuate between months but the concept is the same. Knowing when to raise monthly rent and when to keep it the same is a decision that takes thought and experience in managing Florida investment properties. There are several things that can influence your decision making and weighing all of your options while considering the future success of your investment property is crucial.
How Rent Impacts Tenant Relationships
Every real estate investor dreams of finding a long-term tenant that is able to rent the property and contribute to the property growth. There are many good tenants that turnout to be excellent sources of residual income for property owners. The monthly rent cost is a large portion of a tenant's personal expenses. Any change in the monthly rent price can affect the attitude of a tenant toward you as a landlord.
Property damage that stems from neglect can happen with incremental increases in monthly rent costs. Since you cannot physically keep an eye on a tenant every hour of the day, the care and attention that was once given to the interior of a property can dwindle. This can lead to certain types of damage to plumbing, appliances and the overall interior decor. Tenants easily become used to paying one set price every month.
Know the Local Economy
When you know what the average rent is in a community, you can evaluate the impact that a raise will have on a tenant. If prices have been rising for utilities, gasoline and other services around your property location, it is only natural that rental income should be increased eventually. Many tenants understand this type of increase and it is not such a burden or shock when it happens with a notice.
If you evaluate that a tenant is underpaying for rent, this information can be used in a notification of increase. Tenants do not always know what the average price is supposed to be for a property. Part of being a landlord is making sure that every rental dollar is maximized. Tenants usually find it easier to sign a new lease with slightly higher rent than to take time and search for a vacancy.
Raising Rent and Sweetening the Blow
No one likes an unexpected price increase, but the way that it is delivered can help ease the shock when it happens. Tenants respond better to rent increases when they feel like they are getting an upgrade to the property. No one wants to pay more for the same home that was cheaper just the day before. Offering simple things like cleaning the carpeting, repainting the walls or another type of small enhancement goes a long way to maintaining a tenant relationship and increases the chance of tenants extending a long-term lease.