Tactics for increasing rent

[lixia]

Hey everyone,

The lease is nearly up at my IP and I'm going to be asking for a increase in rent of $40 p/w which works out to be about a 3% increase. It's the first time I've had to do this. What tactics have you used that has made the process smooth and easy.

Li.

 

[Jamie M]

Hi Li

Is it justified? If so - you don't need any tactics, just site the general movement in rental prices as being the rationale behind the decision.

Cheers

Jamie

 

[wylie]

I've rarely put rent up that much for a sitting tenant, but the time I did have to do it (because I'd let the rent slip behind), I sent an email with a list of comparables to show the tenant how I was justifying the increase.

 

[lixia]

I think so. Rent has been the same for the past 3 years plus similar properties near by have attracted tenants at the new price level without much hassel.

How do you guys overcome the fearful emotions of asking for a rent increase?

 

[D.T.]

Sounds like a fair jump, does that bring it in line with the area or over it?

If so, I'd approach the sitting tenant a bit before the end of the lease term about the jump in the renewal price. This way they can either accept it and stay or reject it and vacate at end of lease. If they do the latter you'll be able to advertise the place at the new rental amount.

If you're not comfortable with ending up in the latter situation, re-think your plan.

 

[nhg]

Tactics?

Well...
Offer a list of additions to the property with a justified increase in rent.
eg. aircon +$5 or new something else +$2.

It adds up over time and everyones happy.

Always adjust rent upwards, should happen every 6 or 12 months min depending on your tenant agreement. Never let this slip behind or you'll struggle adjusting it in a lump sum.

I give my tenants a gift once a year close to Christmas, facilitates communication and tenant-landlord relationship.

Fix things straight away (within reason), they are no longer paying for just the house but also good service.

 

[WattleIdo]

Tactics?

I give my tenants a gift once a year close to Christmas, facilitates communication and tenant-landlord relationship.

Not a bad idea ....what kind of gift for example? Wine, hamper, movie tickets?

 

[neK]

I've stayed away from owner-tenant communications.... and purposely insert a middle man. Makes discussions easier.

Anytime im over fixing things I always introduce myself as an acquaintance of the owner. Otherwise tenants start asking for extra things or suggesting changes.

This also makes it easier to increase rent as you have a middle man in between saying "let me speak with the owner and see what I can work out"

 

[Salvatore1]

I am always scared to increase the rent by a large amount. Regardless if you increase the rent by $5 of $40 tenant is never happy. If the tenant has been a good tenant for 3 years why risk losing them with such a big increase. Max I would only increase is $25. If the tenant does vacate and if the property is vacant for a while you would lose more than the increase per year is worth. Best advice send off the 60 days notice +postage for the increase and see if the tenant calls you to negotiate or to move out.

 

[wylie]

I think so. Rent has been the same for the past 3 years plus similar properties near by have attracted tenants at the new price level without much hassel.

How do you guys overcome the fearful emotions of asking for a rent increase?

I've had this exact scenario. I say something like -

"As you know, you have been a great tenant, but we have not increased the rent for the past three years. We don't want to lose you, but we do need to increase the rent. We would like to offer you a new lease in January (or whenever - give the right notice) at $xx per week.

This is a bit of a jump but that is partly due to you not having had any increase since 2011. Here are the houses I've found that are similar to give you a comparison...

(insert re.com.au links)"

I then offer to do up the new lease and arrange signing. I self manage and have some level of relationship with all tenants, but otherwise your PM should be doing this anyway.

When I've done this, I've chosen carefully to help make our house look like better value than the links. Of course, the tenant can do their own research so think carefully of what to link.

After I send it, I hold my breath .

 

[Ed Barton]

With the ease of finding out what rentals are currently around, I think in the majority of cases you will only lose a tenant if:

1. The rent increase is way above comparable rentals currently on the market. If it's only slightly above market then most tenants won't bother moving to save just a few bucks. If you have a competent PM or can use a mouse and keyboard there's no reason you should be way above market with your increase.
2. You're a bad LL and the rent increase has pushed them into moving.
3. The tenant has been considering moving for whatever unrelated reason and the increase has just pushed them into finally getting a round twoit.

Market rental prices are not absolute - they are a range. Most here say to keep rental increases to a minimum so that the price is at the low end of the range. I disagree, I always do rent reviews to keep them at the high end of the range (and never more than once a year). On a new let, I price it at the lower end of the range. This strategy has rarely resulted in tenants leaving, maximised my income and minimised my vacancies.

 

[The Fence]

Must admit that Edbarton is right!

Same goes for us, dont be afraid of raising rents into line with the market.

3% rise, after no rise for 3yrs is not enough IMO.

get it to market rent. If the market is paying then get it.

Business.

One IP we have has had same tenant since we purchased in 2001.
Original rent $180.
Rent today $320.
They are still there, they are pensioners and we have helped them get rent assistance which they did not know about.
We jump on every maint issue instantly. They R happy.

 

[Sexyv40]

consider a reasonable rise, but consider the cost of losing the tenant and having the apartment empty. Not sure on area but the rental market seems pretty fickle at the moment with all new apartments going up.