Raising the rent is an issue may landlords struggle with, especially during times like these when you're wondering what your community can weather because of the COVID-19 pandemic. However, when the expenses of operating your property rise, your rates need to rise with it. The key is to avoid raising the rent beyond your renters' price range: increasing rates too sharply around a lease renewal is often a quick ticket to leaving you with vacancies to fill.
Still, rental property management, Leesburg landlords, is like any other business in that you need your net gains to exceed expenses to stay profitable. Sometimes, that means raising the rent—with care. It's an issue our team at Gunn Property Services has dealt with many times in the course of offering Leesburg property management services, and we have some sound advice for any landlord considering raising the rent.
Please keep in mind: The following does not constitute legal counsel. When in doubt, seek out a skilled attorney or work with the professional at Gunn Property Services!
Reasons to Raise the Rent
Rent goes up all the time—just ask renters! 78% of renters reported rate increases in 2019 alone. As property values rise, the cost of doing business in the form of property taxes and other expenses only increases with it.
However, as a landlord, you know that you need to be cautious about raising the rent—even when there are any number of reasons you might need to ask your tenants for more. Common reasons for raising the rent include:
- Matching the local market: Is your property located in a neighborhood on the rise? If you see rent prices are on the rise in similar properties all around you, it makes sense to raise the rent on your property to keep it in step with the local market. This keeps you competitive while helping you optimize the value of your rental property.
- Keeping up with inflation: The average annual inflation in the U.S. is 3.22%, and it's not uncommon to see rents increase as a result.
- Adapting to increased expenses: If the costs associated with your property (such as maintenance, property taxes, insurance premiums, and homeowners association fees) have increased, you may need to raise the rent to keep your business profitable.
When to Raise the Rent
In most cases, landlords can only raise the rent between lease terms. After your tenant's lease runs out, you have an opportunity to increase the amount that will be charged for rent under the new lease. An exception to this rule is in cases where a property is being rented under a month-to-month rental agreement, in which case rent can be raised any time—as long as proper notice is given.
There may be other restrictions on when you can raise the rent that apply to your rental property. Navigating the law concerning your rental rates is another arena where Leesburg property management services can really shine! The best providers of property management Leesburg has to offer are well aware of how Florida laws impact how and when landlords can raise the rent. In general, you can not raise the rent if:
- Your tenant's lease is still ongoing
- The lease stipulates that rent shall not increase
- Advance notice of rent increase was not properly given
- Rent increase could be considered discrimination or retaliation against a tenant
- The property is rent-controlled
- Local laws limit or prohibit rent increase.
How to Raise the Rent
It's always best to stipulate in your lease agreement how, when, and how much your tenants' rent will increase. That way, your renters will never feel caught off-guard by rent increases. Of course, being a good neighbor and landlord relies on keeping your tenants happy to avoid losing them, so always use caution and courtesy when increasing the rent.
- Give notice: Let your tenants know as far in advance as possible that their rent will be increasing, and by how much. Legal requirements vary, but notification must typically be given in writing no less than 30 days prior to the increase.
- Talk to your tenants: Even if written notice is required, it's a good idea to notify tenants by phone or email as a courtesy. It may also help to explain the reasoning behind how you set your rent. Let your tenants know why rent is going up, so they understand the increase is not arbitrary.
- Don't raise it too much: Raising the rent is perfectly acceptable at times, but losing tenants will cost you more than lost rent. Avoid raising the rent beyond what your tenants can afford, or pricing your rental beyond what it should rent for given its size and location.
- Increase a little at a time: Tenants may balk at large, sudden increases in rent. They're much less likely to be disturbed by smaller increases over time. Raise the rent in small steps (but be sure the terms of the lease allow you to do so).
Still unsure about how to raise the rent while handling your own property management, Leesburg landlords? Working with Leesburg property management services can make all the difference! Along with our exceptional, hands-on approach to property management, we act as your go-between when it comes to how much to charge for rent on your property.
As we recover from COVID-19 as a community, it's more important than ever to seek guidance to raise rent the right way. However, before you raise the rent, you need to know how much you should be earning from your property to keep your business afloat.
With that in mind, your first stop should always be our FREE rental analysis! The experts at Gunn Property Services are happy to provide you with an expert assessment of the rental value of your property, so you have a plan to approach raising your rental rates.