3 Tips to Determine if You Should Raise Your Rental Rates
An increase in your rental rates seems like it would be a good thing. Not only would you be making more money, but you could sink some of the additional funds into your properties, upgrading and making improvements to them. Before you rush off to draft that rent increase letter to hand out to your tenants, though consider these items first.
1. Research First
Raising your rents without completing your research first could serve to drive your tenants out of your properties. While many landlords might think their tenants are leaving because they cannot afford a rent increase, it could also be that they do not feel that the property warrants the additional cost. Before you raise your rent haphazardly, check out the real estate market and going rates for comparable properties.
2. Is Your Property in High Demand?
Consider several scenarios before you raise your rent. Could your property be rented again quickly if your current tenants decide that they do not want to pay the increase in rent? An slight increase in your monthly income from your properties could be significantly offset if you lose a long-time tenant that paid consistently and that was a model renter.
3. Prepare to Upgrade
Chances are, that unless the area where your property is located suddenly experiences a huge jump in value, you will not be able to raise your rental rates without offering some compensation in return. In most cases, this needs to be in the form of some type of upgrade and/or improvement. If you are motivated to raise your rent so you can increase your monthly salary, are you willing to forgo some portion of that increase to make your property worth the additional expense?
While it can be tempting to raise your rent as a quick and easy way to increase your bottom line, doing so could create more problems in the long run. An experienced property management company, such as Real Property Management Las Vegas, can help you set appropriate rates for your rental property.