A.D. Cantelmo Property Management
Our Business is Property Management Orange County California
Time to
Raise the Rent?
Every Landlord comes to
the point when they have to think about raising the rent. It seems reasonable,
Property Taxes increase every year, so it makes sense that rents need to
increase at least to cover the increase in expenses. Even Tenants would
understand that, or will they? If we are going to be honest, none of us want
our personal expenses to increase and Tenants are especially sensitive to an
increase in rent. Some Landlords write increases into the lease, so Tenants are
prepared for it and for large complexes that deal with a large number of
Tenants, that may make sense, but for an individual Landlord, it may not. When you
put an automatic increase in the lease, it could make it harder to lease a
property. Telling a potential Tenant up front that in a year their rent is
going to increase could stop a good Tenant from renting the property. So, how
do you deal with a rent increase and still keep those good Tenants.
Keeping
the Good Tenants Happy
Every Landlord knows
that keeping good Tenants Happy and keeping your property filled with long term
Tenants is the key to a successful rental business, but no matter how you say
it, a rent increase will not make a Tenant happy. I used to be in the camp that
if you have a good Tenant who pays on time and does not make unreasonable
requests and takes care of the property, it may be better not to increase the
rent, but I have changed that way of thinking.
My argument used to be
that if you raise the rent by $100 per month, in one year you will earn $1200.
If the Tenant decided that the rent increase is too much and moves out, it is
going to cost you much more then $1200 to get the property rented again. So my thinking was that it was much better to leave the rent alone as long as the
good Tenant remains and then raise the rent when the good Tenant moves out.
Over time, I have realized that my thinking was not correct. Yes, I still want
to keep the good Tenants happy and I don’t want them to move out, but the
reality is, moving is going to cost Tenants a great deal of money also, so if
they are happy where they are living, a small increase in the rent will not
cause them to leave.
I have found that as long as the rent increase is
reasonable and the Tenant is given enough notice that they don’t feel as though
they are being blindsided, they might not be jumping for joy at the increase,
but they usually will stay. The one risk though is that if they anticipate
another rent increase the next year, they may start to look for another place
to live when that time gets closer.
The bottom line,
keep the rate of increase reasonable and be up front with your Tenant and you have a very good chance of keeping
your Tenant for the long term.
A.D. Cantelmo Property Management
Specializes in Property Management Southern California