One of the most often-pondered questions among rental property owners is whether or not they could be making more money on their rentals. Unfortunately for landlords, unlike many forms of investment that are sheer math games, renting has a distinctly “human” element to it that many money-focused investors aren’t really prone to paying a lot of attention to. That’s where a good property manager comes in. As the people who are interacting with the tenants on a day-to-day basis, we’re the ones who can tell you whether or not a particular tenant seems likely to absorb a rent increase without bailing on you.
We Have a Pretty Good Idea of Who is Happy and Who is Not
There are some pretty clear ways a property manager can tell if a tenant is happy with their situation:
- If they call about a repair and they’re relaxed about it
- If they turn in the rent on time consistently
- If they’re putting some effort into keeping the place looking nice, mowing lawns and whatnot
The happier a tenant is in their current situation, the less likely they are to suddenly become unhappy if you raise rent by $10-$20/month.
We Keep a Close Eye on Comparable Rents
The easiest way to lose a tenant is to raise your rent to a level above what the nice house a block down the street wants. Even a happy tenant will probably be just as happy right over there, and they know it—so raising your rents beyond what the neighborhood is supporting will cost you. And while you might have done the research on comps when you purchased the house, we keep up on those prices on a weekly basis, so we can tell you when a rent raise is more likely to be harmful than helpful.
We Can Offer a Worst-Case Scenario
Moreover, because we’re frequently advertising several dozen houses at once, we have a pretty solid idea of what the overall market is like in our area, which means we can offer a passable estimate about how long it will take you to fill a vacancy. If you raise rent and your current tenant moves, we’re the ones who will know about how much it will cost you in repairs and rehabilitation, too. Together, that means we can give you an idea about what your finances would look like if the raise in rent goes badly wrong–which means you can determine whether or not you can absorb the risk.
We Can Show the Tenants the Deal They’re Getting
One of the reasons tenants are often upset about rent increases is that they feel like they’re getting ripped off somehow. Property managers already have the data for their neighborhood’s comparable rentals (see above), and we won’t hesitate to show them that they’re still getting a better deal than their neighbors.
But perhaps the most important reason a property manager is the right person to raise the rent is this:
We (Usually) Have Goodwill to Cash In
Our entire function in life, as far as the tenant is concerned, is to keep their shelter safe, warm, and comfortable in exchange for a monthly payment. As long as we’re doing our jobs well, we’ll have a history of prompt, open communication, reliable repairs, and the occasional bit of mercy for a hiccup with a rent payment—and we can leverage that to convince a tenant that their extra payout is worth what they’re getting.
Obviously, this won’t work every time nor will it work if you try to raise rent like clockwork every time the lease and local laws allow you to (tenants catch on to stuff like that really quickly). But if…
- You’re reasonable in what you’re asking,
- You genuinely do keep your rents within the neighborhood’s norms, and
- You have a property manager who can help you understand who is most likely to absorb a rent increase without causing trouble…
You can stop wondering whether you’re maximizing your income and start actually maximizing it.
[Editor’s Note: We are republishing this article to help out our newer readers.]
Do you regularly increase rent? How have your tenants reacted?
Let me know with a comment!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.