{"id":175665,"date":"2024-07-25T14:38:00","date_gmt":"2024-07-25T20:38:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=175665"},"modified":"2024-09-13T02:56:18","modified_gmt":"2024-09-13T08:56:18","slug":"6-ways-to-raise-rent-while-respecting-your-residents","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/6-ways-to-raise-rent-while-respecting-your-residents","title":{"rendered":"6 Ways to Raise Rent While Respecting Your Residents"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC8700591017\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><em>This article is presented by&nbsp;<a href=\"https:\/\/www.reination.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">REI Nation<\/a>. Read our&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/editorial-blog-guidelines\" target=\"_blank\" rel=\"noreferrer noopener\">editorial guidelines<\/a>&nbsp;for more information.<\/em><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/CUUR0000SEHA\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Rental costs have gone up, up, and up<\/span><\/a><span data-preserver-spaces=\"true\">. Everywhere we look, we see headlines about the exorbitant cost of renting, whether an apartment or an STR.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Small real estate investors must strike a balance. <\/span><span data-preserver-spaces=\"true\">They\u2019re torn<\/span><span data-preserver-spaces=\"true\"> between raising rental amounts to account for inflation, high property prices, taxes, and rental demand, plus the tension of sustainability. After all, higher rental prices without a rentership experience that justifies it might drive good residents to look elsewhere.&nbsp;<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.urban.org\/urban-wire\/mom-and-pop-landlords-are-raising-rents-albeit-less-market-rates-leaving-renters-few\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Landlords are also balancing the challenging economic times<\/span><\/a><span data-preserver-spaces=\"true\"> many residents <\/span><span data-preserver-spaces=\"true\">are facing<\/span><span data-preserver-spaces=\"true\">, where decisions often come down to paying rent or <\/span><span data-preserver-spaces=\"true\">paying for<\/span><span data-preserver-spaces=\"true\"> other necessities.<\/span> <span data-preserver-spaces=\"true\">Many landlords <\/span><span data-preserver-spaces=\"true\">themselves<\/span><span data-preserver-spaces=\"true\"> are facing tough <\/span><span data-preserver-spaces=\"true\">decisions<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">as well as<\/span><span data-preserver-spaces=\"true\"> delaying upgrades and repairs and deferring more maintenance to account for late and uncollected rents.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The stress investors feel <\/span><span data-preserver-spaces=\"true\">is coming<\/span><span data-preserver-spaces=\"true\"> from both sides. On one, the desire to keep pace with local rental rates is part of the calculation we all use to measure the success of an investment. On the other, there\u2019s the need to keep properties occupied and producing revenue.<\/span><span data-preserver-spaces=\"true\"> How do we balance each to hit the sweet spot we all look for as investors?<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">6 Guidelines for Raising Rent Ethically<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Raising rental rates is part of the industry. <\/span><span data-preserver-spaces=\"true\">It can\u2019t be avoided<\/span><span data-preserver-spaces=\"true\">. <\/span><span data-preserver-spaces=\"true\">Whether you\u2019re a solo investor or looking for compassionate, effective property management, this is how to raise rent with respect <\/span><span data-preserver-spaces=\"true\">and keep<\/span><span data-preserver-spaces=\"true\"> your properties occupied <\/span><span data-preserver-spaces=\"true\">and producing<\/span><span data-preserver-spaces=\"true\"> revenue.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">1. It starts with <\/span><span data-preserver-spaces=\"true\">respect<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Perhaps you noticed the word \u201cresident\u201d when you started reading this. <\/span><span data-preserver-spaces=\"true\">It was used<\/span><span data-preserver-spaces=\"true\"> intentionally.&nbsp; The word evokes thoughts of ownership, long-term stays, and respect.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It is very different from the word \u201ctenant.\u201d Tenant evokes short-term, dime-a-dozen, anyone will do, and indeed a relationship of \u201cwe are not on the same level.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you want to keep your properties occupied longer<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">at the highest rent possible, <\/span><span data-preserver-spaces=\"true\">a great place to start is in<\/span><span data-preserver-spaces=\"true\"> your everyday approach to these properties.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">A resident not only occupies your property, providing a deterrent for vandalism and theft, but they also provide the revenue we use to pay the bank note, reducing the principal on borrowed money. <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/blog.reination.com\/5-ways-sfr-residents-factor-into-your-success\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">A resident <\/span><span data-preserver-spaces=\"true\">provides<\/span><span data-preserver-spaces=\"true\"> the <\/span><span data-preserver-spaces=\"true\">revenue<\/span><\/a><span data-preserver-spaces=\"true\"> to pay for vacancies and maintenance and is the front-line defense to mitigate minor issues and keep them from becoming significant <\/span><span data-preserver-spaces=\"true\">issues<\/span><span data-preserver-spaces=\"true\">.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">How you treat a resident from the moment you show them a property influences how good of a resident they will be. The better your relationship with the resident, the higher the likelihood <\/span><span data-preserver-spaces=\"true\">that<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/blog.reination.com\/8-tactics-for-improving-resident-retention-in-your-sfrs\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> they<\/span><span data-preserver-spaces=\"true\"> stay for many years<\/span><\/a><span data-preserver-spaces=\"true\"> and are willing to pay intermittent rent increases.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">2. Give residents plenty of <\/span><span data-preserver-spaces=\"true\">notice<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Budgets are tight these days. The old 30% rule for rent doesn\u2019t work for most renter households. Many spend 40% or more on housing costs!&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is why investors must be mindful and strategic when they raise prices. <\/span><span data-preserver-spaces=\"true\">You don\u2019t want <\/span><span data-preserver-spaces=\"true\">to not <\/span><span data-preserver-spaces=\"true\">raise<\/span><span data-preserver-spaces=\"true\"> prices<\/span> <span data-preserver-spaces=\"true\">just<\/span><span data-preserver-spaces=\"true\"> to keep residents\u2014it\u2019s not worth it if it causes your investment to stop being profitable\u2014but you need to do so with compassion and respect.<\/span><span data-preserver-spaces=\"true\"> Part of that means giving plenty of notice.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">You don\u2019t want to <\/span><span data-preserver-spaces=\"true\">bamboozle<\/span><span data-preserver-spaces=\"true\"> your residents when their lease is up. As soon as you know a rent increase is happening, discuss it with your residents. They need time to see if it works within their budget without worrying about a quick move-out. At REI Nation, we work six months in advance and recommend at least three months of lead time.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">3. Make it evidence-based, not <\/span><span data-preserver-spaces=\"true\">arbitrary<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">If your residents ask about the reason behind the price hike, you should be ready to <\/span><span data-preserver-spaces=\"true\">give one<\/span><span data-preserver-spaces=\"true\">. Are you lining up with market rent in the area? Does a tax increase mean your costs are <\/span><span data-preserver-spaces=\"true\">more<\/span><span data-preserver-spaces=\"true\">?<\/span><span data-preserver-spaces=\"true\"> Will the resident get more benefits from management or needed improvements and amenities?&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Regardless, <\/span><span data-preserver-spaces=\"true\">you should have<\/span><span data-preserver-spaces=\"true\"> a solid justification for increasing rent beyond a personal want to make more money. If you can show evidence that you can raise rents higher than the amount or percentage you are <\/span><span data-preserver-spaces=\"true\">increasing<\/span><span data-preserver-spaces=\"true\"> them, this can go a long way toward easing the resistance from a resident. No one will look forward to a rental increase, but keeping rents slightly below what is justified can ease the pushback.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">4. Leave room for <\/span><span data-preserver-spaces=\"true\">negotiation<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Residents feel respected when you give them options. They should be able to accept the price increase, reject it, move out, or negotiate.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Be open to striking a deal. <\/span><span data-preserver-spaces=\"true\">They<\/span><span data-preserver-spaces=\"true\"> might be willing to sign a longer-term lease for a gradual price increase. You must weigh if guaranteed occupancy evens out compared to the cost of finding new occupants under a typical lease term.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">5. Make it a conversation, not a <\/span><span data-preserver-spaces=\"true\">demand<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">At the end of the day,<\/span> <a class=\"editor-rtfLink\" href=\"https:\/\/blog.reination.com\/8-qualities-in-sfrs-that-keep-residents-coming-back-for-more\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the best thing you can do is respect your residents<\/span><\/a><span data-preserver-spaces=\"true\"> enough to communicate. Be honest and open with them. Talk it through, and listen to their thoughts and feelings.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Remember, this isn\u2019t a typical business relationship. Your clients\u2014the residents\u2014rely on you for their home. It\u2019s not just a property to them.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">We\u2019ve heard of too many residents facing a too-quick turnaround to move because the owner sold unexpectedly or <\/span><span data-preserver-spaces=\"true\">rent was raised<\/span><span data-preserver-spaces=\"true\"> without notice. It\u2019s stressful and unfair, especially for <\/span><span data-preserver-spaces=\"true\">those who are<\/span><span data-preserver-spaces=\"true\"> good property stewards.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These are <\/span><em><span data-preserver-spaces=\"true\">people. <\/span><\/em><span data-preserver-spaces=\"true\">You\u2019re in a <\/span><em><span data-preserver-spaces=\"true\">people business. <\/span><\/em><span data-preserver-spaces=\"true\">So treat them with the same compassion and grace you\u2019d like to <\/span><span data-preserver-spaces=\"true\">be shown<\/span><span data-preserver-spaces=\"true\">. If you\u2019re working through property managers, be sure they\u2019re on the same page here. A reasonable owner doesn\u2019t do much good if management rules with an iron fist!<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">6. Start small<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Incrementally raising prices is <\/span><span data-preserver-spaces=\"true\">easier<\/span><span data-preserver-spaces=\"true\"> to swallow than a big jump. An increase of 5% or more in one sitting will likely cause turnover. That\u2019s not the end of the world, but if you have exceptional residents, it\u2019s something you want to avoid.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Either way, a smooth, upward curve that <\/span><span data-preserver-spaces=\"true\">can be anticipated<\/span><span data-preserver-spaces=\"true\"> is often better than unpredictable changes. As mentioned, residents will often be OK with signing a multiyear agreement with built-in, incremental price changes.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Bottom Line&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Ultimately, investors shouldn\u2019t be afraid of \u201cchasing away\u201d residents. Sometimes, prices must rise to keep up with the market or other growing expenses. How you do it will determine how well people react.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Speak with your property manager about how they raise rent, discuss it, and negotiate terms. Even if you aren\u2019t directly involved in the process, you want to be on the same page and in the know.<\/span><\/p>\n\n\n\n<div class=\"wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n    \n  <div \n    id=\"segemnt-view-event-block_624f52525847f\" \n    class=\"  \"\n    x-intersect:enter.once=\"\n      analytics.track('DoorLoop Blog Sponsor View', {\n        referrer: 'https:\/\/www.biggerpockets.com\/blog\/6-ways-to-raise-rent-while-respecting-your-residents',\n              })\n    \">\n    \n  <\/div>\n  \n\n\n<h3 class=\"wp-block-heading has-text-align-left mt-0\"><strong>This article is presented by REI Nation<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1408\" height=\"1408\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO.png\" alt=\"\" class=\"wp-image-165214\" style=\"aspect-ratio:1.7777777777777777;object-fit:cover;width:452px;height:auto\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO.png 1408w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO-300x300.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO-1024x1024.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO-150x150.png 150w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO-768x768.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/REI-NATION-LOGO-200x200.png 200w\" sizes=\"auto, (max-width: 1408px) 100vw, 1408px\" \/><\/figure>\n\n\n\n<p>Ready to add turnkey real estate to your portfolio in 2024? If so, now\u2019s the time to invest with REI Nation. Where you invest, and they handle the rest.<\/p>\n\n\n\n<p>Discover stress-free real estate investing with the largest family-owned turnkey investment company, REI Nation. Whether you\u2019re a seasoned investor or just starting, they are dedicated to helping you achieve your financial goals in the world of real estate investing. Visit our <a href=\"https:\/\/hubs.ly\/Q02hh_nR0\" target=\"_blank\" rel=\"noreferrer noopener\">website<\/a> to start your turnkey real estate journey, where your success is their commitment.<\/p>\n\n\n\n<div id=button-custom-event-block_63c9a33918e17 class='button-custom-event'>\n      <a href=\"https:\/\/hubs.ly\/Q02hh_nR0\" x-on:click=\"window.analytics.track(&#039;Sponsored Blog CTA Click&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/6-ways-to-raise-rent-while-respecting-your-residents&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn more about REI Nation<\/a>\n  <\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\"><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Raising rental rates is part of the industry. It can\u2019t be avoided. Whether you\u2019re a solo investor or looking for compassionate, effective property management, this is how to raise rent with respect and keep your properties occupied and producing revenue.<\/p>\n","protected":false},"author":676,"featured_media":175669,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183,7119],"tags":[],"class_list":["post-175665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/175665","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/676"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=175665"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/175665\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/175669"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=175665"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=175665"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=175665"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}