{"id":94704,"date":"2019-10-28T09:00:05","date_gmt":"2019-10-28T15:00:05","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=94704"},"modified":"2023-06-07T10:24:05","modified_gmt":"2023-06-07T16:24:05","slug":"raise-rent-without-losing-tenants","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/raise-rent-without-losing-tenants","title":{"rendered":"6 Tips for Painless Rent Increases (Without Losing a Single Tenant!)"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC3131721558&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n<p>Like most pieces of the property management puzzle, a rent increase is part art and part science.<\/p>\n<p>There\u2019s a human element to it\u2014that\u2019s where the &#8220;art&#8221; comes into play. Fortunately, even that can be systematized.<\/p>\n<p>Far too many landlords hesitate and fear raising the rent. But it\u2019s a part of the business, as raising prices is a part of any business. Inflation waters down the value of your rents each year, all while expenses ranging from taxes to insurance to repairs continue to rise and cost landlords more money.<\/p>\n<p>Here are six (and a half) tricks to avoid falling behind other rents in the neighborhood\u2014and earn your best possible returns on your rentals.<\/p>\n<p><em><strong>READ MORE:\u00a0<\/strong><a href=\"https:\/\/www.biggerpockets.com\/blog\/rent-increase\" target=\"_blank\">How to Raise Your Tenants&#8217; Rent\u2014Plus, Free Sample Rent Increase Notices<\/a><\/em><\/p>\n<h2>6 Tips for Raising Rent Painlessly (Without Losing a Single Tenant!)<\/h2>\n<h3>1. Raise the rent incrementally every year.<\/h3>\n<p>If there\u2019s no other piece of advice you follow in this article, follow this one.<\/p>\n<p>Where so many landlords run afoul of rent hikes is that they wait. They let the rent fall far behind market level, and then try to raise the rent to normal market pricing all at once. But by that point, it\u2019s such a large leap that it jars the renter\u2019s budget, and they end up either leaving or resenting the landlord thereafter.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/how-much-should-i-increase-rent-every-year\" target=\"_blank\" rel=\"noopener\">How much should I increase rent every year?<\/a> Raise the rent by two to four percent every single year like clockwork. It will keep the rent competitive at market levels, and it\u2019s a manageable increase for your renters.<\/p>\n<p>Perhaps most important of all, it sets expectations among your renters. They\u2019ll come to accept the annual rent increase as a fact of life, like paying taxes or politician sex scandals.<\/p>\n<p>Bonus \u201chalf tip\u201d: Schedule your lease terms to end in April or May, regardless of when the renters first move in. When the day finally comes when your renters non-renew and move out, it will be much easier to find replacement renters in late spring\/early summer than other times of year!<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-86212\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/02\/rental-property-pros.jpg\" alt=\"rental-property-pros\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/02\/rental-property-pros.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/02\/rental-property-pros-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3 style=\"padding-left: 40px;\">Ready to learn more about how to become a landlord?<\/h3>\n<p style=\"padding-left: 40px;\">Purchasing your first rental property is just the beginning of your real estate journey, because being a good landlord is almost as important as making good deals. BiggerPockets&#8217; free guide <em><a href=\"https:\/\/www.biggerpockets.com\/guides\/landlord-rental-property-management?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=llguide\" target=\"_blank\">How to Become a Landlord: Managing Rental Properties for Real Estate Investors<\/a><\/em> will teach you everything\u2014from setting rent to handling evictions.<\/p>\n<h3>2.\u00a0 Never raise the rent by more than eight percent.<\/h3>\n<p>Raising the rent by two to four percent won\u2019t scare off your renters. At five to seven percent, they may start considering whether to move. Above an eight percent rent hike, many tenants will move on principle, if not because you\u2019ve busted their budget.<\/p>\n<p>Again, don\u2019t put yourself in a position where you\u2019re $200 below market rents! It\u2019s not fair to you, and it\u2019s not fair to your renters when you raise the rent by so much at once.<\/p>\n<p>Raise the rent incrementally every year to avoid this position.<em><br \/><\/em><\/p>\n<h3>3. Consider offering another option besides a rent increase.<\/h3>\n<p>If you do raise the rent significantly, consider offering your renters an alternative to avoid the hefty hike: locking in a longer lease.<\/p>\n<p>Imagine the following scenario: The rent is $1,500, and you\u2019re raising it to $1,590. Your tenants aren\u2019t happy.<\/p>\n<p>But you offer a way out, you\u2019ll lock in the rent at $1,550 for them if they sign a two- or three-year lease renewal.<\/p>\n<p>Why would you make such a sacrifice? Because turnovers are where landlords lose the most money and the most time in labor and headaches. The longer you can keep each tenant, the lower your turnover rate and <a href=\"\/renewsblog\/visualizing-cash-flow\/\" target=\"_blank\">the higher your average returns<\/a>.<\/p>\n<h3>4. Remember that better relations with your renters = higher renewal rates.<\/h3>\n<p>Maintaining warm relationships with your renters is easier than you think.<\/p>\n<p>First, follow the best practices we outlined in this article about\u00a0<a href=\"\/renewsblog\/11-ways-boost-tenant-retention-higher-roi\/\" target=\"_blank\">boosting your renter retention rate<\/a>.<\/p>\n<p>Here\u2019s a quick and easy one: Whenever you call your renters about anything, spend 60 seconds warming them up first by asking about their personal lives. Keep a brief file on each tenant\u2014their children\u2019s names and ages, their interests, their jobs, and what was going on in their lives the last time you talked to them.<\/p>\n<p>These files take only 30 seconds to keep updated each time you speak with your renters. It takes attention, not hard work.<\/p>\n<p>Example: \u201cHi Betty, how are you doing? The last time we talked, little Bobbie was in the playoffs in his little league. How\u2019d he and the team end up doing?\u201d or \u201cI know you\u2019d been worried about that merger at work. How\u2019d that go?\u201d<\/p>\n<p>You get the idea.<\/p>\n<p>It\u2019s amazing how big of an impression these small gestures make on your renters. They shift the context from an adversarial \u201cmoney-grubbing landlord\u201d relationship to a collaborative human relationship.<\/p>\n<p>When you deliver the bad news that the rent is going up, they\u2019ll take it much better knowing it comes from someone who bothers to ask about their lives and their children, rather than a faceless, soulless check-casher.<\/p>\n<h3>5. Implement dual communication: phone and written notice.<\/h3>\n<p>By law, you must send written notice of rent increases. It must also be delivered within a certain timetable, usually 30, 60, or 90 days before the lease expires.<\/p>\n<p>But that shouldn\u2019t be the only form of notice that you&#8217;re raising the rent. No one likes receiving bad news by letter; it&#8217;s impersonal and bureaucratic.<em><br \/><\/em><\/p>\n<p>Call your renters to deliver the news the same day you mail the written notice. Be friendly, professional, and polite but firm.<\/p>\n<p>After investing a minute or two in the small talk we discussed earlier, present the news like this: \u201cBetty, I wanted to reach out and give you the courtesy of a phone call before sending off the renewal form. This year, the rent is going up by $40. You\u2019ve obviously been a great tenant, and we\u2019d love to have you stay on. You should be receiving the renewal form over the next few days, and we\u2019ll email you an electronic version as well since that\u2019s easier for most people to check off, e-sign, and reply back with.\u201d<\/p>\n<p>If they push back against raising rents, just respond with, \u201cI understand, Betty. But rents go up alongside our expenses; it\u2019s just a part of life. We\u2019d love for you stick around, and we may be willing to negotiate a lower rent increase if you\u2019re willing to sign a longer-term lease. But if you decide to move on, we understand, and we\u2019ll work together for a smooth move-out process.\u201d<\/p>\n<p>See? Nothing to be afraid of.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-83425\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/tenant-screening-tips.jpg\" alt=\"tenant-screening-tips\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/tenant-screening-tips.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/tenant-screening-tips-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>6. Poll about property upgrades\u2014and sometimes make them.<\/h3>\n<p>Want your tenants to keep renewing year after year?<\/p>\n<p>Another way to build trust and human connection\u2014and to improve the value of your property\u2014is to ask them what upgrades they\u2019d like to see. Then, implement them sometimes (but not always).<\/p>\n<p>Once or twice a year, when you talk to your renters, tell them, \u201cHey, Betty. I wanted to check in and see what kind of changes you\u2019d love to see around the property. I can\u2019t promise anything, but we value you as a renter and want to do what we can to keep you with us for the long haul.\u201d<\/p>\n<p>The ideas and suggestions you get will run the gamut, of course. Some will be outlandish, while others will be great ideas. Look for ideas that are affordable to implement but that will improve the value and marketability of the property long-term.<\/p>\n<p>In other words, look for improvements that will justify raising rents for future tenancies, not just help you keep this one renter happy.<\/p>\n<p>For example, many <a href=\"\/renewsblog\/2016\/07\/07\/landlords-invest-smart-home-tech7-gadgets\/\" target=\"_blank\">smart home upgrades<\/a> are inexpensive to implement but fun and exciting for tenants, and in some markets, they justify significantly higher rents.<\/p>\n<p>No one likes hearing that their bills are going up, but renters won&#8217;t think twice about it if they can see tangible improvements around the property\u2014especially improvements based on their own ideas!<\/p>\n<h2>Be a Friendly-But-Firm Professional<\/h2>\n<p>In all your communications with tenants, be professional, friendly, and firm.<\/p>\n<p>Never argue. You do not negotiate with terrorists.<\/p>\n<p>Build a human relationship with your tenants. Set expectations by raising the rent every year. It\u2019s not just taxes and death that are inevitable, but also that your rents will rise every year!<\/p>\n<p>But not by much. You\u2019re not looking to bust your renter\u2019s budget. You\u2019re simply keeping pace with market rents in your neighborhood (and your ever-rising expenses).<\/p>\n<p>If raising rent is uncomfortable for you at first, write out a script similar to the examples outlined above.<\/p>\n<p>You are not your tenants\u2019 adversary. You are a service provider, they are a customer, and you want to work with them in a friendly and professional way, while still enforcing the rules and defending your boundaries.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-investment-calculator?utm_source=renewsblog\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91220\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><em>What have your experiences been in raising rents? <\/em><\/p>\n<p><strong>Share your stories!<\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>Far too many landlords fear enacting rent increases, but it\u2019s a part of any business. Here are some tricks to avoid falling behind the market rent\u2014and ensure you earn the best possible returns on your rentals.<\/p>\n","protected":false},"author":158586,"featured_media":116375,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183,7119],"tags":[7041,7042],"class_list":["post-94704","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording","category-biggerpockets-daily","tag-landlord-seo","tag-seo-optimization"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/94704","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\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=94704"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/94704\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/116375"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=94704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=94704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=94704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}