Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
2y
@Jonah Hartsburg good post and I would add to this...make it short. The more you explain your motivation or thinking in the actual message the more you risk inadvertently offending. Just the fact's ma'am, no "I feel your pain" or "I'm sorry but." or "expenses have increased".
When making a big raise to people we want to keep (inherited, repositioning what have you) we have tried to matter of factly let them know in advance of our plans and use the magic phrase "nothing will change without notice".
We have also used language like:
"As you have been an excellent tenant, we are pleased to offer you a lease renewal at *****. Please see the attached housing survey and area comps for a look at the current market. Should you choose not to renew, please notify us by XXXXX.
Note the emphasis on language suggesting they have a choice. Its a little thing but I think it helps.
I usually for my current just text or email the tenant that they will be receiving a rent increase and will be getting their new lease shortly. As for a newly acquired property I post a letter on their door telling them the same thing a rent increase with a new lease.
Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes
2y
I make it a practice to talk 1-1 with tenants about rent increases. My goal in this is to cushion the blow and be available to discuss concerns, explain the underlying reasons etc.
Why 1-1 instead of text/email? Because turnover leads to vacancy which costs 1-2 months rent typically. It is worth a few thousand dollars to take a few minutes to visit with the tenant.
Another good reason: you want to check on the condition of the property to help make sure you want to extend the lease and here in Virginia a landlord must certify that the smoke alarms are functioning, to do this you have to actually test each one every 12 months.
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
2y
Personally, if area rents have increased, I provide a written notice per my lease within 90 days of lease end as my leases have 60-day notice, so giving them a month to consider before notice is due. I make sure that I am still slightly under nearby area rents, so even if they don't like it, once they look around, most find that it's worth paying the increase rather than moving. While I'd rather not raise rent on good, long-term tenants, I found out long ago that small amounts each year works much better than finding you're way under area market after a few years. At turnovers, I always bring it up to current market, only slightly under if there's many available nearby. If you're purchasing with low-rent long-term tenants, have a conversation with them first, discuss small increases until they're up to area rents, and give them more notice to allow them more time to find rent assistance if needed or make plans to move.
Real Estate Agent · Marion, IN · Member since 2019 · 134 posts · 67 votes
2y
In your approach, consider high-level customer service coupled with risk mitigation.
First, decide the target rent. You will want to be reasonable, considering the property's true condition, the proportional increase to their current rent, and the turnover/vacancy cost if the tenant were to move.
Let the tenant know well before the upcoming increase, typically 60 days minimum is preferred. This common courtesy allows the tenant time to look at comparable rentals and make the decision with confidence. This is opposed to signing a quick renewal because they can't move and causing disgruntled feelings that encourage poor behavior (delinquent rent, complaints, more maintenance reports, treating the property badly, and non-renewal in the future).
The communication should be friendly, transparent, and empathetic, and is typically best in person or over the phone.
Make sure to provide a deadline for the tenant to sign the renewal or provide notice so you are prepared for the potential vacancy.
Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
2y
Firstly, communicate that you plan on increasing the rent well in advance of the month that it will increase. I would advise 60 generally speaking. However, make sure that this is legal in your jurisdiction (I have heard as high as 90 days). If the lease is M2M, you could do probably do less but I would still advise on the 60 days, especially if the tenant is a good one and you want to keep them around. I would advise that you have them e-sign a document stating that they agree to stay in the property with the rent increasing from X to Y on the specific date.
Regarding on the amount of the increase, that will depend on a ton of factors like what is the market rent there, is the current rent well below or above the market, is the tenant good, what is the condition of the property, etc.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
2y
@Jonah Hartsburg good post and I would add to this...make it short. The more you explain your motivation or thinking in the actual message the more you risk inadvertently offending. Just the fact's ma'am, no "I feel your pain" or "I'm sorry but." or "expenses have increased".
When making a big raise to people we want to keep (inherited, repositioning what have you) we have tried to matter of factly let them know in advance of our plans and use the magic phrase "nothing will change without notice".
We have also used language like:
"As you have been an excellent tenant, we are pleased to offer you a lease renewal at *****. Please see the attached housing survey and area comps for a look at the current market. Should you choose not to renew, please notify us by XXXXX.
Note the emphasis on language suggesting they have a choice. Its a little thing but I think it helps.