Hello BP community, what is the best way (and wording to write) for raising rent?
Here is your renewal lease. Rent has been adjusted to $X. If renewing, return signed lease to me in no later than (date). If not renewing, let me know by (date).
No need to tell them why the rent is increasing. They may play dumb, but they understand.
Remember to be consistent with raising rents. Its easier to raise in 30$ annually so the tenant understands and knows its coming instead of raising it $150 out of the blue.
Please check your local tenant/LL laws as they may legislate notice timelines and around amount of increase etc.
Appfolio can raise rents by percentage or a flat rate. Because it keeps up with lease dates, it allows you send the tenant a notice stating in 30 days rent will increase. Do small, gradual annual increases annually for tenant retention.
@Dona D. Another option is offer a multi year lease so the expectations are set. I personally refinanced this year and was able to drop each mortgage around $150/door and chose to keep rent flat because of COVID and kept 2/3 tenants from going elsewhere. Sometimes it’s ok not to raise rent unless you have a reason to (tax or insurance hike, PM fees going up, etc..). But as multiple people said you don’t have to explain it either when you decide to raise rent.
Why are you raising rent? Is it currently below market?
If so, say that in your letter. Let your tenants know that rents in the area for similar properties are higher than what you are charging, and based on the expenses you incur to keep the property in great shape, you need to increase the rent to market levels.
Of course, also throw in how great they are as tenants, how much you appreciate them, and any concessions you're willing to make in order to retain them (for example, if they've been there for a year, offer to paint a room for them or put a nice fan in the master bedroom; if they've been there for several years, perhaps offer to replace the carpeting in a couple rooms; etc).
Remember, it's MUCH cheaper to keep existing tenants -- even if you're getting a bit below market rents or have to provide incentives -- than it is to replace tenants.
@Dona D. This is obviously going to be a sticky situation because no one wants to hear they are going to have to pay more money to live somewhere. But, if you are gracious about it and make sure to explain yourself, then you should not have a huge problem. Everyone is aware that the economy is not in its best condition. A good idea would be to show comparisons of other places to show that they are raising their prices or cost more money, etc. That way, your tenants will know that they are still living somewhere with the best deal. Be open to questions with them and let them know they can contact you. The nicer you are, the nicer they will be to you. Just act understanding of what they have to say, but make sure they understand you as well. Good luck! Also, don't get discouraged if some people decide to leave because chances are someone else will come to fill their spot.
also remember that your local area may have put boundaries on increases due to covid so check your local laws first. But also do research.... IMO rents are staying flat or decreasing, so if your area is seeing decreases your tenants may feel they will get a better deal elsewhere... and as mentioned, it is generally cheaper to keep a current tenant rather than having them move and finding a new tenant.