There’s often a lot of emotion involved in rental increases; both on the landlord’s end and from the tenant’s perspective. Tenants get nervous around renewal time because they often anticipate an increase and worry it’s going to be more than they can afford. Landlords watch their expenses rise year after year and know they should increase the rent but worry about chasing away good tenants.
It’s possible to effectively raise rent without hurting the landlord/tenant relationship or making anyone feel like they’ve been treated unfairly.
When Should Rent Go Up?
Most rental increases occur during lease renewals. Under Texas law, landlords need to provide written notice at least 30 days before a rent increase goes into effect. So, two or three months before the lease ends, decide whether you’re going to offer a renewal to your tenant. If you are, it’s a good time to increase the rent. You’ll want to communicate your offer of a new lease and the new rental amount in plenty of time for your tenant to make a decision.
Raising rent is also acceptable when you’re offering new services. For example, if you decide to have a landscaping service come to professionally mow and care for the lawn, you might want to roll that cost into rent. A pool cleaner might also justify a rental increase. Just check your lease to make sure you’re permitted to raise the rent during the lease, and make sure you’re providing enough written notice.
Evaluate the Fort Worth Rental Market
How much should you raise the rent? This is a common question among landlords and self-managing rental property owners. To get the right rental value, you’ll need to evaluate the market. Find out what homes similar to yours and in your neighborhood are renting for. It’s possible the rental market changed dramatically in the year that your tenant has been in place. In some parts of Fort Worth, the demand for great rental housing far outpaces the number of homes available, and that’s driving up rent prices.
But, the market can also slow down, making rental increases a risky proposition. If a tenant can find a home just like yours for less money, the cost of moving out might be something he or she is willing to manage. So, make sure you know the market.
Decide How Much to Increase Rent and Communicate your Reasons
Even if the market is exploding with growth, keep the rental increase manageable. We recommend that you don’t raise rent more than about five percent. This gives you a comfortable increase in your ROI, and it also tells the tenants that you care about keeping them.
Send the tenants a letter with their new rental amount, and include some information that explains why you’re raising the rent. You can include statistics that reflect current rents or show them comparable properties that have higher rents than what you’re asking.
Work with a Fort Worth Property Management Company
A good way to ensure you’re keeping your rent competitive and aligned with the market is by working with professional property managers. When you have a management team working with you, there won’t be any stress involved in rental increases or tenant communication. Your property manager will handle all of that for you and also be able to provide insight and expertise on the market’s performance and what your home should be renting for.
If you have any questions about raising your rent, please contact us at McCaw Property Management. There’s a lot more we can help you with.