Life flows a little easier with good tenants. Those that pay rent on time, are easy to deal with and are consistent and dependable. Keeping a tenant long-term can help avoid the cost of rental turnover. Especially during these challenging economic times, keeping a good tenant is essential.
Tenants are not the only ones that may be suffering financially during the economic crisis caused by COVID-19. Landlords have their own living expenses, rental property tax increases, maintenance costs and more. However, raising rent may not be a good strategy if it means possibly losing a long-term tenant. According to a study by Zillow in 2019, 78% of those surveyed had experienced a rent increase and 55% said it affected their decision to move.
Ideally, the tenants you would like to keep will renew their lease when it comes time. Here are some things to consider in pricing your rentals, attracting tenants and keeping existing ones in place.
1. Know your local market
Make sure you’re aware of what comparable rental rates are in your area. If you are advertising for a new tenant this is essential to be competitive. If you already have a tenant but feel have determined your rates are below market and want to raise them, you might want to hold off. Rental rates have decreased slightly in most neighborhoods in our market during the pandemic. Until we start to see economic recovery, you might want to keep the rate steady for now. Then, plan for market recovery. Determine the total amount you would like to increase your rent by. If it is a large increase, consider spreading it out over 2-3 years.
Our experienced agents can help you determine the appropriate rent for your unit based on market statistics, and factors like unit age, improvements and condition. We can also advise you on how to implement rent increases.
2. Build good relationships with your tenants
Just as you’ll want to keep reliable tenants, tenants are more likely to stay at a rental managed by a responsible and responsive landlord or management company. A rent increase may feel like a worthwhile trade-off when a tenant knows they’re getting great service from their landlord.
Professional management can help in this area by ensuring a prompt response to property issues like maintenance and repairs. We can also advise on preventative maintenance — addressing those little problems before they become a big expense. Also, be mindful of your tenants’ privacy, and know what is allowed by law regarding notices and inspections. Always give your tenants advance notice before visiting the property.
3. Consider renewal incentives
There are many ways landlords can show good tenants they are appreciated. Offering a lower rate on a longer term lease is one way. Discussing improvements is another. Is there an improvement that would be particularly important to your tenant? Prioritizing that project, if you are financially able, will improve your tenant’s living experience. It will also be good for your business relationship.
4. If you do increase the rent
If you do find you must raise the rent, make sure and provide plenty of notice. It will give your tenants time to plan for the increase, and you time to plan for a turnover if they decide not to renew. The official notice needs to be in writing, but you might consider a courtesy call well in advance of the minimum required notice. This gives the tenant an opportunity to ask questions, and landlords an opportunity to hear concerns.
5. Sometimes, not raising the rent can be the right choice
If you have great tenants who always pay on time, who take good care of your property, and who you don’t want to lose, you might want to hold steady on the current rental rate. This may help you avoid a costly turn over in an uncertain rental market. You can always re-address an increase at a better economic time.