In some parts of the U.S., there is actually a shortage of rental properties. More Americans than ever are opting to rent rather than buy a home. This could be attributed to many factors, but the housing bust of 2008 is the leading factor that has kept rents low. Some rural landlords chose to decrease rents to accommodate tenants who were hit hard with job losses, but landlords in major metropolitan areas chose to increase or keep their rental rates the same.
Increasing Rents with Economic Improvements
According to the government, the recession has been over for quite some time. Landlords and real estate asset management Sioux Falls agents are wondering if now is the right time to start implementing increases to get rental rates near pre-recession levels. While there is no clear way to know when it is the best time to raise rent, there are a few things you should consider before you even make the attempt. Is your area overloaded with vacancies? Are you prepared to lose quality, long-term existing tenants who may not want to pay more money? Do you really believe the recession is over and tenants can afford increased rates? These are all things that are extremely important, so you need to seriously ponder whether or not you are doing the right thing. If you alienate quality tenants, then you could be doing yourself a real disservice.
Making the Decision
Raising rent is a tricky situation, no matter how you go about it. Some tenants may be agreeable to the raise if they feel like they are currently getting a deal for the level of service they receive, but others may find it no longer meets their needs or budget. The most important thing to remember is that you must communicate the raise clearly and well in advance, so your tenants have time to prepare for it. Letters should be sent informing them of the rate increase and terms. You should also post a rent increase announcement on your website, and contact each tenant over the phone to ensure they have received the notifications. If you go about it the right way, to where your tenants do nor feel you are greedy, then you should be able to walk away unscathed with most of your high quality tenants remaining in their homes. Tenant retention rates are important, so make sure a protocol is in place to do things correctly.