One of the most asked questions I have had over the last few months has to do with raising rents. Many owners are wanting to raise rents but are hesitant in doing so for fear of the tenant leaving and having a vacant apartment. One that may not be filled very quickly.
What I want to share with you is what I have seen some of the top apartment owners doing and you can possibly borrow from these ideas, strategies and philosophies.
First, the most important thing to remember is why you own the apartment property in the first place. Hopefully it is to make a profit. Yes, it is nice to provide housing and help people – that is a good thing but the main reason you are in this is because you want to make money. Your responsibility to your shareholders (you and your partners) is to make a profit. So, as far as this is concerned the approach would be to raise rent.
Related to this is the standpoint that the tenant will get mad and possibly leave and that you may not want that to happen. First and foremost remember that this is YOUR property and YOU are taking all of the financial risks here…not the tenant so there should be no tenant that has any opinion or say so about their rent being raised NOR should you be concerned about their well being. They are adults. Also, if you are doing a good job of management and the tenant sees value they will end up staying put most of the time.
Remember it is a HUGE hassle to move – especially if a tenant has been in the unit for some time. Many times even a hefty rent raise will not cause a resident to move because of the hassle and the value that you bring. Heck I have had many tenants over the years wonder why I was not charging them ENOUGH rent.
Lastly, even if the tenant leaves that is actually a GOOD thing in most cases. It allows you to not only raise the rent but also get a fresh tenant in the property with the ‘word’ getting out that there are people willing to pay a higher rent and that it may not be in the the not too distant future that rents will be going up all over the property.
Remember these points as your units come up for renewal.