Is it time to review the rental rates you're charging your long-term tenants? Many landlords start taking a good look at their end-of-the-year figures and use those to determine if it is time to raise the rents. While you may be under contract that locks in the rental rates for some of your newer tenants for a few more months, the odds are good that many of your long-term tenants have been going month-to-month for a while now.
Is it worth risking the loss of good, reliable (and paying) tenants over a rent increase? Is there a way to increase rents without losing those long-term "keepers" that you have among your renters? Here are some things to consider.
1. Consider being as transparent as possible about the need for the change in rates.
In this age of information, people value transparency. If you state that you need to raise the rents due to inflation, increases in taxes, an increase in maintenance costs, utility hikes, or due to upgrades, be prepared to show some facts and figures that back up your statements.
Many of your tenants may not care so much about the actual figures as they do your willingness to level with them about the reasons for the rate change. They're also much less likely to see it as an arbitrary move designed to make you, the landlord, richer at their expense for no reason other than greed.
2. Give adequate notice so that tenants have time to prepare.
Most states require some sort of advance warning on rent changes—if you aren't aware of your state's laws, make sure that you find out and give at least that amount of minimum notice to your tenants.
However, you may consider giving your tenants at least twice that amount of time and it's not unreasonable to consider giving tenants a full 90-days warning. While it might be difficult for someone to adjust their expenses over a scant few weeks, most people can adjust to a modest financial shift if they're given significant time to prepare.
3. Accept that you may have a few renters that leave.
You may have some tenants who either choose to leave or need to leave due to the increased rent. That's an unfortunate reality that you need to be prepared to handle. Your ultimate goal, however, is to have the as few empty rentals as possible, so it's important to be ready to start the search for new renters as quickly as possible.
You may want to consider hiring a property management service to help you screen new potential renters and manage the day-to-day details of handling your properties. A property management service can often help you spot potential problem tenants and find good ones more quickly than you can do on your own.