When landlords get good tenants into their apartments, they’re thrilled. What constitutes a “good tenant?” For me, it’s someone who :
- Pays the rent in a timely manner
- Keeps the apartment clean
- Calls me when there are repair issues that need to be addressed
- Is considerate of other tenants in the house, and keeps noise levels to a reasonable level
When I get someone like that as a renter, I do everything I can to keep them. I ask, periodically, if everything’s going well at the house. (Many times, people may have an issue and they won’t address it with you unless you specifically ask them a direct question.) I also give them little perks from time to time — a gift certificate to a car wash, restaurant, or department store. Showing your appreciation lets them know you’re happy with their tenancy. Also, doing an upgrade for them, like new carpet or appliances, is a wonderful way to say “thanks for being a great tenant.”
But! When they’ve been with you for more than a year or two and you haven’t raised the rent, you’re cheating yourself. Many landlords shy away from raising rents; they just won’t do it. (The old “bird in the hand” theory.) But many of those same landlords end up struggling to survive in this difficult economic climate for that exact reason . . . they go years without raising rents. Just $25/month increases on 20 units earns $500 more/month, which could keep a landlord stable and sane.
Getting the maximum income from each unit should be the ultimate goal of every landlord. Total occupancy with rents that are too low is a much less desirable goal!
My strategy is to look at increasing rent every time a unit is empty. Look at what’s available in the neighborhood and see how your unit compares. If you can charge a little more, do it. It’s much harder to raise the rent in a unit that’s occupied but, when I have to do that, I write a short letter that says something like this:
“I need to talk to you about a rent increase coming up in the next month. I dislike this part of my job . . . You’ve been with me for almost two years and I haven’t raised the rent, but the increases in property taxes, utilites, repair costs, etc. are forcing this decision. Beginning with April rent, your rent will go up $25/month. As usual, I’ll continue to do my job to the best of my ability . . .”
Doing month-to-month leases makes this easy. You can make changes to the lease with one month’s notice at any time, as long as it’s in writing. This is one of the reasons I prefer monthly leases over year leases.
So, in closing, don’t screw yourself over financially . . . expenses will slowly increase, and your rent pricies need to keep up with the increase in expenses. If you’re a good landlord who treats your tenants with dignity and respect, chances are they’ll pay a slight bump up in rent to keep you as their landlord. My experience has born that out. And trust me . . . your wallet will thank you too!
Onward and upward . . . 🙂