Whether you are new to investing in rental property or have done it for decades, many homeowners report that among the most stressful moments of the rental property journey is when they have to tell their tenants that lease has changed. But, not all of the rent changes have to be a bad thing, even if the price does go up.
In order to successfully increase your rental costs without raising concern, it’s important you take these tips from Real Property Management Metro Detroit to communicate with your tenants and show them the value they get based on the shifting costs.
When a potential renter is in the selection procedure for selecting their future rental house they’re looking at details such as the age of the home, how new appliances are, even if the color scheme of the house is contemporary and satisfies their personality, etc. In this stage, a tenant should determine what their price range is and whether it’s feasible to consider going even slightly above their scope if a single house satisfies their needs over another.
But once in a home, there are often constraints as to what a renter can perform in terms of renovations, painting, and remodeling, and so on. It’s necessary for your tenant to comprehend that as you make improvements to your house, the price rises with its marketability. Many renters feel entitled to the house, and to the first rent price, they were awarded. If explained, however, and when the house enhancements meet their expectations, then your renters are much more likely not to raise their concern over cost increases should they believe they’re getting benefits.
Don’t be too fast to presume your renters think you’re greedy because you’re raising your costs. Rather, take some opportunity to describe to them where the money is moving so that this scenario doesn’t need to occur. Just as the housing market varies out of a buyer’s market to a seller’s market so do the prices.
A scenario to illustrate this is that of a rapidly growing city. With time, rental listings which are located close to the core of the town or other main attractions will naturally increase in price over time. Though this might seem unfair, it is offset by rental prices dropping in surrounding areas leaving the decision up to the tenant as to where they choose to live. Living in busy and exciting cities have costs which landlords have to account for in order to continue to operate within its limits.
While they might feel as though they’re paying lots of money, most likely they don’t understand that it’s the combined mortgage, taxes, homeowner insurance, utility bills and home loans that make it possible for them to live there. When broken down all of these individual elements add up, and if taxes change or interest begins accruing or further loans are taken out for remodeling then costs obviously grow.
While you should avoid sharing with for your tenant the details on any of the above-mentioned items, it is helpful to explain how you’ve taken on the task of homeownership so they can enjoy the house they’re living in. All rent increases must be done legally, and while some markets only allow for minimal rent increases annually, a little eventually adds up to a significant sum.
If you are interested in having your property managed by Real Property Management Metro Detroit, have more questions, or just want to speak to one of our team members, then contact us online or call us directly at 248-808-6550 today!