We get this question fairly often at SMART as owners can get pretty eager to raise the rent for their property. But is it wise?
Here’s the thing: Your rental price will directly impact the type of tenants who walk through the door.
Well-qualified tenants will not waste their time with properties that are priced too high, even their chances of approval are 100%. What you will be attracting are tenants who’ve been rejected by other landlords. These types of tenants have no choice but to pay more because they have no where else to go.
Why have they’ve been rejected in the past?
- Bad credit
- Low income levels
- Negative references
Allowing a tenant of this type in your rental is a major risk. And, remember, the long term effects of your price are more important than the cash flow your rental price can provide.
The truth is, you won’t earn any income at all if you have to evict a tenant or wait for someone who is willing to pay your price.
When is a Good Time to Raise the Rent?
The good news: Most tenants aren’t surprised when a landlord raises the rent. It’s assumed it will happen at some point after the initial lease period.
Here are some strong reasons to raise the rent:
- The lease is renewing;
- The market supports higher rent for properties like yours;
- Your property-related expenses have gone up; and,
- You’re offering additional services, such as landscaping or internet.
Like we mentioned above, tenant retention is critical, and you don’t want to rush good tenants out of your property with risky price increases. When you’re ready to renew a lease and you want to increase the rent, make sure you can justify your reasons to the tenant, and make sure it’s not an outrageous increase.
Good tenants will not want to leave. But, they will take the time to compare the rent they are paying to what other properties are renting for in the area. Make your rental increase reasonable, and let the tenants know that the increase is consistent with the market.
Consider adding value at renewal time, when you’re raising the rent. Perhaps a free carpet cleaning will make your tenants happy, or you could offer to replace an aging appliance. Always give your tenants plenty of notice before you raise the rent, and keep the lines of communication open.
Pricing your rental property is an important part of your success as a landlord in Las Vegas. If you need help understanding the market or how to use your price to attract the best tenants, contact the team at SMART. We’d be happy to help you succeed!