One of the inevitable consequences of owning rental income property is that from time to time the landlord finds it necessary to inform tenants that their rent will be getting raised.
The issue is not a slam-dunk. Rent increase is a คอนโดมือสอง ราคาถูก sensitive subject that greatly impacts real estate owners and tenants alike for their own set of reasons.
The tenant, of course, is not going to be pleased that they will have to pay more to continue occupying the unit. Perhaps they can't afford to pay more. Or maybe it means having to do away with some simple pleasures or other goods and services. Whatever, a rent increase is never what tenants want to hear.
As a result, knowing full well how a rent increase could affect their tenants, property owners are confronted with their own fears and concerns surrounding the financial aspects of the decision.
The primary fear being, of course, that otherwise good tenants might decide to move out and leave the landlord with increased vacancies. Although this might be manageable for properties having many units, an increased vacancy rate for properties consisting of just a few units can be financially devastating to real estate investors.
Fair enough.
Real estate investors, nonetheless, are running an investment business that totally relies upon rental income and sometimes having to raise rents is the only way to make it profitable - or at least profitable enough.
Okay, so let us suggest some things for you to consider when rent increases are in order that might help minimize the risk of driving out your tenants.
Avoid pure greed. If all you want is to produce more money from your investment without rhyme or reason than the other suggestions might not be relative and you may have to simply take your chances. Understand your market. If your market area is generally saturated with other rentals than you might suffer a huge turnover of tenants due to a high supply-to-demand ratio. If supply is scarce, than the opposite is true and you might not suffer any turnover. Know your property. How do your rental property's location, condition and amenities measure up to other rentals in and around the area? Tenants are less willing to endure the stress and cost of relocating over a nominal rent increase when you provide desirable features compared to other properties. Know your tenants. How does your property's unit size measure up to tenant needs? For instance, your rent increase could motivate an accountant with several assistants occupying your small office space to relocate to a larger space. Or a single occupant in your two-bedroom unit to set off in search of a one-bedroom unit. Watch your competition. If similar-type units are available just around the corner for less rent than you're proposing, chances are good that you'll lose tenants. If your rents are reasonably in line, than probably not. Be smart. Modest increases given over consistent intervals are more easily understood than irregular ones that surprise and undoubtedly will alienate your tenants. Offer a trade off. Perhaps a month-to-month tenant would be willing to sign a lease to get a rent that reflects less of a increase than otherwise proposed. This allows you to bump up your rental income somewhat and at the same time guarantees that you'll have an occupied unit during the term of the lease.
Rule of Thumb
Real estate investors will always run some risk when proposing rent increases because tenant expectations vary, circumstances vary, market conditions vary, and certainly personalities vary. Nonetheless, when the investor does his or her homework and then proposes an increase that has reasonable grounds, chances are good that the fallout will be minimal.
Here's to your real estate investing success.
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