Raising your rental prices means more money in your pocket, right? Unfortunately, that’s not always the case.
Although raising your rent has the potential to be lucrative, it can also create a lot of problems that will cause you to lose money. There is definitely an art to raising your rental prices that you must master if you want more lucrative rental properties.
Consider the overall rental market in your area
Raising rental prices may seem like a quick fix if you’re in a pinch, but raising rates in a neighborhood with lower property values could be a disaster. If your rates are a little high compared to other properties in the area, potential renters are likely to look over your property in favor of more affordable options.
Demand for your rentals should also be considered. If you offer unique services or are known in the area for offering a safe place for singles to live, you may be able to get away with increased rates.
Are you likely to lose tenants because of the increase?
Before you raise your rates, consider the renters in your units. Are they primarily low, middle, or high income? If you raise rates, are some of your tenants likely to move out?
Although this may not seem like a huge issue, finding new tenants costs time and money. You may end up losing money instead of making money if you raise rates and your tenants move out!
Pair your increase with an update
If you’re looking for an easy way to get away with a rental increase, pair it with an update. Re-roof the building, re-pave the parking lot, replace the windows, or offer new appliances to tenants. If the rate increase will increase their quality of life, most tenants will be willing to stay.
If you’re having a hard time deciding if a rental increase is the right choice for you, consider hiring a property management company to help. They have the tools and experience you need to get the most out of your rental properties.