MY TENANTS LOVE ME BECAUSE MY RENT HAS BEEN THE SAME FOR 20 YEARS
Money On The Table
Some landlords may have the luxury of keeping rent the same for the entire time they are a real estate investors, but most investors need to keep up with the ever increasing cost of living. In addition, if you are like most investors, you became a landlord to boost your income, and not simply to shield income or profits from other endeavors. So, if you have not recently evaluated your rents, in comparison to the market rate, it may be time to see how much money you are leaving on the table.
You Can Keep Your Current Tenants (If Desired)
Do not hear us wrong; we can already hear people chanting we are part of the problem for the increasing rise in rental rates. A balance must be struck between getting “top dollar” and keeping tenants for the long-term. If you charge the highest possible rate, your tenants are going to hit the road as soon as they can find something cheaper. On the other hand, most landlords have plenty of room to increase rent somewhere between the rates from the 1970s, and the very top of the market. In fact, it is not uncommon that a landlord can see as much as $100 increase per month with an effective strategy. You did not misread that stat; rental rates can increase by an average of more than $100 per month. In many cases, this increase can occur while keeping existing tenants. This is possible by educating them about the realities of the current market and offering them options that do not break their bank. If for some reason, an increase does not work, we help them transition with as little pain as possible.
$36,000 Yearly Rent Increase!
One success story involves an owner who was collecting around $7,000 in gross rent for his 14 units. He looked at his ability to raise rent with skepticism when he was told his rents could be increased to $10,000 per month for the same inventory. And, this increase could happen in the first year. His skepticism transformed to elation when he hit his goal in less than six months. And to the critics chagrin, those tenants did not leave as soon as they could. They all stayed longer than the initial lease obligation, and many stayed for multiple years. If you already broke out the calculator, you will know that the gross rent increase was $36,000 per year.