Property investors are looking for reasonable ways to adjust their business costs and keep their good tenants happy, too.
Traditionally, the best months for renters to sign a lease are between December and March and the worst time is May through October; however, the pandemic threw a curve ball into many things traditional. Right now, the question property owners are faced with in the second month of 2023, is whether it’s a viable time to raise rents to help recoup their pandemic losses.
Over the last two years, many property owners were in reactionary mode, keeping their businesses afloat amid lockdowns, record inflation, panicked residents, and a supply shortage on practically everything.
Now the subject of raising rental cost is top of mind for most property owners. Is now the best time? Raising rent can be problematic. On July 31st, 2021, when the eviction moratorium and rent freeze ended in the United States, it was all too obvious how the pandemic hurt the economy and made the subject of raising rent uncomfortable.
One troublesome aspect for property owners is not wanting to lose good tenants. When you have good tenants, it’s more difficult to raise the rent. And it goes without saying that vacancies can be costly. But, if rental market rates increase and you don’t raise the rent, you’re reducing your net income every year.
As a real estate investor, you may need to raise the rent for these more obvious reasons.
- Meet current market rates
- Fund maintenance and improvements to the property
- Pay property tax increases
But under the unusual circumstances caused by the pandemic, it might be necessary to raise rents to help recoup your losses.
A Few Rules About Raising Rent
Local landlord-tenant statutes govern the process of raising the rent. In general, you can increase the rent when:
- You are renewing a lease
- You give at least thirty days’ written notice
- Your tenants are on month-to-month leases
Make sure that you know your state’s laws. Navigating the legalese of the statutes is frustrating. A qualified real estate attorney will help you understand the ins and outs.
When it is time to raise the rent, it’s possible to do so without losing good tenants. Here are some helpful tips:
- Increase rent every year
- Raise rent reasonably
- Alleviate the pain of a steep rent increase
The Changing Face of Renters
There’s also the fact that renters are becoming a mix of older and younger generations. Baby boomers, who want freedom from keeping up a house, now make up a significant portion of renters in the United States. Also, millennials, the largest generation in the country, are entering the housing market in greater numbers every year, most of them as first-time renters.
For property owners/managers, this means a shift in the types of housing and services they are providing. Older residents will want accessibility and convenience. Elevators, ramps, safety rails in bathrooms, and other ADA-compliant equipment are sought-after features in rental properties.
Millennials, on the other hand, are looking for proximity to work, environmentally friendly, modern kitchen, technology upgrades, entertainment options, and outdoor recreation.
Raising rental rates is a decision you must make based on your personal financial situation, as well as economic changes, locally and globally. However, if you find yourself in need of savvy real estate investment advice, contact one of our real estate experts at Cousin James Management. Our reputation as a trusted property management company comes with more than 25 years of experience. Let’s talk about what we can do for you.