It’s possible that your tenants won’t be pleased to learn that you are raising their rent. Nobody likes to see their rent go up. Tenants may feel alienated and might look for rental properties. It is possible to feel embarrassed or nervous about raising rent.
You can raise your rent with good planning and clear communication. Tenants will not complain. These tips will allow you to keep your rent profitable while keeping your tenants happy.
Tip 1: Decide how much you want to increase your rent
The first step is to figure out how much rent will increase. This number is important for two reasons.
Your operating costs must be covered by your new price. If you constantly undervalue yourself, your profit margins will decline.
The new rent price must be affordable enough to attract renters and reduce tenancy turnover.
It is essentially a balance act. Your goal is to keep up with inflation, rising business costs, and encourage your tenant’s renewal of their lease.
What is a reasonable amount to increase your rental rate each and every year?
There are many ways to increase rent, but there is one rule that works for all properties.
Three main factors should be considered when deciding how much rent to raise.
Your operating expenses
The average rent price at your location
Renovations that you have done to your rental
Property rental costs
If you want to make consistent profits each year, it is important that your operating costs are kept in check. To To determine the cost of operating expenses, it is important to examine each line. These may include:
Property taxes
Premiums for property insurance
Repairs and maintenance
Utilities
Landscaping
Tenant screening fees
Garbage collection
Property management fees
Advertising and marketing
Professional services (accounting, legal, etc. )
Compare rental rates at your location
The higher your monthly expenses, the easier it is to justify raising your rent price. Rent prices should not only be affected by your monthly income. This will make it difficult for renters to sign up and cause you to charge too much. It is better to price your rental property at the market rate.
It is important to research the price trends in your area for rental properties so that you can set a fair rent rate. To get the information you require, please visit:
Check out rental listings websites such as Craigslist, Kijiji or Realtor to find current rent prices on similar rental properties
Rentometer, a rent-comparison tool, can help you find out the average rent price per unit in your local area for units similar to yours.
Local real estate meetups are a great way to get information and exchange ideas with others about market trends.
Renovations
Renting a much higher price for a rental if there have been significant upgrades made to the property can be justified. Your rent price should be comparable to similar properties.
Tip 2: Be sure to follow your local rent control laws
Canada has rent control laws in every province and territory. These laws protect tenants from predatory pricing by landlords. These laws are your responsibility.
Rent These are the control policies:
How It is often possible to raise your rent.
Rent can only be increased by a maximum of $2,500 each lease renewal.
You can determine whether you can increase your rent at the market rate if your tenant vacates your rental property (vacancy control).
Property owners in Ontario can raise their rent price by as much as 2.5% every 12 months for existing leases. The landlord may charge tenants the rent at whatever rate they choose for replacement tenants if the tenant leaves their lease.
Below is a summary of the 2023 rent-increase guidelines for each jurisdiction.
Tip #3 Raise Your rent will be paid each year in stages
It is often a mistake to put off raising rents for years. You may find that your expenses have increased to the point where you have no choice but to increase your rent. Do not be surprised if tenants get angry. Move on and pack up your belongings.
Gradually increasing rent over time puts less stress on tenants’ finances. The increased rent will allow them to be flexible with their budgets and make them feel more at ease.
By stating in the lease that your intention to increase rent prices by a certain amount for the next three years, you can notify new tenants. This will allow them to know what they can expect at the end of their lease.
Tip #4: Give your tenants plenty of notice
You are required to provide written notice of a rent rise to your tenants within a certain time period in most provinces. This is usually 90 days. This period may vary depending on whether you have a weekly or monthly tenancy. The laws in your province will require you to include all relevant information within your contract.
No matter what regulations you may have, it is important to notify your tenant as soon as possible about the imminent rent increase. Notifying your tenant sooner allows you to give them the time they need to plan and will save you money. They’ll feel valued and more motivated to stay than they are to go.
Tip #5 Be open and honest about the reason you are increasing rent
Communicating with tenants in a transparent manner can prevent you from causing problems and provoking confrontations. Here are some ways to approach communicating a rent rise:
Explain that you are facing rising expenses. Provide examples of property taxes or insurance premiums to illustrate your point. Tenants may not understand inflation, so it is best to avoid citing it in relation to your rent rise.
Give data showing comparable rent prices for nearby properties. A reasonable rent will make your tenant more likely to move.
Give details on local rent control laws. This will show your tenant that they follow all regulations and are not price-gouging.
Notify us of any improvements that you have made to the property in the past year. These updates will ensure that your property is always up-to-date and enhance the living space.
Closing the letter, explain to your tenant that they would like to remain and are available to answer any questions. Keep your tone professional and respectful.
Tip #6 Use incentives to motivate your tenants to stay
Imagine that your current tenant has rented your property for many decades. They are more likely to pay their rent on time if your tenant has been renting the property long-term. They also maintain the property in a clean condition. You might consider offering incentives to get them to renew their lease, despite the rent rise.
Give a gift certificate
Do some free repairs and maintenance such as steam-cleaning the carpet
Get a dishwasher
Install an air conditioning unit
Minor renovations can be done with tenant input. For example, paint the walls the color they choose.
Offer Wi-Fi as a complimentary or heavily discounted amenity
Few people will agree with that statement. “no” To save money on rent, consider offering a discount rate to tenants who decide to stay long-term.
You can, for example, waive the monthly rental fee upon renewal of the lease. You can also offer to reduce rent by 1% for tenants who renew their leases within 90 days. With the promise of freezing rent for the following year, a two-year lease agreement could be offered.
Our Final Thoughts
To maintain your profit margins as a landlord you will likely have to increase your rent regularly. Rent increases can be caused by rising operating expenses. Rent prices should be determined by the market’s willingness to pay, and not your budget.
Tenants hate to hear they will be paying more rent. Tenants will be more likely to accept a fair and reasonable rent increase, as long as you communicate it in a friendly and open manner. Incentives are a great idea, especially if the tenant has been punctual for a long time.
Although rent increases may help you keep a healthy bottom, it is not a guarantee that your tenant will continue paying their rent indefinitely. Tenants There are many reasons why rent payments can become behind. If they do, your expenses can quickly increase.
The worst scenario is when a tenant refuses or causes damage to your property. To To begin the process of eviction you can file a complaint to your local residential landlord board. It may take several months for you to present your case. Your rent will go every month and you won’t be able pay it back. This is a difficult situation for landlords.
SingleKey offers the Rent This program will cover missed rent payments and eliminate the risk of losing rental income. This program will guarantee your rent for up 12 months and up to $60,000. The program guarantees your rent for up to 12 months, and can pay $1,500 for legal fees and property damage. You also have access to a paralegal team to help you with an eviction.
