Your cash flow and ROI depends on keeping your rent at market levels. To stay profitable, you’ll need to raise the rent on your tenants when they renew their leases.
Rent increases are important and necessary, and today we’re talking about why. Planning for Future Cash Requirements
A lot of owners say that they do not need the money, so why should they increase the rent? Well, you may not need the money now, but you could need it in 10 or 15 years. A lot of things in your building are probably aging, and over time they will need replacement or repair. If you have not accounted for all these things, then you are going to be surprised when you suddenly have to incur those costs. If you increase your rent, you can take that money and put it in a savings account until those issues do arise. With the extra rent, you can even fix them before they become a problem. Maintaining the Property Keeping up with the market rent levels also helps you maintain your property. If you are making routine maintenance repairs and following a preventative maintenance schedule, you do not necessarily have as many of those projects coming up all the time. Things like the roof or paving that you don’t do every year will eventually come up as time goes on. Consult your Property Manager
Consulting with your property manager on rental increases is always important.
If you don’t have a property manager, you should think about getting one. You can call us at The HLW Group, and we would be happy to talk to you. Talking to a property manager can help because you may be maintaining a rental rate that isn’t high enough. Crunch those numbers and get an actual report or a study done. These are the types of things a property manager can do.
We have the expertise and know-how to gather and analyze the statistics, and we can help you plan your rental increases to avoid getting hit by surprise repairs. If your property is well-maintained and you’re retaining excellent tenants, you can trust that those tenants will stay with you even if you implement a minor rent increase. If you do lose your tenants, you’ll still have an opportunity to charge more rent. It will be even more important to offer a well-maintained property that’s in good condition and desirable to tenants.
Avoid bad tenants, surprise repair costs, and an undervalued property by maintaining your home and planning rental increases when they make sense. Even if you only increase rent by three percent every year to cover inflation, you’ll have a little extra money in your reserves, and you’ll be more financially secure.
If you have any additional questions, or you need help raising your rent to market rates, please feel free to contact us at The HLW Group. We’d be happy to analyze your rent and the rent that properties similar to yours are earning.