With September around the corner, the last thing you want to hear is that your tenants are moving out. As of today’s date, there are numerous vacancies for September luxury apartments.
If you’ve purchased a Boston luxury condo and want to rent it out, chances are you’ll need to increase the rent at some point. Every year, the value of rent is reduced by inflation, but expenses like insurance and repairs continue to rise. Raising the rent is an important part of keeping your business viable, but you may hesitate the first time you prepare to increase your tenants’ rent. You may be worried your tenants will be so upset they will leave, damage the property in retaliation, or confront you over the increase. Most tenants expect small to moderate rent increases. With the following tips, you can eliminate the stress of raising the rent and avoid losing tenants to hurt feelings and rising costs.
1. Offer a Reduced Rent Hike for a Longer Lease
One strategy that can lessen the sting of a rent hike is offering a reduced increase in exchange for signing a longer-term lease renewal. This option might help your tenants feel more comfortable about staying by locking in a “discount” for a longer time, and it gives you greater security. After all, long-term tenants offer the highest returns by helping you avoid costly turnovers.
2. Make Sure Rent Hikes Are Legal
Before instituting a rent hike, make sure you are legally allowed to increase the rent. If your tenants have a signed lease, their rent is fixed for the entire term of the lease and can’t be raised until the lease is up. If your tenant has a month-to-month agreement, you will need to be more careful. Massachusetts law requires giving the tenant at least 30 days’ notice if the rent increase is 10 percent or less. If the rent increase is more than 10 percent, you must give 60 days’ notice.
3. Call Before Sending a Written Notice
An impersonal notice in the mail is important for legal rent hikes, but it doesn’t do much for the emotional impact on a tenant. No one wants to learn about bad news like a rent hike in the mail. Before you drop the written notice in the mail, give your tenants a courtesy call to let them know how much the rent will be increasing and that they can expect a renewal form.
4. Be Friendly, But Remain Firm
No matter how you communicate with your tenants about the rent hike, it’s important to stay professional yet friendly. Build a relationship with your tenants to encourage them to stay in the long-term, but remain firm about enforcing your policy, especially if the tenants push back against the rising rent. Explain politely that rents increase with expenses and you’d love for them to stick around.
5. Offer a Discount for Online Payments
Offering a discount to tenants who make their rent payments online can offset the shock of a rent hike, and it comes with benefits for you as the landlord. Accepting online rent payments prevents the hassle and potential costs of check payments, and it can decrease the risk of late payments with payment reminders and scheduled payments. Depending on the platform you choose, tenants may have several ways to pay their rent, such as credit or debit card, eCheck, PayPal, and SMS.
6. Institute Modest Rent Increases Every Year
The most effective way to raise the rent without losing your tenants is to establish a policy of increasing the rent every year at lease renewal. Most tenants expect rent to go up every year as long as it’s a reasonable increase. Annual rent hikes allow you to keep your units at market price and avoid drastic hikes that can leave tenants resentful or unable to pay. An annual increase of 2-4 percent allows you to stay competitive and sets expectations for tenants. It’s also a manageable increase most tenants should be able to afford