Rental property owners often turn to their property manager for advice about whether it’s time to increase the rent. If you recently received notice of higher property taxes or home owner association fees, you likely wonder if your property manager will adjust the rent to cover your new added expenses. Generally, it’s a good idea to talk to a professional landlord about any financial questions or apprehensions you feel, especially as a first-time real estate investor. If you own a rental home in San Diego County, it’s likely your rental home is steadily increasing in value. At the same time, the fact that you have higher expenses such as property taxes does not necessarily mean it’s time to raise the rent. According to an article by vcstar.com, rent increases often drive away reliable and steady tenants. Higher vacancy often adds expenses to the mix. At the same time, consider legitimate reasons to raise the rent.
When the lease expires
If they have a one-year lease, most tenants assume their rent will go up at the end of the year. If your expenses have not gone up and you feel comfortable with the situation, consider leaving the rent the same or a slight adjustment. Before deciding, consult with your property manager about any expected expenses in the next year such a new A/C or windows. Although a rent hike would not cover the cost of major expenditures, it will ease some of the responsibility.
After hiring new property managers
If you just hired a new property manager to handle your San Diego County rental home, it’s time to re-evaluate the market rent. New property managers take a look at the current rental market conditions. If previous property managers set the rent too high or too low, it could turn off potential renters. If you keep the same tenants when you switch property management companies or hire a company after you handled it as a DIY landlord, consider the fresh perspective.
After a major update or remodel
Tenants benefit from major renovations and updates such as all new stainless steel appliances, granite, new windows and mini-blinds or upgraded flooring. Improvements to your rental property increase the market rent. Your property manager will likely oversee improvements in between tenants, but in some cases you will move forward with remodels with tenants in place.
When the rental market booms
If the rental market is booming, it’s a good time to consider if you should pass on increased costs to the renter. In many cases, a renter is reluctant to move because similar rental properties in San Diego County are just as expensive or more expensive. It costs money to move. At the same time, increasing the rent too much backfires. A better approach is to ask your property manager to perform a specific rental market analysis on your rental home.
If you do decide you want more rental income and your property manager is on the same page, the manager will notify tenants according to the state and local laws. Experts point out that the cost of living rises faster than income in the current economy, although it’s not the case for every individual.
At Home Team Property Management, we help investment property owners find qualified tenants with sufficient income to handle reasonable and prudent rent hikes. By gradually increasing the rent each you, it covers your extra expenses while keeping most tenants content. Most renters anticipate rent hikes, but it’s all about the way your property manager handles them. For more tips on keeping tenants satisfied while covering your financial needs as investors, please contact us.