As a rental property owner in St Petersburg, FL, you probably know that good tenants aren’t easy to come by. Finding them requires experience, knowledge and time. So naturally, when you get them, you’ll want to hold onto them for as long as you can.
But what should you do when you need to raise their rent?
It could be that the costs of maintenance have gone through the roof or maybe the cost of living has shot up. Perhaps, it could be that property and income taxes have been adjusted upwards.
Remember, your rental investment is a business. And, the goal of any business is to make profit. So, when property expenses increase, you’ll need to adjust your rent price in order for your rental business to continue being profitable.
Albeit, increasing rent is, without a doubt, risky. Raising it could leave your tenants scurrying for a new place to call home. Opting not to raise it, on the other hand, can mean leaving money on the table.
So, in this article, we share with you 4 steps on how to raise the rent on a tenant without complaints.
Step #1: Determine Your Reasons to Rent Increase
As a rental property owner in St Pete, there are several reasons you might want to raise the rent. They are as follows.
- Your regular expenses have gone up. Examples of such expenses include escalating cost of living, high mortgage, rising taxes, higher utility costs, and property management fees.
- The rental market supports it. Are rent prices around you rising? If so, the market might be trying to tell you it’s time to raise the rent as well.
- The local economy is rising. If the local economy is rising, then raising rent makes financial sense.
- The neighborhood is developing. As neighborhoods change and improve, your rent should reflect the new status as well.
- You are upgrading the property. Changes that add to the property’s appeal cost money. You may be planning on redoing the bathroom or kitchen, replacing the tiles or carpets, landscaping the exterior, or putting in a new HVAC unit.
Step #2: Calculate How Much You Should Charge for Rent
First off, as a property owner, you reserve the right to ask whatever rent amount for your rental property.
That being said, increasing the rent too much could result in a costly tenant turnover. What you want is as little tenant turnover as possible while staying competitive with market rents.
Bear in mind that in a competitive rental space, tenants have different options to choose from. As such, setting the right rent amount is key to retaining them in your property.
But what is the right rental price?
Basically, the right rent amount needs to be on the same level with similar rental properties in the area. There are a few good online sources that can assist you in this regard. Rentometer.com is one such source.
Step #3: Decide When to Increase Rent
Generally, state law or lease/rental agreements dictate when and how a rent increase should be communicated. However, none of Florida’s cities has rent increase laws. As such, only the lease or rental agreement can dictate rules for a rent increase.
A rental agreement runs month to month and self-renews until you or your renter terminates it. In this case, you can raise the rent when the month ends with relatively short notice (15 days).
A lease agreement, on the other hand, typically runs for one year. In this case, you’ll need to wait until the lease term expires for you to raise the rent. Here, you must give your tenant at least 60 days’ notice.
Step #4: Inform Your Tenants That You Are Raising the Rent
Communicating clearly and professionally will go a long way towards minimizing conflict with a renter over rent increases. You want to make sure that the communication:
- Relays the information as concisely as possible. This helps ensure there is no room for negotiation or argument.
- Leaves no room for confusion over the rent increase by covering all the necessary information.
You may also decide to use the rent increase notice to remind your renters about your rent rules, even if they are clearly stated on the lease.
How to Handle Backlash
Tenants who are generally more satisfied with living on your property are less likely to complain about a reasonable rent increase. Odds are, they have received a cost of living wage adjustment and already know your expenses have increased too.
However, if they haven’t and are starting to complain, the following are some ideas on what to do:
“Why are you increasing the rent?”
Clarify that your own expenses have increased. You can also go further and mention the exact examples. For example, insurance premiums, property taxes, utilities and maintenance costs.
You may also mention any improvements you are planning or new amenities you plan to add.
“You’re increasing the rent too much.”
Here, you’ll need to educate your tenant about the prevailing market rate. You’ll need to have done your comparative market research and figured what the rent prices in your neighborhood are.
If your new rent price compares well to the prevailing rent price, then your tenants will be less likely to complain.
Unlawful Rent Increase Practices
The state of Florida prohibits landlords from raising rent for retaliatory or discriminatory reasons. That is, you cannot increase the rent because your renter requests repairs or reports code violations.
It’s also against the law to increase the rent based on any of these reasons:
- Unfavorable military discharge
- Physical, mental or perceived handicaps
- Sex or sexual orientation
- Age, marital status or because you have children under 18 years of age
- Race, religion, color, ancestry or national origin
As a property owner in St Petersburg, FL, raising the rent is something that you’ll experience sooner or later. Making sure you get everything right is the key to success. Hopefully, with this guide, the whole process will be somewhat easy and straightforward.