{"id":16504,"date":"2024-07-25T15:33:24","date_gmt":"2024-07-25T07:33:24","guid":{"rendered":"https:\/\/leasing.dmcihomes.com\/blog\/?p=16504"},"modified":"2024-07-25T16:05:22","modified_gmt":"2024-07-25T08:05:22","slug":"when-increase-condo-rent-price","status":"publish","type":"post","link":"https:\/\/leasing.dmcihomes.com\/blog\/when-increase-condo-rent-price\/","title":{"rendered":"When to Increase Your Condo Rent Price: Signs It\u2019s Time for A Change"},"content":{"rendered":"

For most property owners, increasing condo rent price is one of the most challenging parts of renting out their unit. After all, expensive rent is a <\/span>top reason tenants move out<\/b><\/a>. <\/b>However, evaluating and updating your rent prices are vital if you don\u2019t want to undervalue your property and lose rental income.<\/span><\/p>\n

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Photo courtesy of <\/span>Terje Sollie<\/span><\/a> via Pexels<\/span><\/p><\/div>\n

You don\u2019t change rent prices on a whim. Take into consideration factors such as comparable rent prices, market demand, and property value to <\/span>set a fair condo price increase<\/b><\/a>. This way, you can provide a reasonable explanation to your current tenants to keep them from leaving. Determining the right rent for your unit will also attract prospective renters who are most likely to sign the lease.<\/span><\/p>\n

As a condo owner, you\u2019ve probably read countless <\/span>guides to renting out your condo<\/b><\/a>. However, getting your rental price adjustments right can be tricky the first time. That\u2019s why <\/span>DMCI Homes Leasing<\/b><\/a> has compiled all variables you need to consider for rent adjustments as well as how to implement them so you don\u2019t lose tenants. Read further to learn more about them.<\/span><\/p>\n

Signs it\u2019s time for a rent increase<\/h2>\n

Figuring out the <\/span>right timing to raise the rent<\/span><\/a> of your condo for rent is much more challenging than it sounds. While you don\u2019t want to bring it up to your tenants for fear of straining your relationship with them, you still need to make sure you\u2019re getting a return on your investment.<\/span><\/p>\n

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Photo courtesy of <\/span>Alexander Mils<\/span><\/a> via Unsplash<\/span><\/p><\/div>\n

Fortunately, evaluating your property regularly will provide you with a valid <\/span>explanation for the rent raise<\/span><\/a>. Here are some of them:<\/span><\/p>\n

1. Market demand<\/h3>\n

When there is a high demand for condos and a limited supply, you can naturally increase the price range of your rental property. As a landlord, it\u2019s your responsibility to keep an eye on market trends to better prepare for adjusting your rent. The balance between market supply and demand for condos are usually affected by new housing developments, mortgage rates, changes in consumer preferences, and more.<\/span><\/p>\n

2. Comparable rent rates<\/h3>\n

Another variable that can serve as a <\/span>basis for your rental price<\/span><\/a> is rent rates of nearby properties. Although you can get a decent estimate by researching the average condo rent price in the country, it\u2019s still better to set your rate depending on the rentals near you because they are your direct competition.\u00a0<\/span><\/p>\n

Check out what amenities they offer and the condition of their rental. When they start raising rent prices, investigate to find out why. This is an indication that you should consider doing the same.<\/span><\/p>\n

3. Property upgrades<\/h3>\n
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Photo courtesy of <\/span>La Miko<\/span><\/a> via Pexels<\/span><\/p><\/div>\n

If you\u2019ve made recent improvements to your condo like installing new flooring or remodeling the bathroom, your tenants are less likely to feel wronged about a rent raise. They\u2019ll be happy to see the changes even with an additional price tag because they\u2019re benefitting from them.<\/span><\/p>\n

Adding amenities like covered parking, pool, and lounges can also justify a rent increase. After all, they provide extra value and convenience to your tenants.\u00a0<\/span><\/p>\n

4. Property value<\/h3>\n

For most landlords like you, getting a rental property is a means to grow passive income. However, if you\u2019re not pricing your condo according to its market rate, you\u2019re not getting a fair <\/span>return on your investment<\/b><\/a>. This defeats the purpose of why you even bought a property to lease.\u00a0<\/span><\/p>\n

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Photo courtesy of <\/span>Nicholas Cappello<\/span><\/a> via Pexels<\/span><\/p><\/div>\n

To get an idea of your property\u2019s fair market value, you can check online portals, schedule an appraisal, or research comparable properties. From there, you can make yearly rental increases to start making profit.<\/span><\/p>\n

5. Inflation and increased cost of living<\/h3>\n

As the cost of living increases, the expenses associated with maintaining and operating a rental property also rises. Since you\u2019ll be paying more for the upkeep of your unit and processing payments, you\u2019ll have to offset these costs through rent one way or another.\u00a0<\/span><\/p>\n

In addition, <\/span>inflation makes it harder for people to afford buying a home<\/span><\/a>. This means they\u2019re most likely to opt for a rental property, which increases the demand in the rental market. With large demand and little supply, property owners have more leeway to charge a higher rental rate and still get tenants willing to pay for it.<\/span><\/p>\n

6. Property taxes<\/h3>\n

Many people think that they don\u2019t have to <\/span>care about property taxes<\/span><\/a> as long as they are a renter. However, that couldn\u2019t be farther from the truth. When property taxes arbitrarily increase because the government needs more funding, landlords will have no choice but to raise the rent to balance the additional costs.<\/span><\/p>\n

7. Maintenance costs<\/h3>\n
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Photo courtesy of <\/span>Karolina Grabowska<\/span><\/a> via Pexels<\/span>\u00a0<\/b><\/p><\/div>\n

One of the largest expenses that property owners spend on is <\/span>maintenance costs<\/span><\/a>. That includes routine maintenance, repairs, replacements, and unexpected emergencies. When maintenance gets too expensive because of factors like inflation or extent of work needed to be done, offsetting the costs through a rent increase is understandable.<\/span><\/p>\n

8. Tenant turnover<\/h3>\n

When your current tenant leaves, the time of vacancy until someone leases your rental again will cost a lot of money. It involves terminating the current lease, getting your unit ready for the next tenant, and signing them. It becomes an expensive problem when you have to do this process often because you\u2019re just not retaining tenants long enough.<\/span><\/p>\n

To avoid this, you need to <\/span>balance a rent price hike with tenant retention<\/span><\/a>. Since rent increases are inevitable, consider implementing tiered increases with tenancy length as a standard. Long-term residents will get small increases while newer tenants will get a price range that\u2019s closer to market rates. It can also help to get their feedback regarding the change or offer concessions and incentives.<\/span><\/p>\n

9. Financial goals<\/h3>\n

Renting out your condo is a great way to build wealth. However, once you notice you\u2019re not meeting your financial goals, it\u2019s a clear sign that you need to increase rent. A good tip to remember as a property owner is that your rent should be able to cover your expenses.\u00a0<\/span><\/p>\n

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Photo courtesy of <\/span>Iryna Tysiak<\/span><\/a> via Unsplash<\/span><\/p><\/div>\n

Create a spreadsheet to track mortgage payments, property taxes, maintenance costs, and more to make sure everything is accounted for. If you\u2019re barely breaking even just from your expenses, it\u2019s time for a rent raise.<\/span><\/p>\n

How to implement rent increases<\/h2>\n

No one wants to hear that their rent is increasing even if it\u2019s necessary. As a landlord, you\u2019re torn between wanting to cultivate a pleasant landlord-tenant relationship and meeting your financial goals. To minimize the possibility of losing renters during a rent hike, make sure to do these steps:<\/span><\/b><\/p>\n

1. Learn the market rate for your property<\/b><\/h3>\n

As mentioned earlier, a good benchmark for determining if you need a rent increase is to know the market rate for your property. You can do this by comparing your current rent to the rent of other similar properties. If you\u2019re charging below the market rate, you can justify an incremental increase to follow that standard.<\/span><\/p>\n

2. Review existing terms and conditions of the lease<\/h3>\n

The actual rent increase will depend on the content of your <\/span>existing lease<\/b><\/a>. <\/b>If the agreement clearly states that you can\u2019t increase the rent at a specific duration of time or by a certain amount, you\u2019ll have to respect that.\u00a0<\/span><\/p>\n

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Photo courtesy of <\/span>Kampus Production<\/span><\/a> via Pexels<\/span><\/p><\/div>\n

3. Check out landlord-tenant laws in your city<\/b><\/h3>\n

Another important step you should pay more attention to is the <\/span>landlord-tenant laws<\/b><\/a> in your area. You want to make sure that you don\u2019t run into legal troubles by hiking your rent price arbitrarily. For example, Philippines rental law states that rent of up to \u20b13,999 shouldn\u2019t increase more than 4% every year. Meanwhile, Rents of \u20b14,000 to \u20b110,000 shall not rise more than 7% per year in a contract with the same tenant.<\/span><\/p>\n

4. Discuss with the tenant about the rent increase<\/b><\/h3>\n

Take the time to talk to your tenant about the upcoming change. Either give them a phone call or arrange a meeting with them in person to explain why their rent is increasing. It\u2019s best to be transparent and empathetic during the conversation so you can help them understand the reason behind the decision.<\/span><\/p>\n

5. Post a notice before raising the rent<\/h3>\n

If your lease doesn\u2019t include a required written notice before raising the rent, you should still provide one as a landlord. Whether it\u2019s a 30-day or a 90-day notice, you should give tenants time to prepare for a higher monthly rent or decide to not renew their lease.\u00a0<\/span><\/p>\n

Keeping your tenants happy during a rent increase<\/h2>\n

Everyone wants <\/span>affordable rental prices<\/b><\/a>, but you have to remember that you\u2019re running a business first and foremost. While adjusting your rent, you might encounter a little resistance from your tenants. They\u2019re less likely to object if you\u2019re able to do the following as a landlord:<\/span><\/p>\n

Be as honest as you can<\/h3>\n

Negative reactions from tenants on rent increase are always due to them thinking that landlords are just greedy for money. Whether it\u2019s because of property taxes skyrocketing or catching up with the market rate, patiently explain to renters why the rent raise is necessary.<\/span><\/p>\n

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Photo courtesy of Mikhail Nilov<\/a> via Pexels<\/p><\/div>\n

Make property improvements<\/h3>\n

Time your maintenance or improvement projects with the rent increase. When tenants see the positive changes in your rental condo, they\u2019ll respond more favorably to raising the rent.<\/span><\/p>\n

Offer incentives<\/h3>\n

At this stage, the tenant is already debating whether to renew their lease with a higher rent or terminate it. Consider giving them a discount on the rent increase when they renew early instead of last minute. As a landlord, you can also offer other non-monetary incentives to keep your tenants happy.<\/span><\/p>\n

Key takeaways<\/h2>\n

Now that you know when to increase your rent and how to implement it without losing your tenants, you\u2019re now ready for that rent hike. You just have to remember the following:<\/span><\/p>\n