If you plan on sending a rent increase letter to a tenant you need to understand how this can play out.
If you have a standard form letter announcing a rent increase you may get your monthly bump in cash flow, but at the expense of creating a long term relationship. And long term relationships are one of the secrets of stress free landlording!
Think about it, when you get a form letter in the mail does it bring a smile to your face, or is it so impersonal you simply ignore it or worse build up negative feelings. I’m guessing even if you do ignore it deep down your subconscious is still feeling like you’re just another number in the system.
What if instead of a form letter you instead received a personalized letter. One that addresses you, your potential concerns and perhaps doesn’t have your name in a different font! How would that make you feel?
Well that’s the reason for creating a customized rent increase letter for any tenants facing a potential rent increase. But it’s not just a matter of customizing it.
You also need to position it! Now I go much more in depth about positioning in a previous article about raising rents and you can go check it out here, Raising Your Rents Without Raising The Roof (I also provide a sample rent increase letter you can look at).
The quick lesson about positioning is you have to make sure your tenants know you value them and that you’re not just randomly raising rents, but rather that you have expenses to cover as well.
Expenses like ever increasing property taxes, skyrocketing insurance rates and bank fee after bank fee. While they’re not a huge deal if they trickle in, after a couple years they can put a significant dent in your cash flow, and you’re already taking the risk of being a landlord so these costs need to be passed onto the tenants.
Just to be clear, I’m not talking about doubling your rents either. There is a fair and positive way to increase your rents and you need to understand that it starts with your rent increase letter.
If you haven’t gone to take a look at that earlier article yet I’d suggest you go take a look and get started on your rent increase letter sooner rather than later.
One last thing, make sure you understand local rules about rent increases. This can include how much you may be allowed to raise rents, how often you can raise rents and how much notice is required for a rent increase.
If you have any questions or feedback, leave me a comment below!