We’re navigating some of the most exciting times in the real estate world. For example, the rental market in Orlando, Florida, is becoming more and more dynamic—got to keep things fun, right?
The good news is that, for investors and rental property owners who manage their property correctly and strategically, there’s more money in the game than ever before.
However, the critical words here are “correctly” and “strategically”. Wrong moves can mean the loss of tenants, which means the loss of rental income. But don’t worry, that’s precisely why we’ve written this blog topic.
As a full-service property management company in Orlando, Florida, we’ve seen numerous mistakes rental property owners make when trying to raise rents and end up losing quality tenants.
To keep your Orlando rental property running smoothly, let’s talk about how to increase rent without losing tenants.
Why should you increase rent in the first place?
For many rental property owners, raising the rent price is an uncomfortable move for several reasons:
- They developed close relationships with their tenants and didn’t want to harm them or lose them altogether
- They have good, responsible tenants and don’t want to upset them and go through the hassle of finding new ones (well, that hassle can be avoided if you work with an Orlando property management company)
- They don’t want to deal with the possible tension of upsetting the tenants
- They don’t want a vacant rental property
To have a successful rental property, you need to run your Orlando investment property like a business. In the Central Florida area, rent has been increasing dramatically, so you need to weigh your options as a rental property owner. The goal isn’t to substantially increase the rent but to do it strategically to keep the tenant AND increase your rental income.
Speaking of the market, a quick look at The Guardian reveals an exciting spike in rent prices in the USA—especially in 2021, but still going strong in 2022. According to the article, a few cities in the USA (i.e., New York) have been experiencing average price increase rates as high as 40%. In general, the rents in the U.S as of December 2021 have seen an increase of up to 14%.
In Orlando, Florida, we have seen significant increases as well. As an Orlando property management company, we have seen a 21.4% rental rate increase, from a year ago.
If you haven’t already done it, you should consider carefully raising your rent! A vacant rental property isn’t beneficial to anyone. If you don’t want to deal with that, you can always look into Orlando property management companies to help assist.
Here are some tips on exactly how to raise the rent at the time of lease renewal:
6 tips for raising the rent for your Orlando rental property
1. Prepare good reasons why you’re increasing the rent.
Let’s be honest: the tenant won’t care about the real estate market booming these days, and rent prices are going up because of it. After all, a higher rent is a disadvantage for most tenants.
But here are other solid reasons the rent prices (and all prices, for that matter) are going up:
- Because of the global economic and political situation that’s going on right now, the prices for essential services/products like utility and gas have skyrocketed, and the cost of living, which means that there’s a need for more money to cover expenses.
- On the same note, maintenance costs have gone up. We have seen significant price increases for maintenance in the Orlando area, such as plumbing costs, cleanings, and general care.
The price of pretty much everything has gone up, which will impact the rent as well.
2. Increase Incrementally
If you have a good tenant, you don’t want to lose them by getting greedy. There’s a fair limit to a rent price increase.
Keep in mind the tenant’s financial situation and the perks of having them as a tenant (pay rent on time and maintain your rental), the average market price in your area, and the risk of having no tenant, thus no income for some time.
As a bonus tip, if you have a bad tenant, you may want not to renew their lease agreement, or you could try raising the rent much more to drive them away.
3. Announce your rental rate increase early
You’ll want to inform your tenant about your intentions to increase the rental rate following your lease agreement and provide them with sufficient notice of your new rental rate for renewal.
You want to let the tenant know as fast as possible that there will be an increase.
Some owners choose to specify that there will be a rent price increase upon every renewal (usually around 2-5%) in the actual lease. This way, the tenant knows from the beginning what’s ahead, and there shouldn’t be any uncomfortable conflicts.
If you don’t currently have that, let the tenant know about your intentions at least 60 days in advance. Make it clear and specific!
4. Provide incentives for renewing
If you want to keep your current tenants, announce your rent price increase, explain your reasons, AND offer them incentives like upgrading old appliances, renovating a room, etc. The higher rent won’t seem as bad and will justify a rental rate increase.
Suppose you already have a property management company in Orlando. In that case, you can inform your property managers that you’d like to get quotes on rental property updates and tell your tenant that you’d like to make a few updates.
5. Be a good rental property owner
Sometimes, the most valuable things are the simplest ones.
If tenants like their landlord, they’re very likely to stay even if the rent increases (of course, more factors come into play, but assuming their financial situation allows them, they’ll likely stay).
Your tenants appreciate it if you’re an empathetic, easy-going, and responsive owner. Moreover, if you develop a relationship with them, your odds are even more significant.
6. Hire an Orlando property manager
If you are not an experienced rental property owner in Central Florida, you may consider hiring an Orlando property management professional. Property managers are experts in your local area and can be of massive help for your lease renewal and rental price increases.
Rental property managers will perform a property management analysis which will include insights into what other comparable properties are renting for in your neighborhood. For example, our property management pricing includes renewal services such as renewal rate analysis and recommendations, pre-renewal inspection, and attorney-prepared lease agreement.
Property managers help take the stress and worry from owning an investment property, so we handle everything with your tenant’s lease renewal.
Orlando property management summary
Navigating all the aspects of managing your rental property can be stressful and troublesome. Still, if you follow these tips for raising the rent for your rental property, you’ll likely keep your tenants in place and increase your rental income.
Suppose you have a rental property in Orlando or Central Florida and want some guidance on what your home can rent for in today’s market; contact us today for your Free Rental Analysis with our trusted Orlando property management company.
