You’re probably aware by now that a low tenant turnover rate equates to higher generation of income from rental payments. On the other hand, having a high tenant turnover rate means that you need to spend more time, effort, and money searching for tenants who will rent the property.
There are various reasons why a renter may choose to end their tenancy. One of the reasons may include a disagreement in the changes in the rental fees. This shouldn’t be a problem for you if you know the steps for properly raising the rental fees.
First, you need to do some market research in order to identify the general market rate. Make sure that you remain strictly compliant with the Florida landlord-tenant laws.
The right rent price may attract high-quality tenants. It is ideal to base rent price on a balance of remaining competitive, attracting the best renters, and aiming to generate the highest possible rental income.
These renters are often drama-free, clean, honest, credit-worthy, responsible, and more importantly, pay rent on time.
How to Keep Tenant Happy While Increasing the Rent
1. Inform your renters that rent increases will not be frequent.
Doing so will encourage your renters to stay within a specific period as they feel at ease knowing that rent will not increase any time soon.
2. Be straightforward with your tenants.
When you are raising the rent, it would be best to appropriately inform your tenants the reason behind the increase. This way, you may be able to prevent the renters from assuming that you are increasing the rental fees for selfish reasons. You may let them know that your expenses in managing the property have increased and that is affecting your business.
3. Maintain a healthy landlord-tenant relationship with your renters.
It is highly likely that your tenants will be more understanding of a rent increase if you have already spent time and effort in building and maintaining a healthy landlord-tenant relationship.
How to Raise the Rent in Your Orlando Rental in 4 Steps
1. Identify Fair Reasons for Raising the Rent
You cannot randomly increase the rental price just because you are the landlord. You need to be able to justify the increase before you change the rental fee. The most common and obvious reason why landlords increase the amount of the rental fee is to make sure that their business remains profitable.
If the business’ cash flow is negative, the business cannot remain profitable. To help identify your cash flow, calculate your expenses and profit. The common expenses include Homeowners Association (HOA) fees, insurance premiums, cost-of-living expenses, and property taxes.
2. Identify the Rate of Increase in the Rental Fee
According to SmartMove, landlords have a greater tendency to increase the rental fees as the competition in rental housing increases.
However, you should also remember that not all rental markets are the same. To help you calculate the rental price of similar properties in the Orlando neighborhood, it is important that you conduct a comparative market analysis.
If you charge too much on the rental fees, your Orlando rental property may end up being too expensive for potential renters. Keeping your property vacant for a longer period. On the other hand, undercharging will equate to not generating enough income from your property.
Finding the right balance between remaining competitive, aiming for the highest possible rental income, and attracting the best tenants should be your goal. Experts suggest an annual rent increase of about 3% to 5% – depending on the state of the market.
3. Determine the Perfect Timing for Increasing the Rent
Oftentimes, the timing for increasing the rent is communicated by state law or by your rental or lease agreement. Regardless of the timing, you are required to provide the renter with a rent increase notice.
For a month-to-month lease, Orlando rental laws state that you are required to notify your renters at least 30 days prior to the increase. For a fixed lease, you are required to notify your renters at least 90 days ahead of time. Notifying your tenants ahead of the change give them a chance to make the necessary adjustments to their budgets.
4. Give Your Renters with a Written Notice of Rent Increase
In a form of written notice, you need to inform to your tenants of the change in rent. Make sure to clearly indicate all the specific arrangements that are being made. To prevent confusion, negotiation or altercations, ensure that you include all the basic information related to the rent increase.
Things that You Should Watch Out for When Raising the Rent
- It is illegal for you to increase the rental fees as a retaliatory tactic against a renter of your Orlando property. Based on most landlord retaliatory regulations, a landlord is not allowed to raise the rent, intimidate or evict a tenant who is exercising their rights.
Some of the examples of these Florida tenant rights include:
- Complaining to a government agency.
- Requesting for legally-mandated repairs.
- Creating a renter rights group within a multi-unit community to achieve change with management.
- Reporting violations of the building code in your Orlando rental property to the local regulating agencies.
If your tenant does any of the aforementioned acts, it is best for you to delay raising the rent shortly after it. Otherwise, many courts will automatically consider that your rent increase is an act of retaliation.
- It is illegal to increase the rental fees due to discrimination. Florida Federal Fair Housing Rules states that it is illegal to discriminate against a renter based on their gender, disability, familial status, national origin, religion, or race.
For example, you may be accused of discrimination if you increased the rent shortly after you became aware of the tenant’s sexual preferences. As another example, it may also be considered as an act of discrimination if you increase the rental fee shortly after you became aware that your tenant has a baby.
Receiving complaints after a rental increase may be expected. Nevertheless, tenants who are generally happy with living in your Orlando rental property have a lower tendency of complaining.
Nonetheless, you may do the following to handle complaints better when the situation calls for it:
- Point out specific reasons behind the increase in the rental fee. You may mention the increase in expenses such as insurance premiums, property taxes, cost-of-living expenses, and higher utility costs.
In addition to this, you may also mention the property improvements or new amenities that you added recently.
- Inform your renter about the market rate. If your new rental price is close to or below the average comparable price of rentals, there may be a lesser chance of receiving complaints from your renters. This is why it is important for you to conduct a comparative market analysis before you increase the rent price.
Increasing the rental price can upsetting. Nevertheless, if you have carried out the process in a fair and structured way, you can implement it with lesser issues. When raising the rental price on your Orlando rental property, hopefully, you will find this guide helpful.