When you have a portfolio of investment properties, staying on top of the rental market activity associated with each of their locations can be a herculean task. If you want to ensure that each of your investments are yielding the maximum returns possible, you’ll need to remain in close communication with your property manager to absorb market trends.
Part of knowing when it’s time to raise the rent is being aware of the wider property market’s activity in both sales and leasing categories. As the weekly rental return of properties similar to your own begins to increase, you may have the opportunity to command a higher yield, too. Be aware of the ebb and flow of local demand and supply, however: you don’t want to raise your rent at the wrong time, as you may become vulnerable to the risk of an empty property and the knock-oncosts that follow. Changes in the wider economy – affecting either landlords or tenants – can also alter the likelihood of achieving an increase in your rental income. Work closely with your property manager to decide when the time’s right for a rental increase.
Establishing when to increase the rent is one matter – the next issue is how. If you increase the rent when a tenant vacates, it can be a relatively simple matter. With your property manager’s help, compare how your ‘rent per week’ compares with other similar properties before advertising a new rate. If you have good tenants already living in-situ, rental increases must be sensitively dealt with and require a thorough understanding of local legislation relating to notice periods and what you may and may not request. One way to make an increase in rent easier is to maintain a good working relationship with your tenants from the beginning of their lease. Mutual respect and listening to one another’s concerns as expressed by your property manager will certainly increase the likelihood of a successful negotiation.
Deciding whether or not it’s appropriate to increase your weekly rent can feel like a conundrum. You need to find a happy balance between yielding the maximum profit from your investments and that’s in the best interest of your property and your ongoing income. Good tenants are hard to find – and if you want to keep them, be wary of hefty rent increases; you don’t want to drive them away. That said, you don’t want to be lagging behind inflation and fluctuating mortgage rates either.
Your property manager is always on hand to discuss these complex issues, and their wealth of experience will come in handy when deciding the best path to take.