Increasing rent in Palm Beach can be tricky for landlords to navigate, especially when your tenants have been nothing short of perfect. Sometimes, though, external factors come into play that make it impossible to maintain the current rental rate without losing your own necessary income as a landlord. As the Palm Beach market becomes more competitive or as tax rates increase, you’ll need to keep up and adjust your prices accordingly.
Approaching the topic of raising rent is delicate, and you don’t want to upset happy residents who are planning to renew. At Home Beach Property Management, we strive to provide as much information as possible for homeowners and tenants so that everyone is on the same page. Below are a few things to consider before jacking up the price, along with a quick guide on how to communicate the increase in rent to your tenants.
Are You Allowed to Increase Rent?
Before you even consider raising rent, make sure that you are allowed to do so. You don’t want to violate any of the following:
- The terms set in the lease
- Fair Housing in Florida (read our Fair Housing Pledge here)
- Rent control laws in your area
The three items listed above are just a start; consider any other obligations you have as a homeowner in your neighborhood. If you are well within reason to increase rent, typically towards the end of a lease, you’ll need to take a few more steps before simply raising the rates. First, you’ll need to perform an analysis to determine how much is fair to charge, then you’ll need to communicate openly with any current tenants.
How Much do You Need to Increase Rent?
There may be several reasons why you’re planning to raise the rent. Some common factors include:
- Renovation costs
- Market changes
- Insurance premiums
If you have gone over the numbers and realized that your income isn’t high enough or that you’re on the verge of losing money, add up all of your costs, both internal (maintenance) and external (HOA fees). From there, figure out how much rent you’ll need to charge in order to turn a good profit. If you want to keep your current tenants, don’t get too greedy and make sure that the rent matches the rest of the Pal Beach neighborhood.
That being said, owning a property is a lot of work. Don’t sell yourself short just to please other people but think like a business owner and charge what is best for both you and your tenants. If you need help calculating your profits or managing any aspect of the rental process, make sure to check out our services as a Palm Beach Property Manager.
How to Raise Rent
Once you have decided that you’re going to increase rent, you’ll need to implement it in a way that is fair to both you and your tenants. The following three steps are crucial when it comes to increasing rent in Palm Beach.
Document the Rent Increase
While you don’t need to give tenants all of the details that went into your cost analysis, you should keep documentation for yourself. Write down everything you are considering and how it is in accordance with the law.
After that, boil down the necessary details you need to communicate to tenants – including how much rent is going up, when the rate will change, and how it affects their payments. Include anything else that feels necessary depending on the situation (like if the neighborhood gets a Homeowner’s Association that shakes up the status quo). Not sure where to start? Try this template, but make sure to include everything that pertains to your Palm Beach property.
Provide Ample Notice to Tenants
Once you have the rental details properly documented, send the information to tenants with plenty of notice. Just as you require a certain amount of time for a tenant to let you know they aren’t renewing, 60 days’ notice before your resident’s lease ends is a typical timeframe for you to alert them to any changes. if they want to renew, they’ll need to know in advance that the price is changing in order to prepare financially.
Consider Incremental Changes
If you have a Palm Beach property with tenants who are in it for the long haul, like a family who intends to live there awhile, consider raising rent only a small amount every 6 months to a year. You need to think of it as a long-term investment; sure, you may be fine profit-wise now, but will you still be fine three years down the road? If not, don’t panic and raise it all at once. Consider how much you need to make each year in order to keep up.
Raising the rent incrementally may help your tenants as opposed to a shockingly high increase all at once. After all, they are likely paying your current price because it is what they can afford. If you know them well, consider if they have a job where they get periodic raises, or if they are going through hard times, or if you are currently giving them a great deal. Factor all of that into your decision on how helpful it is to raise rent slowly versus all at once to make your own ends meet.
Need Help with Increasing Rent in Palm Beach?
If you’re in a position where your Palm Beach rental property doesn’t experience high turnover and has great tenants, increasing rent may seem stressful. Remember that you are in a good position if this is the case, and it’s up to you what to charge. If you’re at a point where increasing rent is necessary for your own monetary goals, follow these steps and do your due diligence to make sure it is all legal, ethical, and best for the business.
If you need help managing your rentals or increasing rent in Palm Beach, contact us today. We can help you throughout the entire process to keep your tenants happy and your renewal rate high.