These steps to fast and easy rent increases, are based on my experience in increasing rent every 12 months, annually for thousands of rental property, and receiving very little, if any tenant push back. If anything, I would be strengthening my relationship with tenants as we push through these moments and get closer as a result. How do I do this? With outmost respect to tenants, and explaining the process to them so it is clear and it makes sense.
I find a lot of landlords are leaving thousands of dollars on the table due to fear that their tenant will vacate. On the other side of that, thousands of tenants complain that their landlords don’t do enough maintenance. Regular rent increases help landlords maintain their rental property, which then improves the standard of living for tenants and their families.
Here are the 10 steps I take to put rent increases in place, and manage them once they have taken effect.
1. Maintain the property well. If your property is well maintained, your tenants will not want to leave. If they do decide to leave, then your rental property will look great and it will attract good tenants fast! - It’s a good feeling to know that you don’t have to worry about existing tenants moving out.
2. Hire a photographer to take good photos of your property when it’s vacant. Or invest in a camera, a wide angle lense, and learn about property photography. Having good marketing photos readily available saves time and speeds up the process if tenants decide to vacate.
3. Set the expectation with tenants at the start of the tenancy that rent will be reviewed annually. A little diplomacy here will go a long way. For example, explaining to the tenants that rent will only go up by about $10 or $20 per week is to be expected. Also they will get 60 days notice so they have time to plan.
4. Regular smaller increases are easier for tenants to manage. Rather then larger rent increases done at random time intervals. Anything unexpected puts people on high alert which will trigger a fight or flight mode.
5. Be predictable with rent increases. If the tenants moved in in February. Then do your rent reviews every February. Tenants will expect it, plan for it, and they wont make a big deal about it when it is time.
6. Serving the rent increase notice needs to be done gracefully. Calling the tenants personally to say hello and giving them a heads up that the rent increase is due in 60 days will strengthen your connection with the tenants.
7. Show current market trends. Some evidence of the current market rent in their area for similar houses will help if they question the increase. In most cases a $10 or $20 rent increase per year will not keep up with the market in Auckland. If your increase is slightly below current market levels, evidence of this will certainly help with any push back.
8. Set yourself a reminder. Rent increases in New Zealand take 60 days to take effect. Tenants will often forget the date and slip into arrears by the rent increase amount after it is due, until they are reminded. So a friendly reminder to the tenants will ensure the rent increase takes effect on time, and saves them the embarrassment of being in rent arrears.
9. Be intentional with the date of the increase. I set the date of the rent increase to match the day the tenants usually pay rent, and the day the tenancy started. This way it’s a simple matter of increasing their regular automatic payment to take effect on their usual payment day. Nothing unexpected here, and no reason for push back.
10. Be kind. Personally, I never increase rent in December or January. Tenants are already highly committed in December leading up to the holidays. In January tenants will be away, or not working and may need time to financially recover after December.
This is my process for easy and fast rent increases. It has taken a lot of experience and time to get good at managing rent increases. But you can get into it straight away with this cheat sheet!