How Can You Raise the Rent for Your Waikoloa Village Property and Still Keep Your Tenants?
14 November 2019
Hawaiian Dream Properties
If you're a new Hawaii landlord, you have a lot of decisions to make. Should you rent your property long-term or use it as a vacation rental so you can come or go? How much rent can you charge? How much rent should you charge?
The right rental price can be a tricky thing to find:
When the rent is too high, you might struggle to keep tenants long-term (and tenant turnover is expensive).
When the rent is too low, you lose money because you're not generating enough income to offset expenses.
How do you find the right rental price? If it's too low and you're losing money, how do you raise the rent without sending your tenants packing?
If you handle it like a pro, you can raise the rent on your Waikoloa Village rental property appropriately to help improve your income and retain tenants. Let's look at how landlords can successfully pull off this maneuver and keep growing their long-term wealth!
Low Rent = Low Profits
Landlords occasionally set a low rental price to attract tenants to the property when they are nervous about finding a tenant right away. It can be a desperate measure to fill a vacancy—or it can be an honest mistake without knowing what your property is genuinely worth.
When the monthly rent is lower than similar properties in Waikoloa, it will catch the attention of plenty of applicants! However, if you aren't charging enough for your monthly rent, you're losing income.
You don't want your rental property to break even or lose money. You bought your Waikoloa rental property to add to your long-term wealth. Chances are, it's part of your retirement plan! When you lose money on your investment, you delay your income and your timeline to retire.
How Do You Raise The Rent?
You've determined you're losing money and the rental price is lower than it needs to be. How do you raise the rent without losing a tenant?
If you're providing an excellent property and service to your tenant, you'll have happy tenants who stay in your property longer than one lease term. Lease renewal is an ideal time to apply a rental rate increase, but be sure you don't do it the wrong way.
DON'T Do It This Way
Most tenants expect rent increases when it's time to sign another lease. However, it's critical to handle it in a way that maintains a good landlord-tenant relationship. You'll increase your income while keeping an excellent tenant.
Don't raise it too much. Most tenants can tolerate incremental increases in the rental price when it's time to renew the lease. If you decide you want to make an extra $500 a month, you'll lose a tenant (and income) while you find a tenant who might pay that price. Work with a Waikoloa property manager to set a market increase.
Don't ignore what's allowed in the lease. The lease agreement binds both you and your tenant. Most leases last for a one-year term, and they should outline when rent increases can occur. If you suddenly raise the rent at a time that ignores what's noted in the lease, you might end up in a lawsuit for violating the terms of the agreement.
Don't forget to let them know. A rental rate increase should never be a surprise to your tenants. Give them plenty of notice about the new monthly rent and when it will take effect.
Knowing what not to do helps guide you to the best way to increase the rent successfully.
Provide excellent customer service and a wonderful place for your tenants to live—from the start. The best way to justify rate increase is to convince your tenants they're already at home. How you manage your property and your tenant relationships goes a long way to help support an incremental increase in the rent.
Let them know 90 days in advance. Start communicating with your tenants about the rent increase well in advance of a lease renewal date. This lead time gives tenants time to plan for the increase. Make sure you put the notice in writing and send reminders so your tenants understand the change in the rate.
Never apply a large increase. Make it easy for your tenants to say "yes!" to renewing the lease. Keep your rent increases in line with other rental properties in the area.
Your best tenants will appreciate a thoughtful approach to raising the rent when it's necessary!
Let the Experts Handle the Rent!
Raising the rent can cause stress for landlords. The fear of losing tenants can keep you from charging enough for your Waikoloa Village rental property, but losing money hurts your long-term financial goals.
Hawaiian Dream Properties can be your messenger when it's time to raise the rent. We understand the appropriate rental price for your property, and we're experts at raising the rent in a way that retains your tenants. We also provide the best property management on your behalf, so your tenants feel at home and are ready to renew the lease at the end of the term.
If you need to raise the rent, let's start with a FREE Rental Analysis to determine the best price!