When a lease comes up for renewal raising the rent can sometimes be a difficult subject to broach with tenants in Park City property management. If you are wondering what your property should rent for you can check out an earlier post I have on that subject titled "What Should My Rent Be In Park City Property Management?". If you have already established a market rent but during the term of the current lease the market has changed you may want to increase the rent. Right now in Park City property values are climbing back up. This also results in an increase in rental rates. As the properties I manage are coming available I am increasing rates, either with renewals or vacant units. So here are some tips for approaching a tenant about raising the rent.
- Make the increase reasonable: This number should be a reflection of the rental rate. A $200/month increase might be completely reasonable for a single family home but not for a studio. Do your research on what similar vacant units are renting for and try to match that rate. If it ends up being a significant increase you may want to scale back. The goal is to keep the tenant while pricing the property for the market, not raise rent to unreasonable levels.
- Let The Tenant Know You Want Them To Stay: Some people may interpret the increase in rent as a desire to have them leave. You should be careful as a landlord to avoid being accused of retaliation by a tenant in Park City property management. Make it clear to them you want them to stay and that the increase is no punitive or designed to force them out. If they are resistant it may also be useful to explain all the costs of money, time and effort that go into moving. Some tenants may have a gut reaction without actually thinking through what moving will require. Things like deposits and first month's rent, moving trucks, etc. are just some of the costs of moving.
- Explain The Reason For The Increase: In general as a property ages it will require more money to maintain. Property taxes also typically go up. If you are paying any utilities or HOA fees these also tend to go up. Other outside factors can also warrant an increase in rent such as increasing property values, new property or business development in the area, etc. Explain your reasons behind the increase to your tenants so they will hopefully understand where you are coming from. Long term tenants are valuable for long term rentals in Park City.
As a landlord you need to balance your goal of maximizing revenue through rental rate increase with the potential costs associated with vacancy. Talk this through with your tenants and be willing to work out an amicable compromise.
If you would like more information or tips increasing rental rates., or further information about Park City property management in general click the link below for a free consultation. You will receive valuable information specific to your property that will help you make an informed decision. You will also receive a free, no-obligation quote on our property management services. At CC Realty we specialize in making investment property ownership a trouble free experience. Please contact us today for your free consultation.
The central question in any type of Park City property management can really be boiled down to one thing: How much is the rent? This is a simple question but the answer should not be arrived at simply. I have partially addressed this topic before in my post "4 Tips On Market Rent For Park City Property Management". To bring up my favorite point from that post what ultimately determines the value of a property is a willing buyer (or in this case tenant) and a willing seller (or in this case landlord). But there are a lot of factors that both tenants and landlords should be aware of that combine to influence the rental rate of any given property. So here are a few of the more common ones I utilize in setting a rental rate.
- Availability: This one is fairly obvious to most people. If there are a lot of long term rentals in Park City available then generally speaking rental rates will decrease. If there is limited availability then rates will generally increase. This does not mean you can charge whatever you want if you are the only property available, there are limits to what a person is willing to pay for any particular property. Check your local paper and craigslist to find out how many comparable properties are available in your area.
- Location: Location location location, the realtors mantra! This is also true when it comes to Park City property management. An average condo located at Kimball Junction is going to rent for significantly less than a ski-in/ski-out condo in upper Deer Valley, even if other factors like square footage, interior finishes, etc. are comparable. Certain locations are inherently more desirable, even within a particular community or development. Find and emphasize the value of your property location.
- Amenities: Most people are willing to pay more for certain amenities or upgrades. New appliances, carpet or flooring, granite counters, etc. are just some interior amenities that are attractive to potential renters. Community amenities like a pool or hot tub, gym, accessibility to freeways or bus routes, etc. are some external amenities that build value in a property. Take a good look at the amenities of your property in relationship to Park City property management and price accordingly.
- Expenses: I hesitate to list this as a contributing factor because the reality is it doesn't really work both ways. Every rental property carries with it certain expenses. A mortgage, insurance, taxes, association dues or fees, maintenance, advertising, etc. For some these fees may equal more than the current monthly rent. Does this mean you can just raise your rent to cover your expenses? Not if other factors determining the rental rate have driven the price down. However if your expenses are below your rental income this can allow you some flexibility in reducing the rate to either retain good tenants or decrease vacancy.
This list are what I consider to be some of the major factors that influence rental rates. Do you think I have missed any? Please leave a comment about factors you have encountered that have influenced your rental rates, either positively or negatively.
If you would like more information or tips on good practices, or further information about Park City property management in general click the link below for a free consultation. You will receive valuable information specific to your property that will help you make an informed decision. You will also receive a free, no-obligation quote on our property management services. At CC Realty we specialize in making investment property ownership a trouble free experience. Please contact us today for your free consultation.
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