We all know the value of a good tenant. They look after our valuable property assets and help us reach our financial goals by paying their rent on time.
But here’s where some investors come unstuck… They show appreciation for their tenants by not passing on any rent increases.
In my view, this doesn’t make good business sense. I believe that if you increase the rent on your properties regularly and keep it just below or at market value, then your tenant will not move.
They might move for other reasons, but it won’t be because you put up the rent, as an increase of $5 or $10 will not break the bank for your tenant, whereas the cost of moving might.
To really grow your wealth, you will need to increase your rental returns regularly. A $20 per week increase translates to $1,000 over 12 months, which can have a big impact on your bottom line.
If it’s been too long between rental increases on your investment property, consider the following advice:
1. Check current rates
Browse the rental property market for similar properties in the area and consider where your property sits. Be sure to compare apples with apples by comparing properties that have similar features and benefits and take note of the asking rents.
2. Confirm vacancy rates
Vacancy rates are important to know because they tell you whether properties in your area are in demand or oversupplied. As a guide, a vacancy of less than 3% is generally considered a “tight” rental market and above 3% is considered “oversupplied”.
3. Chat with your property manager
After performing your own due diligence it’s time to discuss your options with your property manager. They can provide on the ground advice about the current rate of enquiry and demand for your type of property.
4. Show appreciation
Keeping your tenant happy and comfortable is the best way to ensure they won’t move on. Maintain the property in good condition and respond promptly to repairs to ensure that your tenants appreciate the property and treat it as if it is their own. You can also send a card and a bottle of wine at Christmas as a small token of your appreciation.
I hope this helps you in boosting your rental income.
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