Rent increase is a controversial subject that no landlord can avoid. Whether you are a new landlord or a veteran, deciding the amount to charge for rent is truly a skill. And this skill has the power to make or break the success of your deal or investment. But you have to maintain the profit and tenant satisfaction simultaneously to accomplish your goal of profitability. Rent calculators can help you find the sweet spot between the two.
So, how can you balance profit and tenant satisfaction with rent calculators?
First, let’s understand why landlords increase rent.
There could be multiple reasons for which landlords can increase rent. All of them play a significant role in maintaining profitability. With the increase in expenses, landlords and property owners need to look for ways to offset such factors, keeping up with a healthy cash flow. Generally, the landlords increase the rental rate when one lease ends and the next one begins. Here are the common reasons for increasing the rent by landlords –
- To be at par with market rent rates
- Increase profitability
- Offset maintenance costs
- Due to increased rates of insurance premiums
- Mitigate the amount of increase in taxes.
How does rental amount affect profitability?
The financial success of your rental property depends on your income plus occupancy rates. Sometimes, you even have to consider the option of taking rental loans to maintain a healthy cash flow but don’t want to research all the formalities and requirements for the same. There are multiple software that can help you find top lenders to match you with the best rental property loans. You just need to apply online for such softwares, and then the concerned person will call you and ask you for the details.
Furthermore, you may think of deciding the high rental price as it can result in more revenue. But, this can also result in prolonged vacancy periods, indicating no income during these times. So, you need to find the right equilibrium between setting a high rent rate and till the time you secure a tenant. The higher rent might prove to be the factor of giving more returns, but extended vacancy can potentially offset such gains.
If you set a slightly lower rent rate, it has the power to accelerate the process of occupancy. No wonder that the rent amount of each month could be slightly less as compared to the premium rate, but consistency in receiving rental income can turn out to be fruitful for your revenue over time.
Importance of a rent calculator
A rent calculator is an extremely useful tool for landlords to accurately determine the rates to charge for rent. It takes factors like location, amenities, market demand, and size into account to simplify the pricing process. These factors ensure that landlords are on the same page as the prevailing market conditions and stay ahead of their competitors.
Rent calculators are like a boon for the current real estate industry. Before they came into existence, landlords had to follow the traditional way of setting rental prices – researching and relying on personal judgment. But rent calculators have transformed the process.
Working towards tenant satisfaction: Why Should Landlords Use Rent Calculator?
Nowadays, using a rent calculator can turn things around for making informed decisions about the tenants. You can earn a stable rental income as a result. Let’s learn in more detail why landlords must use this invaluable tool.
Ensuring affordable rents for tenants
Screening the right tenants is very important if you want to reap better returns and better professional relationships with your tenants in the future. While screening them, verify their employment and rental history. You can ask them for references from previous landlords when you set up the rent amount. Then, take out your rent calculator and decide the amount. Give them flexible payment options.
Avoiding financial risks
Bid adieu to the times of abacus and welcome the rent calculator for accurate rent calculations. You can say goodbye to the financial risks of your rental income. The benefits of using a rent calculator include reducing the number of vacancies, retaining tenants, and a streamlined flow of finances. So, without waiting anymore, make the first move in using rent calculators right away.
Notifying tenants of rental increase
Many states have laws stating that landlords should inform tenants of rental increases with a prior notice in writing. Having said that, the amount or percentage of increase determines the time of notice period. It is generally believed that if a landlord is increasing the rent by less than 10%, giving a notice of 30 days is advisable. However, the requirements vary from state to state.
Check the landlord-tenant laws at your place and ensure you adhere to them. Some laws that you must take into account are – rent-controlled housing regulations, limitations on the frequency of increases, and maximum increase amounts.
Use a well-written and clear notice to reduce any conflict with the tenants. Also, include the terms and conditions for late fee policies in the agreement. The agreement must have the full address of the property, the date on which the notice is written, the current rental rate, the percentage increase, the date from which the new rental rate will be effective, and the contact information of the landlord for any query.
It is also ideal to quote the reasons for this increase. Very few landlords do this, but writing the necessary reasons increases the chances of them agreeing with your contract and understanding your situation.
Rent increases don’t have to be tough all the time. Do your research, use a rent calculator, and be on the same page as your tenant to attract success.