Property Management Blog

Raising the Tenants Rent – Good or Bad Idea?

Wednesday, December 18, 2013
Atlanta Property Management Blog

As a property manager who manages hundreds of home in the metro Atlanta area, I get the question about raising rental rates with existing tenants quite a bit. So I wanted to explore this further in an effort to showcase both side of the equation and let you decide what you feel is best for you.

Most owners don’t fully comprehend the tenant mindset. They think that if they raise the rate by $25.00, there is no way a tenant will incur the inconvenience of moving for such a small amount, but history proves otherwise.

While it may not make sense to an owner that a tenant would incur the additional moving expenses, utility deposits, & time for a mere $25.00 a month. We have found that tenants don’t think about those expenses. They only think about the monthly payment. In addition, there are generally other owners who are willing to help off-set those costs with a move in special to help a tenant move into their home understanding that for them, vacancy is the biggest cost to an owner.

We have had owners who have insisted on a small rent increase (against our recommendation) and ended up with a vacancy, turnkey expenses to get the home into rent ready condition, tenant procurement costs, utility costs, and in 1 case, ended up renting the home for even less money than they had it rented for before. So it is not the owner who benefited from this, but me the property management company.

While I am all about making a fair profit for my services, I work very hard to help my owners make good business decisions and in most cases, raising the rent for a good paying existing tenant is not the answer. The $300.00 per year gain is wiped out as soon as the tenant elects to move. So why do owners insist of raising rents? I am not sure. Of course we have a duty to abide by the owner’s wishes, but I certainly want them to be fully aware of the consequences of their decisions. So what do you think – should an owner raise the rent or not?

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