Telling your Tampa tenants that you are raising rent is undoubtedly among the most stressful moments of the rental property journey.
Be that as it may, even if the price of rent does go up, not all of the rent changes have to be dreadful. You just need to have a good plan!
In this article, we’ll cover everything you need to know about raising the rent on your Tampa rental property. From the reasons why an increase in rent may be necessary to how to handle backlash and everything in between.
Important Reasons for Raising the Rent
A landlord can raise rent for a variety of reasons. The most common ones include:
- Property upgrades
When you make improvements, raising the price of rent to reflect this added value becomes a no-brainer. Whether you are putting in a new heating, ventilation, and air conditioning (HVAC) unit, landscaping the exterior, or replacing the tiles or carpets, re-doing the bathroom or kitchen, changes that add to the property’s appeal cost money.
- A rising local economy
If the local economy is rising, raising the rent to keep up with increasing housing prices makes financial sense.
- New employers
When a large company moves into an area, it usually creates jobs and leads to increased incomes. These and other factors help raise housing prices and, accordingly, rental rates.
- Neighborhood enhancement
As neighborhoods improve and change, your rent should follow suit. Features to consider include:
– Upgrades in public transportation or new parks, green spaces, running paths, and new bike trails.
– New services, such as post offices and libraries.
– New businesses, such as coffee shops, eateries, and grocery stores.
- The market supports it
If rents around you are all rising, the market is trying to tell you to follow suit as well.
- Your regular expenses have gone up
If your regular monthly expenses have gone up, you definitely need to raise the rent. Examples of such expenses include property management fees, homeowner’s association (HOA) dues, insurance, property taxes, or even the mortgage payment (if you have variable interest rate).
Considering these, how much should you raise the rent by?
Determining the New Rent Amount
It’s a good idea to become familiar with Florida’s rental laws before the rent increase. Firstly, as a Tampa landlord, you have a legal right to ask whatever price you want for your rental property.
Ideally, you should aim for the highest possible return on investment (ROI). But, you should also be wary not to limit the number of potential renters. Some factors to consider include:
1. Your costs and expected return
While you should do this even before you purchase the property, it’s worthwhile going over it once in a while. By doing this, you’ll be able to determine whether or not your investment is worth it. If you notice you aren’t getting the return you want, consider raising the rent on your Tampa, FL real estate.
2. Comparable rents
Let the free market be your guide. Get a rent estimate from Cozy.com or search online marketplaces like Trulia and Zillow to find similar properties for rent.
3. Leave room for negotiation
When you understand your finances and know your comparable rents, put a number out there and see how the market responds to it. Start high so that you have enough room for negotiation.
Rent Increase Notices
Most states require landlords to provide official notices of rent increases to their renters. Florida has relatively flexible rent increase laws compared to other states. Landlords can raise rent with minimal notice since no city in Florida has rent control policies.
Generally speaking, you can raise the rent on your Tampa rental property on a lease of one year or more until the lease is up. That said, some tenancy agreements contain provisions that allow rent increases during the rental period.
When communicating the increase, make sure it’s professional and concise. This will go a long way towards reducing conflict with your tenants over a rent increase. When providing the notice, ensure you:
- Convey the news as succinctly as possible
This ensures there is no room for argument.
- Cover all the necessary information
Don’t leave room for confusion over the increase.
Unlawful Rent Increase Practices
- Unfavorable military discharge
- Physical, mental or perceived handicaps
- Sex or sexual orientation
- Age, marital status or familial status
- Race, religion, color, ancestry or national origin
Raising rents can oftentimes bring about negative feedback from your rentes. That’s why it pays to have a legitimate justification prior to raising the rent. Consider the following questions:
- Are you doing any property updates?
- Are you offering new amenities?
- Are you matching market prices?
If you aren’t doing any of those, it’s likely that you’ll face a backlash from your renters. But, if they feel they will be getting more value, then they will likely be more responsive to the increase.
At worst case, they may not renew the lease. If this were to happen you would need to calculate your costs for marketing the property and the loss of rent while the property is vacant. Determine if the increased rent justifies finding a new tenant or keeping the previous rental price.
Increasing the monthly rent on your rental properties is something you will inevitably experience with Tampa real estate. While things can go wrong, with this guide, you can be sure to get through with much ease.