(Newswire.net — September 18, 2018) — A major concern for any business owner is how to increase profits. For a landlord, one straightforward way to do this is through raising rental prices. But increasing prices is not always easy, and often comes with the risk of potentially losing renters. It’s tricky to decide on a good time to increase prices, and if raising them will benefit both the landlord and renter. To ensure you know what you are doing, here are three signs it’s time to raise your rental prices.
When tenant responses are positive
Getting feedback from potential tenants is an efficient way to gauge whether you should raise prices or not. When showing a property to a potential tenant, evaluate how they react. Make conversation with them. It’s a great sign if tenants think highly of a place and are more than willing to make a commitment to it. If the tenant says anything which implies the value is higher than they expected, then you can likely raise rental prices without any worries.
Also consider the status of potential and existing tenants. If a tenant is in good standing and can keep up with the value of a property, including upgrades, then raising rental prices shouldn’t be a problem. It’s always a good idea to run a tenant credit check to make sure potential tenants are in the right market and can afford a higher rent.
When neighboring properties are raising their rents
Always keep on eye on the market and the competition. Following the market keeps you updated with current changes so that you can develop your business accordingly. It also keeps you informed on how the business looks for your competition. If neighboring properties raise their rent, then it’s a good idea to look into the reasons why and potentially raise yours as well. However, don’t just copy their actions. First make sure the properties are comparable to yours, as it’s possible their motives for changing prices may not apply to your own property.
When other properties raise rent, they’re factoring in any recent enhancements to the neighborhood. These include new businesses growing in the area such as grocery stores and cafes, or new services offered in the area such as libraries and community centres, or even upgrades in local transportation like new bike trails or bus routes.
When you’ve improved your amenities
Having renovations done on your property, or expanding amenities and services provided, raises the value of a property and it’s just good judgment to make the rent prices follow suit. Keep in mind the costs of these amenities and services to measure how much you should raise rent. Reinstalling a bathroom, or upgrading kitchen flooring and appliances are costly improvements, and should be included in the raise. If the amenities are things like a pool or a gym, then you should include the cost of operation as well. Also consider how these amenities will attract potential tenants. Keep up to date with what sells best on the market, and what tenants are looking for in a property.
Raising rental prices can be a tricky situation, especially since it brings about the prospect of possibly losing clients. It may not be easy, but it is a necessity when you want your business to grow. Being alert and knowing when it’s the right time to raise prices will help you through this challenging process.