One of the best ways to earn more money on your investment and create better stability is by retaining tenants. Tenant retention is crucial for the success of your rental property investments, and it’s something every landlord should be working towards as soon as a tenant moves into your property. Avoiding vacancy and turnover costs will do wonders for your bottom line.
However, rental increases are an important and necessary part of renting out a home. You need to increase your rent every year in order to keep up with your own expenses and to raise the value and potential of your investment property.
Finding the right balance between keeping good tenants happy and raising rent to meet your investment goals can be a challenge. As the demand for rental properties in Murrieta continues to rise, landlords need to ensure that they are maximizing their investment while maintaining tenant satisfaction.
We strike this balance all the time, as professional Murrieta property managers. So today, we’re discussing some strategies and sharing some tips on how landlords can find the right balance between tenant retention and raising rent. Whether you’re a seasoned real estate investor or just starting out, we can help make sure you’re earning what you should be with your property while holding onto your best residents.
Determine Your Property’s Market Value
The first step in finding the balance between tenant retention and raising rent is to understand your property’s market value, especially as renewal time approaches. You can start by conducting some research online within the market to evaluate where rental prices are landing in Murrieta. Check out websites where you’ll find listings that show you the current rental rates in your area. Compare those rates to what you’re currently charging and see if your rental prices are competitive. If they’re on the lower side, you can consider raising the rent. However, be mindful of how much you raise the rent, as an excessive increase could result in tenant turnover.
Talking to a property manager will lead you to even better data. We are constantly monitoring the market so we know where rental values should land. You can leverage our insights, analytics, and understanding of the competing properties and what tenants are willing to spend. We consider the local economic indicators as well, including local employment rates, inflation, and whether salaries are rising and falling.
Negotiating Lease Renewals and Offering Incentives
Most tenants in Murrieta will expect that their rent will go up when it’s time to renew the lease agreement. As long as they’re having an excellent rental experience and they feel like the increase is aligned with the local rental market, they’ll likely be comfortable paying it.
There may be counter-demands from them, and you should consider hearing them out.
Are they asking for fresh paint on a living room wall that is especially marked up with fingerprints? This is a great way to keep your tenants satisfied and to preserve the condition and value of your investment. Maybe their refrigerator has needed repairs twice in the last year, and they’d like a new one. Consider the upgrade. These things will make a rental increase easier to take.
Improve Your Murrieta Rental Property
Investing in property upgrades is essential if you want to continue earning more on your rental property.
Those upgrades and renovations are also an excellent way to justify a rental increase when you’re renewing the lease agreement with your tenants. Fresh exterior paint, for example, will improve your curb appeal dramatically. Hiring a landscaping service will help your tenants feel good about the home they’re living in. When you rip up the carpet in the living room and install hard surface flooring, your tenants will be eager to renew their lease agreements, even if it comes with a higher rent.
Focus on making necessary repairs and upgrades, such as painting walls, updating appliances, and updating lighting fixtures. By providing tenants with a property that’s not only well-maintained but also desirable and modern, you can easily feel good about the increase in rent.
Communicate with Tenants before Raising the Rent
Communication is crucial when it comes to raising rent and retaining tenants in Murrieta. Make sure to give tenants sufficient notice before raising the rent, at least 60 days, which is required by California law. Explain why you’re raising the rent while emphasizing the benefits tenants will receive, such as property upgrades. Not moving is often an incentive enough, but you want to make sure that your residents notice that you aren’t raising the rent too high, and that you’ve done the required research to set the rent at a competitive rate. Tenants will appreciate and respect open communication, which you can leverage to maintain long-lasting relationships with them.
Showing your tenants that you appreciate them can be a significant factor in retaining them. You can send them a thank-you note, provide a gift card to the local coffee shop, or do something special that will make them understand how much you value having them in your rental home. Regular appreciation will help build trust with your tenants and leave a lasting impression that will encourage them to continue renting from you.
One final point: always make sure you’re following any local or statewide rent control laws when you raise the rent. Your lease agreement must stipulate whether your property is subject to rent stabilization laws or exempt from them. If you are covered by those laws, there are limits to the amount that you can raise the rent.
Finding the balance between tenant retention and raising rent is critical to the success of rental property investments in Murrieta, CA. By following the tips and strategies we have discussed here, you can effectively manage your rental property while keeping your tenants satisfied.
Remember to stay competitive with your rental prices, offer incentives to keep your tenants happy, continue to improve your property, communicate with tenants, and show your tenants appreciation. When done right, achieving the right balance between tenant retention and raising rent can result in profitable and long-term investment returns.
Need some help navigating this? Please contact us at Diamond Property Management, and we’d be happy to help.
