Successful landlords are the ones who are able to get positive cash flow each and every month. There are only two ways to do this: 1) increase income and/or 2) decrease expenses.  It is possible to increase rents each and every year without loosing your current tenants. If you understand these three events, you will be able to raise your rents without loosing your existing tenants.

Market Cycles

Good property managers realize that the real estate market moves in cycles.  During increasing cycles it is possible to raise your rents every year without loosing your tenants because they will be paying more to move to your competitor’s property. When you get to the point that you start to loose tenants when increasing rents, it is a barometer that the market cycle is starting to change and will soon enter a declining phase. You should never increase rents during a declining cycle. Successful property managers understand the current market cycle and can take advantage to increase rents when possible.

Property Maintenance

The number one reason that tenants move out of a rental property is because the current landlord fails to handle maintenance requests. If you purchase a property with extensive deferred maintenance, you can reasonably increase rents with the existing tenants after completing these maintenance requests. The tenants will be ecstatic the repairs have been done and will be more than willing to pay higher rents.

Ask Prospective Tenants

Several months before your current tenant’s lease expires, start advertising for the property. Your advertising should be for slightly more than the new rent you will be presenting to your existing tenant. If the current rent is $1,000, advertise for $1,030 even if you plan to raise the existing rent to only $1,010. As you get calls from prospective tenants, ask them if this price is competitive. If you get many that balk at the price ask them if they would be willing to pay $1,010. If many of the calls you get are willing to pay $1,030 then you have leverage when presenting the existing tenant with the increased rent. Even if they move out you know you can get a new tenant at the much higher $1,030 rate. Either way is a win-win for the landlord.

Follow these three strategies to be able to increase your rents every year without loosing your existing tenants.