How To Increase Rents AND Keep Residents Happy | |Real Estate | REIal Talk Podcast | EP. 79

Hi guys. Welcome back to another episode on Real Talk. This is episode 79 and today we are talking about renewing leases with a rental increase and how to keep your residents happy. So if you watched the vlog last week, we touched a little bit on how often to renew your leases. Usually it's every year. And then how to increase your rents, usually around 3 to 5% and how to go about doing that. In Ohio, the law states you have 30, you need to send them a 30 day notice of a rental increase. But we at Dependence Property Management, we give them 60 days. That way they have plenty of time to try to figure out if they would like to renew their lease or if they want to move on to their next endow endowment endeavor. Thank you. Sounded right in my head, but I was like, wait a second. So today we're going to kind of dive deeper into that. You know, if a resident asks, you know, why is my rent increasing? You know, what you can say and things like that and then other ways to keep them happy. So the first one is, you know, if they ask, why is my rent increasing? Kat or Erica, do you want to touch anything on that?

Yeah. So for, if they ask us, why is there rent increasing? Actually it's stated on the release that there is a, an increase, minimally increase every year if they renew their lease. So sometimes they just forget to read their lease and then we'll just have to explain to them that we'll just have to come up or with, with, with market rent. We have to have the rent be fair enough with the market around the area. And then also if there are some upgrades that has been done on the property. So like there are owners that are willing to. Correct me if I'm wrong, Erica, if there, there are owners that would like to make new floors for the property.

Or paint new walls or something like that.

Yeah. A lot of the times the owners have like the capital expenses that they are planning for, you know, upgrades like windows and flooring and things like that. Very kind of already budgeted out. So if they are asking for like a really, like a larger than usual increase, I'm. They're usually very open to, you know, making the property even better.

Yeah. And that's definitely kind of like an incentive too for them because you know, they're living there. Of course. I mean, who wouldn't like to have new flooring or fresh paint or something like that, you know, make your home be even better. So like, yes, we're increasing around, but we're willing to offer this incentive for you. Another thing, too, is. I know, Kat, you meant. You mentioned market rents. You know, you have to keep up with what is happening currently in the market. And in the vlog, I think you even mentioned, or maybe Erica mentioned about, you know, looking around to see what other properties are kind of renting for. That's huge. And, you know, something that you could even do yourself if you also wanted to go an extra step is doing a market analysis and just calling, like, some local area, local apartments or what have you and saying, hey, I'm just doing a quick market analysis, wondering what you're currently running. Your one bedroom, two bedroom, three bedroom, four, what have you. Whatever. They kind of have listing right now, and that can kind of give you a better idea, especially if there's, like, a listing and it gives you a range of what they're offering. Figuring out what that range is based on.

Oh, yeah, I was gonna say a lot of the, like, websites that have the properties listed on there, they'll give you kind of, like, when you look at your address, they'll give you others nearby. So I really like that feature because then I'm like, okay, they have similar. Like, they have a similar number of bedrooms and square footage. Oh, they're going for this price. Oh, wow. It's a little bit more than I'm doing. Or maybe I can bump it up.

Yeah, definitely. And another thing, too, is our property taxes. You know, yes, their rent is increasing, but as the owner or the landlord, whoever, their property taxes are increasing with that. So that's another reason, you know, that kind of goes with the market trend is like, yes, your rent is increasing, but, you know, I also have some financials that are increasing on my end too. So that's, you know, there's. There has to be some sort of balance there.

Mm.

You. We kind of touched on this a little bit already, but the incentives. So we talked about, you know, maybe updating some flooring or things like that. You could also maybe do. Like, you know, we value you as a resident. You know, we appreciate you and everything. You know, if you renew again, we want to offer you, like, a gift card or something. I don't know, something to show your appreciation for them and, like, you like, yes, we know we're increasing our rent, but we still very much appreciate you and, you know, we want you to continue living here. We want you to be happy. Do you guys have anything to add on that at all?

Yeah, actually, it's one. One way of having a good relationship with your tenant. So if you're renewing their rent. Sometimes you can ask them about desired upgrades. We're not actually asking them, hey, do you want a new flooring or do you want a new wall? It's just like that. We take into consideration what they would like to have as much as possible we can assess and then we can ask the owner if they can approve on having that specific desired tenant upgrade. Then all in all, if everything goes well, it's a win win for the tenant and the owner as well. They renew, they provide the upgrade. It's a harmonious relationship.

Yeah, absolutely.

Yeah. And I personally as a renter, you know, I always expect an increase. So I'm usually not too thrown off when it's, you know, especially if it's not too much. Like the 3 to 5% that we talked about before.

Yeah, that was, what I was about to add was, you know, communicate with your resident and like make sure that they know that it's going to be pretty standard that every year they should expect a year increase. And that can kind of, you know, limit their chances of getting too upset or angry with you. When they do get that notification in the mail or email, however you're sending that out, they should already kind of expect it and know what's going to happen. And like you said, usually a 3 to 5% increase usually isn't too much, you know, depending what the rent is. But usually it's around like 20 ish, 50 ish dollars, something like that. A month or. Yeah, a month. So it just all depends. I know personally, when I was renting, something that my landlord did for me was they came in and they cleaned our carpets on our renewal, which was super nice because our almost our entire apartment was carpet. Excuse me, like the dining room was carpet. There was just a small little section. The bathroom and the kitchen were the only things that weren't carpet. So it was huge for us.

Yeah, that's great.

All right, do you guys have anything else that you want to add on, you know, the renewal process and increasing the rent process?

Maybe just a tip for before raising the rent to the exact number. Let's just. Most of the time I'll just have to pause to consider how much of a rent increase we're going to advise the tenant. So let's calculate the percentage of the rent increase over the current tenants over the market rent. But the good rule of thumb, always don't raise the rent more than 5% any more. Sharp rent increase often jolts the tenant into looking for much another property. But just for example, you're currently renting the property at 1000 and then when we analyze the comparison, the rent should be at around 1,100. So let's.

We.

We don't actually provide increase. Like give it a hundred dollars increase.

Yeah.

So we'll consider increasing like $50 for this year and another $50 by the next year.

Yeah, that's a really good point. I'm glad you brought up. Instead of like setting like a certain dollar amount that you're going to increase it, a percentage is actually a little better because it helps, at least from my personal experience when I was in property management a little more was that helps keep up better with the market trend and what is happening versus setting a certain dollar amount that might actually set you back a little bit as an investor landlord point of view. There was someone that I know she. She was. Had a property here in Dayton. This is not with. I. With Independence Property Management. I should say that it was a private landlord and I think she was renting her house for like 1500amonth and they increased it a thousand dollars this past summer. And she was like, I literally like, don't know what to do. I was like, did you say a thousand dollars? They increased your rent a thousand dollars a month? And she said yes. And I was like, that's a lot. And she left. I mean, and frankly, I would have left too if my rent was increasing a thousand dollars. That's a huge jump. That's like paying another rent almost.

Yeah. I almost feel like that landlord wanted her to move out. Maybe they wanted to like rehab it and like then get it to be rented at that price. You know, started off like, oh, they take it for this and then, okay, I'm going to do the work anyway and make it that much.

So that was kind of what I was thinking too, but still, I wonder what they ended up getting it rented for. Curious on what ended up happening with that.

Google it afterwards. Not advise any owner to do that. We would be like, no, we will.

Yeah. I mean, and that's one way to know. Make a resident unhappy. But also that could cause for like them to probably go and make it like a complaint about you. Like, maybe you were a great landlord the entire time and then that happened and that just like completely upset them because maybe they were also a great resident or something, I don't know. But then that could be like, hey, like, you know, on your renewal expected to skyrocket or something like that. I don't know. Um, so definitely be mindful of those kinds of things. And when you are renewing, just from my personal experience and everything.

So.

Since we're kind of on this trend of, you know, trying to keep residents happy, communication is going to be huge. I know we talked about, you know, giving them that 60 day buffer instead of the 30, the standard kind of 30 day. Um, so that's super helpful. What other kind of tips can you guys think of there?

I think for a big thing to communicate on and just to help keep them happy throughout the whole time that they're renting from you guys, it's or from us is, you know, maintenance and communicating why things are getting delayed. You know, a lot of the times for like, if there's an outside job, if it's the winter, we're not going to do it until the spring or, you know, the summer when things are a little bit more accessible to work outside and the ground isn't as hard. So like just communicating that stuff, but then keeping, you know, their work orders taken care of, so then they want to renew, they feel like comfortable in their own home and they don't want to move out as soon as they have the opportunity.

Yeah, definitely. That reminded me when I worked as a leasing agent, we had this resident who. And again, this wasn't with ipm, but we had this resident who wanted their AC replaced in the middle of the winter. And we were like, are you running your ac? Because they had at this place there the AC and the heat ran off of two separate units. And so we're like, are you running the ac? And they're like, well, yeah, that's what we're using for, like to try to keep our apartment warm. And we're like. So we had to explain everything. And we're like, you have, you know, you have the heat. That's different, the ac, because she was saying that it wasn't heating her apartment well enough. So we had to kind of explain it. We were like, well, we did look at her AC and we're like, we can still replace it, but it's not going to be until, you know, like the springtime or fall, once it gets a little closer to then because, you know, your furnace is still working and everything. So that reminded me of that. So. But other things, as far as maintenance orders, you know, like you were saying, you know, communicate on those things, explain why you're doing things, try to get to them in a timely manner. You know, if it's something urgent, definitely more so. And just kind of personally again, I would over communicate with them, let them know what's happening step by step, what they can expect when someone's going to be there, who's going to be there, and those kinds of things.

I know we definitely have in the past, like maybe not explained well enough or the tenant just didn't want to listen on, like why we weren't doing something. So as renewal comes around, there's like this long list of things like I've been asking to get this done and not done. And it's like, okay, that was a cue for us, like, oh, we need to explain better why we weren't going to be doing that. Because it's never fun when you have to try to help them, you know, explain the reasons why that didn't work out or why though it got declined or maybe it just something they, they thought they told us, but they didn't.

Yeah, definitely.

Yeah.

Yeah. Also to add on that one, since we're on tenant communications, I just remember that every time I sent out a renewal, this works for me. And I think this works for most of the lease renewals if you're offering anything to them. It's just that every time I have a tenant that I remembered, like, I remember the name of the dog or I'll have to check on the profile. So before I ask them about, hey, are you going to. I'll ask them, hey, how is your dog? Is he still like, okay, what are you doing right now? So let's just start a little conversation with them. And most of the time I get the, when I start doing that, when I get the, I get something from them like, oh, you're not just here to talk about the rent. You're, you're such a nice lady. You're asking us how, how we are or how we're doing. So I think one of the best way to keep the residents happy is to get engaged with them or ask them, how about just a little chit chat on how are they doing? They're okay. Remembering their kid's name or their dog's name or their wife's name or someone in their house is a big deal for them.

It's.

See if they make. It makes them feel that they are very welcome.

Yeah. And it, that's a really good point. I'm super glad that you're doing that. That is, you know, building a relationship with them and it helps also make them feel like, you know, recognizing that they are also a person and they are human and they have feelings and they, they have things going on too. And so that's huge. I'm glad you did that. I didn't know you did that.

So I love that Kath is a pro. As a. Yeah.

Sometimes I don't know if I'm their marriage counselor, their guidance counselor. They just call me every sometimes, and they like, yeah, I have a problem. I'm breaking up with this one.

And sometimes, too, if, you know, when you have those relationships with your residents, it makes it a little easier, you know, to tell them some not so great news or something that is happening. You know, they might be a little more understanding, you know, understand, you know, like we're. We're human, too. And, you know, there are things that happen that are unfortunately out of our control. They're not. We don't completely have control over everything that happens. So that helps a little bit too, you know, on both ends as well. So my next point was going to be, you know, have sympathy and empathy with the resident, as, you know, as much as you can. So I kind of touched on that. So I'm glad you brought that up. Something else that you can do for your residents. This is just kind of like an extra layer to kind of, you know, make them feel important and know that you're there and that they're there and everything is maybe off offer, like some type of, like, event throughout the year or, I don't know, send them, like, birthday cards, something to do, like an extra layer to show them that you care about them and you know, that they're there and something like that. Sorry, lost my train of thought. Do you guys have anything to add on that?

Yeah, we definitely do. The birthday cards we spend, I think it's like an E card that we send, right, Cat?

Yep. Yep, we do.

And I think also one thing that we do is we do, like, an inspection of the property once a year. So, I mean, doing that at the time of renewal kind of helps them feel like they're being heard because you go and see the issues that they have, potentially the issues, or, you know, just be able to have that face to face. I know.

Yeah.

You know, talking, being in my home, if I know the management is invested and willing to hear me out when needed. So we've done that before, and it's really helped. And, you know, that we can have eyes on for the owner, of course, that's a big benefit. And why we offer the pre inspection once a year.

Yeah, I'm glad you brought that up. That's a good point. I remember when the first time I had an inspection done when I was a renter, I had a completely different, like, point of view on that. I thought, like, they were going to, like, come in and be like, like, you've done xyz. Like, why is this. Or that, and, like, write me up or something. I don't know. Like, I had no idea what was going to happen. Uh, but they came in, they were super nice, they were out, and they asked, like, you know, like, how's everything running? How is everything working? Do you need anything done? So basically, they're just walking through to see, you know, what the current condition is and if they need to do anything on a management side of things. That's a really good point because I, as a renter, I thoroughly enjoyed that and was glad that they did that because it showed that they cared and that they cared about my home that I was living in, and they wanted to make sure that it was safe and sound for me. Yeah, that's a really good point. Kat, do you have anything you want to add on that?

Well, you've said it all.

That's totally okay. I just want to make sure everyone is, you know, getting kind of what they have off if they have anything that they want to add. That was all that I have. There's several different other things that you can do. Like, you can run different challenges throughout the week. Like, maybe you have another. Or throughout the year. Excuse me. Maybe you have another property that you are trying to get rented. So maybe you send something out to your other residents and say, hey, we have this property that's coming available. We want to offer you a referral bonus, you know, an extra way to earn some extra money in your pocket. So there are several different things that you can do to, you know, stay engaged with your residents, make them happy throughout the year, build relationships with them, and, you know, keep happy.

You're the mascot, Caitlin. You help put out the resident newsletter that we have. We do different activities, like Halloween, I don't know, vote on the pumpkin, and you're to win whatever. You know, all those different little fun things that we do.

Yeah, that's another great point. Not like, thank you, but like, you know, if you have, like, a mini, like, apartment complex or a. Or a quadplex 54 Plex. Anything that has, you know, really maybe more than, like, two units. Maybe go in and post somewhere, like, in a common area, like, some updates or, like, hey, like, it's the holiday season. Here are some recipes that you can check out or here are some events that's happening this holiday season or something like that. Something to just kind of, like, you.

Know.

Flare things up a little bit, go the extra mile that, you know, maybe most landlords won't do. That was something that my landlord did. Granted, we lived in a large apartment complex. It's a little different. But every summer they would do, like, a resident cookout, and they would get all the residents together and they would have, like, a party, essentially, and they would have, like, vendors come out and supply food, and they would have treats, and they would have cornhole games, things like that. So that was super fun and cool. And so there's all kinds of different things that you can do to, you know, provide for your residents, keep them engaged and things like that. So.

Yeah.

And make them want to renew. So even if there is a rental increase, you know, if they're happy and you're happy with them and everything and, you know, you want them to stay, let them know that. Show them that you care and everything. So it's huge.

Yeah. Those are great points. Thank you.

You guys have anything else you want to add before we say our farewell for now?

Just that. Well, I just have to remind everyone that renewing the rent, it's a delicate dance. It's raising the rent technically. So it takes tact, professionalism, friendliness, and firmness. But if handled right, your tenants will all renew and everybody will be happy.

Yeah, absolutely. Definitely. Yep. All right, well, that is all that I have that we have for you guys today. Be sure to check out further episodes. I know we have an episode on, you know, how to lease properties in the winter months or even in general colder months when it's the holiday season. So be sure to check that out if you guys have any questions or concerns, comments, any topics you want us to talk about on further, let us know in the comments below. We'd be more than happy to touch on any for you guys or answer any questions that you have. We always like to end these with Invest smart, Live happy.

Bye, guys.

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