First, compare your property to what the market has to offer. If other properties with fewer amenities are priced higher than yours, that’s a good indicator that it’s time to increase rent.
Let’s say you find a well-suited tenant who can easily afford the rental price. While signing them up, express how well you keep your properties maintained, if they find anything that needs repair, have a system in place that would allow them to notify you. This is a good time to discuss with them which ones are considered an emergency (call anytime of the day) like water leaking or a non-working furnace during winter – and what should NOT be classified as an emergency like burnt lightbulb or a toaster oven that is not working. Notify tenants that your rental rate is the same as the market and that you may or may not increase rent on the following lease based on the market trend.
Now, tenants expect the possibility of rent increase which would make it much easier for you to implement when needed.
For example, the lease is about to end (1-year lease) and based on the market it’s time for an increase, this is a good way of addressing it.
“Thank you for being a tenant at (Address). Our mission has always been to provide a clean property, reasonably priced. When it’s time to increase rent at any of our properties, we take a look at it to determine if it’s really necessary.
We’ve determined that it’s time to raise the rent on your property, effective to $1,700 from $1,500. This is to cover higher insurance, property tax, utilities, upgrades and maintenance costs. After this increase, we’ll still be below the average market for a property like this. Instead of paying an increase, you may choose alternative housing. If you intend to leave at the termination of the lease, the initial lease state that you need to provide notice in writing of your intention to move. If you choose to do so, signing this stating that you will not renew and returning this before your expected renewal date will be used as your written notice.”
This letter is concise and meets important points. Increase amount, date of implementation, and XX day notice if tenant decides to vacate in a hassle free manner.”