Need Help Drafting A Letter For Rent Increase
I have some tenants and I need to raise their rent . How do I go about drafting a letter that is fair and clearly explains the resons for the increase ? They have been renting from me for sometime and teh rent has not changed and is considerably low . I need a basic idea on how the letter should be set up .
I include a rent increase of 5% per year with the original lease. In other words, I set rent now at $700, and tell them, before they sign the original lease, that there will be a 5% rent increase each year. That way, they know up front, and cannot claim that I am being unreasonable. If you need to "justify" your rent increase, pull out your bills from the beginning of the lease for such things as taxes, insurance, maintainance, etc. I am sure you will see an increase in all of these costs. Another argument, which is fair, but which a tenant might object to, is that the value of the property is most likely much higher now than it was when you first rented the home to them. Thus, to maintain a 10% return on your investment, you have to get a higher net, since the property is worth more. Also, remember that, when you go to sell this property, that the value of that property is a direct function of how much rent it currently brings in. In other words, if I have a choice to buy two properties, one whose tenant pays $500 per month, and another whose tenant pays $700 per month, I would certainly pay more for the property which gets the higher rents. I really have to laugh when sellers advertise "rents are low and can easily be raised to $xxx". Well, if that is the case, why have you not raised the rents.. Why should I , the buyer, pay you, the seller for work (raising the rent) that I will do? Why should I take the risk of having a vacancy if I do raise the rent as you, the seller, suggest. I have 3 prroperties, and plan to continue to raise the rents, on a reasonable basis, both for current income, as well as future selling value. Hope that helps.
Whenever I raise the rents, I draft a basic, informal letter outlining my reasons for the increase. It's that simple. There's no mystery behind a rent increase letter.
That said, the one thing I do include in my letters is an opening paragraph stating how happy I am with the tenant and how eager I am to continue our relationship.
Then I lower the boom.
I close by letting them know they can always call me personally when they have a concern.
[addsig]
My property taxes go up each year so I use that as an excuse to raise the rents.
My letter never gives reasons. It just states that
"Begining on _____ the monthly rent on the property that you occupy at ______ will be $____. All other terms and conditions of your lease will remain the same."
I'm with edmeyer. I usually let them know in person or over the phone, then I follow it up with a letter for the sake of keeping everything legal.