Raising the Rent With Existing Tenants

There was a recent story in the Seattle Times about a landlord who hadn't raised his rents for many years. He was trying to be thoughtful to his tenants and gave them an exceptional deal because he was a nice guy. When he did decide to raise his rents, he was attacked by the media for being a cold-hearted greedy landlord. His mistake was being nice and not incrementally moving up the rents. Not once in the story did the Seattle Times mention that the tenant was getting a good deal, and living in a free society, the tenants had the option to move to a less expensive area of Seattle.

Also notice the not so subtle mention of rent control in the story, which will cause an even greater problem in the Seattle housing market !!

The media will usually portray us landlord/owners as greedy capitalists and tenants as poor downtrodden victims.

When you and your current tenant sat down to sign the lease agreement, it clearly specified the amount of rent due each month, plus the term of the lease agreement. When you want to raise the rent amount, the lease is the first place to start. You cannot raise the rent until the end of the lease period, so if your tenant signed a 1-year lease, you can’t implement a raise until that has expired.

Do your research and determine what market rents are. Rents in King County and throughout the Puget Sound region have gone up dramatically the past few years. You may be surprised what your units should be rented for. Don't be shy...start slowly moving them up, even if it's an increase of  $50 or $100 a month.

If the lease expiration is approaching, there are certain steps you must follow.

Make sure your rental increase notice is taking place in plenty of time and in compliance with your state laws.
Put the information in an official written notice to the tenant that includes the new rental amount and the date it becomes effective. This can be a signed and dated letter.

Keep a copy of the notice for your records

Send the official notice of rent increase to the tenant via certified mail, or else hand deliver it to the tenant at the rental property.
As a courtesy, send the tenant a follow-up email, letter or phone message reminding them of the new rent right before it is due.

Be prepared for the tenant to get a little upset at the rent being raised and probably contact you to negotiate. Of course, remain professional and explain that you need to keep up with the current rental market rates and that you hope they will stay. Your tenant may choose not to renew the lease agreement and start looking for another place. Keep the lines of communication open so that you both end the lease term in ways that benefit each of you.

If your tenant is choosing to renew the lease agreement with the new rent for another year, make sure the new rental amount is reflected in the new lease.

If the tenant is on a month-to-month agreement, where there is no written lease or the expired year lease has gone into a month-to-month tenancy, you can raise the rent at any time after giving a 30-day notice. Follow the same procedure and always keep track of notices, email or text conversations and so forth for your records.

Keep Rents Current

Copyright 2016 FRED GRUNEWALD

Raising the rent requires a blend of good business skills, marketing research, public relations with tenants and legal requirements, making it a key part of anyone’s real estate investment business. Whether you are a new landlord wondering how much to charge or an experienced one who hasn’t raised the rent in a few years, the process of raising the rent is one that seems easy on the surface but can result in a loss of money or tenants if not done properly- Fred Grunewald