As more and more people move to Denver in the hopes of finding jobs, real estate value continues to climb. With that in mind, it is reasonable for your raise your rental rates when a tenant renews his or her lease. However, you have to balance kindness and profit with reason during this delicate process. Put simply, your renters aren’t going to be happy about the rental rates increasing. And, the higher you raise the rates, the more likely your renters are going to look for another place to live. If you dramatically raise the rates for a number of your tenants, you may be faced with long periods of expensive vacancies. So, how do you come up with a fair cost-of-living increase number?
Determining Market Value for Your Denver Rental Property
Fortunately, coming up with your rental property’s market value isn’t as difficult as it might sound. To get a rough estimate of what you could rent your property out for, follow these steps:
- Search online for apartments or rental homes in the same area
- Find similar quality properties with similar square footage
- Average out the rental rates for those types of properties
- Add or subtract some of the rental cost for amenities you have or don’t have
That will give you a relatively fair rental cost for the following year.
Increasing the Rent Payment to Cover the Cost of a “Problem” Tenant
Let’s face it; you aren’t going to like all your tenants. Despite whatever screening process you have in place, you will run into people who are simply difficult to deal with. However, when the lease renewal approaches, you could look into raising the rates significantly so that you either nudge them gently into leaving or receive more money for having to deal with them. In this case, you would want to raise the rates above market value.
For more help on determining a fair rental value for your tenants, call Keyrenter Denver at (720) 739-3000!