It is common knowledge that the real estate market is cyclical. It is unavoidable that there are periods when owning an investment property where the local market is slow. This makes it hard to get your tenant to pay more when you have other increasing costs, such as utility bills, council rates, and maintenance of both your home and investments.
Despite the state of the market and without your requests being unreasonable, there are ways to get your tenant to pay more for living in your property.
Be the ideal landlord
Apart from your regular responsibilities as a landlord, it is best to view your investment like a business, and approach these responsibilities like a business owner. Running a business means regularly analysing the way in which you offer your product or service, and trying to improve this service to your client (your tenants).
This means going beyond simply outsourcing the management of your investment to a property manager or even responding to tenant requests in a timely manner. It means anticipating the needs of your tenants and eliminating these needs. Providing an excellence of service, like in any business, means you can charge the rates that reflect such service.
Make the right improvements to the property
Just as your service as a business owner can be reflected in the rental price, so can the product you are selling.
Short of large-scale renovations, you can replace and update fixtures as well as make cosmetic changes (landscaping, flooring, new paint, new appliances) to help raise the value of your property on the rental market and get your tenant to pay more.
You may not be able to increase your rental income immediately, but installing new appliances and cosmetically upgrading the property may mean that even if the market does not budge over a six month period, you could still point to these upgrades to show that the property is worth more to a tenant.
Remember to list such improvements in the rental increase notification letter.
Increase property security
The installation of effective and modern security systems in your investment property will not only potentially help your insurance premiums but provide further reason (alongside any increase in the value of your property and repairs, improvements and additions to the home) to rightfully get your tenants to pay more.
Beyond alarms, consider security doors, sensor lighting and reinforced glass windows in your quiver of security measures. Make sure to list these when having your property valued.
Survey your tenants
Not many landlords take the time to really get to know the personalities and needs of their tenants from a commercial perspective. Companies often utilize surveys to understand the spending habits and attitudes of their customers, and landlords can do the same. Not many real estate agencies will go to the trouble to tailor personalised surveys, or conduct surveys at all, simply because of the size of their rent roll. When choosing a property manager, you may wish to discuss whether the agency can offer such a service, so that you can get to know the needs of your customer and in turn eventually have greater cause to increase your rental yield.
Revalue your property
Have your investment both professionally valued as well as getting regular property appraisals from not only all the agencies in your local area but agencies outside of it too. A professional valuation, in which an accredited valuer analyses a host of details about your property to find an accurate value, will give you the most authority when getting your tenant to pay more. If your tenant does decide to take your notice of a rental increase to a tribunal, such as VCAT in Victoria, then a professional valuation that shows a real increase in the value of your home will help your case.
Note: remember that as a landlord, you have a right to increase rent as long as it reflects the realistic costs of running the property and the state of the local market as it relates to your property. The number of times per year and the extent to which you can increase rent varies by state. It is common for a state such as Victoria to restrict the increase of rent to no more than once every six months, and not before the end of a fixed-term agreement if that is the nature of the tenancy.