As a landlord, raising rent is inevitable. It’s something that you’ll have to do at some point in time as a Charleston property owner. There are many reasons that make landlords raise the rental price. These include:
- Property improvements
A property owner may raise the price of rent if they’ve made improvements to the property. The changes may include landscaping the exterior, putting in a new HVAC unit, replacing the carpet or tiles, or renovating the kitchen or bathroom.
- A rising local economy
As the housing prices increases, raising rental prices is essential for landlords to maintain the property.
- New employers
When a large company moves into your area, your Charleston rental property may become more desirable. People will naturally want to live near their workplace.
- Neighborhood Enhancement
Your rent should change according to how neighborhoods change and improve.
- Keeping up with the market
You may also raise the rent of your Charleston rental property to keep up with other similar properties in your area.
While no landlord wants to raise rental prices just for the fun of it, it’s a necessary part of property management.
A Step-By-Step Guide to Raising the Rent on Your Charleston Property:
1. Determine Why You Should Raise the Rent
It’s important to ensure that your investment is profitable. If you are having trouble maintaining a positive cash flow, then raising rent may be the way to go. Before raising the rent, consider the following expenses:
- Cost-of-living expenses
- Property manager
- Insurance premiums
- HOA dues
- Higher utility costs
- Property taxes
Preferably, factor these expenses into the rent during lease renewals or tenant turnovers to make sure you aren’t overcharging.
2. Determine the Amount of Rent Increase
The goal here is to ensure that you stay competitive. Charge too high and you risk making your Charleston rental property unattractive to potential renters. Charge too little and you risk leaving money on the table.
Depending on the state of the market, a good rule of thumb is a 3-5% increase annually. You should also consider the following things:
- Your cash flow.
In an ideal market, the price of rent should be based on your expenses. However, the rent you decide to charge should be based on the prevailing market rate. Your goal should be to ensure that the business is profitable while still having competitive market rates.
- Prevailing market rates in your area.
If similar rentals are increasing in price, then you should follow suit as well.
- North Carolina housing laws.
Make sure that you stay within the confines of the law when it comes to rental matters. Although the property is yours, you can’t increase rental payments arbitrarily. You must adhere to the SC and Charleston rental laws.
For example, it’s illegal to raise rent before the lease expires. The only exception is if the lease agreement made a provision for it. Even then, a court would still find it illegal as it negates the idea of a “fixed” lease.
You should also increase rent in a non-discriminatory way. This means it is not based on a person’s sexual orientation, familial status, religion, race, or disability.
In addition to this, you shouldn’t increase rental prices based on retaliatory reasons. In South Carolina, if a tenant has exercised a legal right, has been involved in a tenant’s organization, or has filed an official complaint to a government authority, then you are barred from increasing rent for a set period of time.
3. Decide When to Increase the Rent
Generally, state law dictates when and how rent should be raised. Check South Carolina state laws as well as your lease or rental agreement.
In South Carolina, if your tenant is on a month-to-month tenancy, then you can raise the rent after serving a 30 days’ notice. It’s best if the notice is written.
If the renter is on a fixed-term lease, then you should give them a 90 days’ notice. This will give your renter adequate room to adjust should they plan to renew their lease for another term.
4. Inform Your Charleston Tenant with a Notice of Rent Increase
Make sure the communication is clear and professional. The notice should be written. When providing a written communication, make sure that you:
- Relay the information as concisely as possible. This will ensure that there is no room for negotiation or argument.
- Create a reference for how much each renter is paying and when they began paying it.
- Leave no room for confusion. Make sure that the communication covers all the necessary information.
Make sure that the increase rent notice is compliant with state and local laws as well as your lease agreement.
Dealing With Complaints
Tenants will be less likely to complain about a slight rent increase if they are satisfied with living on your property.
For a resident complaining that the rent increase is too much, try educating them about the market rate. That’s why it’s important to do a comparative market analysis before adjusting your rent. The analysis will help you get an idea of the prevailing rent in your neighborhood.
The renter will be less likely to complain if the rent increase compares similarly to other rentals in their neighborhood.
If they are wondering why you’re raising the rent, try explaining the expenses that must also be covered. Make sure that you cite specific examples of the expenses. For example, insurance premiums, property taxes, utilities and maintenance costs.
Also, don’t forget to cite any new improvements that you made on the property. You could also tell them about any future plans you have regarding more improvements to the property. By doing this, your tenant will see that the increase in rent will also directly benefit them.
Increasing the rental price of your Charleston rental property is not a simple task. It requires some research and planning as well as strict adherence to the state and local laws. To make the rental price increase predictable for your renters, make sure that you specify it in your lease agreement. This way, you will be able to get the rent increase with fewer issues.