What’s the Best Way to Raise Rent for a Houston TX Tenant?

March 29, 2022 by Michael Brown

What’s the Best Way to Raise Rent for a Houston TX Tenant?

During the course of your property management activities, you may feel the impulse to raise the rent at one of your properties. There are many good reasons to do this, such as to cover new expenses like higher property taxes or HOA fees.

You may also simply wish to increase your profits by keeping your rent in line with increasing market rates. Whatever your motivation, it’s essential to raise the rent for your Houston property in a legal and reasonable manner.

This will guarantee that you continue to host a profitable tenant and maximize your chances of long-term success as a landlord.

Texas Laws

Here’s some good news: According to the Texas State Law Library, “There is not a statewide law that places limits on how much a landlord can increase the rent when a lease is renewed. In fact, Texas law only allows cities to establish local rent control ordinances in certain cases. A state of disaster has to have been declared and the city must find that a housing emergency exists. The governor must approve the ordinance before it can go into effect.”

In other words, in the vast majority of cases, it’s perfectly legal and acceptable to raise rent when a lease is renewed. Still, it’s a smart move to consult your lawyer to make sure you increase rents appropriately and in compliance with local laws.

Your Priorities When Raising Rent

Eventually, after the legal questions have been cleared, you’ll have three priorities when you increase the rent:

  • Maintain your tenant. Your greatest priority is probably to maintain your current tenant, assuming they’ve been a good resident throughout the duration of the lease. It’s not easy to find tenants who pay their rent consistently and on time, and it’s expensive to search for a new one who has these qualities. Ideally, you’ll be able to raise your rent without alienating your tenants and forcing them to move out.
  • Make a bigger profit. Secondly, you’ll want to make a bigger profit, or at least maintain the level of revenue you’ve been accustomed to receiving. If you’re dealing with higher expenses, you may not be able to increase profits, but you can at least offset those expenses. Otherwise, your motivation will be to increase cash flow over time.
  • Remain attractive to other tenants. You’ll also want to ensure your property remains attractive to other prospective tenants. Thus, if your current tenant decides to vacate (either in response to the rent increase or at some point in the future for other reasons), you’ll have an easier time finding someone to replace them.

How to Raise Rent

Use these strategies to raise the rent while still accomplishing your main objectives.

  • Hire a property management firm. The most convenient and straightforward strategy is to hire a property management firm. Such companies handle most of the responsibilities you face as a landlord; they’ll take care of tenant screening and marketing your property, they’ll collect rent on your behalf, and they’ll talk with your tenants about crucial issues such as raising rent. You’ll have to pay a percentage of your gross revenue to maintain the service, but you’ll be relieved of some of your most challenging duties.
  • Be ready to lose your current tenant. If you decide to raise the rent on your own, without a property management firm, it’s necessary to set appropriate expectations. Most of all, you have to be prepared to lose your current tenant. Most people don’t like to see their rent go up, even if they understand the reasons for it. If they’re tired of the space or they’ve had other issues with the property, a rent increase could be the final straw. You must expect that potential result; otherwise, increasing the rent may not be worth it.
  • Pay attention to rent prices elsewhere in the region. Do the research before raising rent. What are similar properties in the area renting for? Knowing this will help you figure a reasonable price for your rentals. The information will also provide you with evidence you can present if your tenant argues that the proposed rent is too high. Try not to charge more than other owners are charging for similar properties. You can save yourself a lot of headaches this way.
  • Raise your rates in small increments. If at all possible, avoid gigantic rent increases. You’re much more likely to have compliant and understanding tenants if you raise their rent by 10 percent than by 30 percent or more. If you have a long-term vision for the growth of your rental rates, you can build up to that level gradually and face less resistance from your tenants along the way.
  • Provide plenty of advance notice. Even if you’re not legally required to do so, it’s only considerate to give your tenants as much advance notice as you can. Reach out to people 90 days or more before the lease is set to expire and let them know you’re planning to increase the rent. This will give them time to process the amount and search for a new apartment if they decide it’s necessary.
  • Explain your reasoning. Try to explain your reasoning for why you’re raising the rent. You can cite increasing property taxes, higher maintenance and repair costs, or even higher market prices. Any explanation is better than no explanation.
  • Be willing to negotiate. If you value a tenant and you want to keep them, be ready to negotiate. Meeting in the middle or delaying the increase temporarily could be a great way to maintain your profitability while still keeping your desirable tenant happy.
  • Offer extras or improvements. Consider making upgrades or improvements to make the rent increase seem more “worth it” to your tenant. A cabinet makeover or fresh landscaping could be all it takes to make a renter happy.

Are you looking for a Houston property management company that can help you increase your rent or manage your active tenants? Look no further: Green Residential is here for you. Book a free consultation with one of our real estate experts today!

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