How to walk the tightrope of raising tenants’ rents

You likely find that the cost of operating your rental homes continues to increase year after year. Be it labor, insurance, or taxes … rarely do prices fall. And that’s not even considering a big expense, such a complete air conditioning system. So where does that leave you when it comes time to renew a tenant’s lease and raise the rent? It makes the decision even harder if you have a good tenant you’d hate to lose.  

We still live in a free market society; you can try to charge whatever you want. But to stay in business your rents do have to stay in line with the supply and demand in your area. What’s more, I’d rather have a good tenant who pays $1,200 a month than a problem tenant who pays $1,500.

Most tenants are honest, hard-working people who simply want a decent place to live. So run your rentals like a business that has customers. And if you want to keep good, long-term tenants who will not balk at a reasonable rent increase, be proactive.

That means inspect regularly, respond quickly, and be creative. Look at how to improve things throughout the year. Reward early payments, offer extra services like direct deposit, or tenant insurance. Even a gift certificate to a local pizza joint can go a long way.

Other good gestures, for example new paint or carpet or even a security system if they pay the monthly monitoring, could also assure tenants that they’re getting their money’s worth.  

Want more ideas on how to become a successful landlord? Then click here to order your copy of What You Must Know BEFORE Becoming a Greedy Landlord.  

Individual real estate investors score big in blue-collar markets

I’ve been saying this for years: If you want to build a profitable portfolio of investment properties, avoid high-price homes in upscale markets. Instead, go for older single-family homes in working class, blue-collar neighborhoods. And RealtyTrac recently confirmed my philosophy.

The data firm found that the highest yields for single-family homes can be found in secondary and tertiary neighborhoods in secondary and tertiary markets. These somewhat older homes in older neighborhoods are benefiting from rent growth and strong demand for rental housing. And they are far away from the places where institutional investors have bought thousands of rental homes.

According to RealtyTrac, in some of those blue-collar markets the average home price is well under $50,000 and average rents are significantly higher than $1,000 a month, adding up to annual rental yields of over 30 percent. 

You can read more about RealtyTrac’s findings by clicking here.