Making Better Real Estate Decisions

When you own a house that you rent out to tenants, it's useful to develop a strong bond with them. When your tenants view you as a good landlord, they may opt to stay in the residence for a long time, which will save you the hassle of finding new tenants, and they'll also treat the building with respect. Occasionally, you'll need to raise the rent, which you may find a little uncomfortable. Although you're under no legal obligation to justify the rent increase, explaining why you're making this change can ensure that your tenants understand the change and continue to respect you. Here are some details that you can share to justify the increase in rent.

Change In Property Taxes

One thing that can often cause landlords to raise the rent for their tenants is a change in the property tax. If your new tax bill shows that you'll need to pay more for your rental house and you feel that you need to raise the rent as a result, simply convey these details to your tenants. You can show them the amount that you pay for property tax currently versus the amount that you'll be paying in the coming year. Doing so will show them that you aren't simply raising the rent to end up with more money in your pocket. Rather, the increase in the rent will be going to the local government.

Increase Utility Rates

In many cases, the landlord will take care of some of the utilities bills for his or her tenants. For example, you might have your tenants pay for electricity, but you take care of the water bill. If there's a marked increase in the rate that you'll be paying for water, it's conventional to pass this rate increase along to your tenants in the form of charging more for rent. But instead of just increasing the rent, explain the reason for the change by showing the tenant proof of the water bill's increased rate.

Renovation Expenses

Many tenants will appreciate when you renovate part of their house — but they need to know that this will often result in a rent increase, too. If you've paved what was previously a gravel driveway, removed the ugly exterior siding in favor of trendy stucco or upgraded the bathroom fixtures in the home, you can consider calculating the total expenditure of any of these projects and sharing it with your tenants so they'll understand the rationale behind the rent increase.

For more information about rental properties, contact a company like Keller Williams Realty.