Managing a rent increase requires documentation as well as a review of market rent. Today, we’re talking about how we do this. Our process starts in a spreadsheet, where we have the rent schedule listed and the square footage of each unit. We also list the current rent and the market rent. On another sheet within the same file, we have rental comps to help us determine market rent.
Finding Rental Comparables
Once a month we go to Zillow and we find comparable units. We input the asking rent and the square footage and we weigh it for parking, water, sewer, garbage, whether there’s a balcony and an elevator, and what kind of pet policy is in place. Rental comps are difficult to pull because it’s not like the MLS where I can pull sold comps, and you know what a house sold for and what the asking prices are. We don’t have anything that shows us what each unit rented for. They might advertise at $1,600 but actually rented at $1,450. We don’t know. So, we use the ads. Think of yourself as the renter. Renters are looking at the same ads we are. That’s what they’re going off, and the cycle moves quickly. You want to have the best ad in there. You want to have the best pictures and descriptions, and you definitely want a competitive price. The person looking for a place isn’t worried about the difference between $25 or $35. So, we advertise a little high knowing we can come down. It only fluctuates $50 or $100, in our experience.
Implementing Rent Increases
We don’t increase rent on every unit every month, but we do try to have an increase on at least one unit in a building each month. We look at where we are compared to the other marketplaces and adjust the rent accordingly. During November, December, and January, we don’t increase rent because we don’t want any turnover in the winter months. When you give a rental increase letter, the tenant who was thinking about moving might start looking around.
Documenting Rent Increases
To decide which units are getting rent increase letters, we look at the last increase date and the post date. We keep careful records so that if someone wants to know why the rent was raised, I can show them the documentation that shows how we came to the rental amount. It’s well recorded. It increases ROI for our owners and shows that this has nothing to do with anyone personally. It’s part of the process, and documentation is vital. You don’t want anyone saying rent was increased because of their kids or cats or because we don’t like them.
That’s our process for rental price and rental increases. Your takeaways are: look at market rent every month; be fair, consistent, and honest; and, always document. If you have any questions about how to increase the rent or any Seattle property services, please contact us at Olympic View Property Services.