There are always turnover costs between tenants in rental homes. Depending on the age of the house and the number of vacancy days, Landlords can lose significant money. As a property manager it is important to create processes that minimize vacancy days and reduce turnover costs.

At Crosstown Properties, we strive to do just that by strategically raising rent to keep good tenants.

Tenants often think that a rent increase means the Landlord doesn’t like them. In reality, raising rent is entirely market driven and has no bearing whatsoever on the Landlord’s personal opinion of the tenant. See our blog “Rent Increases and Lease End Dates Explained.”

While raising rent according to the market is necessary for good business, it’s not so simple – there is an art to raising rent while minimizing vacancy and avoiding turnover costs.

Often the market rent increases so significantly year over year in Austin, Texas that tenants could easily be deterred from renewing their lease. Generally keeping tenants is good, so we strive for a win-win situation – we suggest raising the rent about 50% of the increase indicated by the market.

To use an example with round numbers for illustration purposes:

A property rents for $1000. When we do rental comps about 60 days before the lease ends, we find that the market value has increased from $1000 a month to $1100. Assuming it’s in the owner’s best interest to keep the tenant, we typically suggest to the owner a rent increase of $50 to incentivize the tenant to renew.

We use a form letter to inform the tenant that the market rent increased by 10% but if they renew we will only increase the rent by 5% in an effort to have a win-win situation so that they can stay in the property.

Keeping a good tenant, even at half of the market rent increase, avoids vacancy and turnover costs entirely and in all likelihood is the best financial option for the Landlord.

On one hand, it’s very important to raise the rent as often as possible to offset the significant costs Landlords incur such as taxes and mortgages. On the other hand, it’s important both for the Landlord’s sake and the tenant’s not to force out a good tenant who would otherwise have stayed.

Most tenants understand that in Austin, Texas the price of housing has been going up for many years. So those tenants appreciate when the Landlord is willing to work with them and increase the rent only part of the market increase.

People often find us by searching “property management Austin,” “rental home management austin, tx,” “property manager near me,” and “property management companies austin, tx.” We’d love to hear how you found us!