The past couple of years have been difficult, but there was one silver lining: Americans got a 20% raise -- according to a CBS News report. Sadly, there won't be any hors d'oeuvres or champagne to celebrate. During that same period, rent increased about 30%.
All things considered, it's a tough time to do a fair rental valuation as a landlord in Tacoma, WA. While you may have to raise rent to keep up with your mortgage, giving it too much gas could engender resentment in tenants. What pitfalls should you avoid with rental property pricing?
Let's take a look at the Tacoma rental market and examine common rental valuation myths. Avoid the following if you want a stable rental income.
1: High Rent Valuation Equals Higher Profits
At a glance, it may only seem like basic math that raising rent raises your overall rental income. However, nothing is ever so simple. An extreme rent valuation could cause several indirect effects like:
- High tenant turnover
- Longer periods of vacancy
- Fewer interested applicants
- Resentful tenants
If you want a stable long-term profit and decreased vacancy, raising rent needs to be done with care. Gradual increases may seem like pennies now, but they'll be Benjamins tomorrow.
2: You Can Increase Rent Without Notice
It may seem like you can just change the rent on the contract and call it a day. However, even if the rent is reasonable, you do need to warn tenants about an increase. And you need to do it a lot sooner than you might think.
Tacoma, WA, the landlord fairness code requires two early notices before making an increase. One is about 210 days ahead of the date it comes into effect. The other is 120 days ahead.
Long story short, you can't just think of a last-second increase when throwing the contract together. Give official notice at the required times well in advance to avoid any issues. It'll definitely save you a bit of landlord stress.
3: Tenants Will Eat the Increases
Housing is in short supply, which may lead some landlords to the false assumption that they have carte blanche. They can charge as much as they want with no repercussions. Nothing could be further from the truth.
Most talents treat their apartment like a job. If they want a "raise," the smartest thing they can do is get a new "job." Instead of suffering a rent increase with you, they'll find a new apartment with a lower starting rent.
So effectively, you are playing chicken with a tenant who is not afraid to move again. Prepare for vacancies and trouble finding new tenants if you are too excessive with rent increases.
Work with PMI South Sound
Rental valuation is a tricky subject plagued with myths. People assume raising rent as high as they want equals higher income, and that there's no need to give early notice. Further, they think tenants will shoulder the increase -- but none of these myths are true.
PMI South Sound in Tacoma, WA, is backed up by countless testimonials praising us for our professionalism and friendliness. Our customers will tell you first how we earn more on their investments than other management companies. Get a free rental analysis to see what you're missing.
