Rental Increases - Tips & Techniques

[Wezz]

Hello

In the residential property forum, there is a "tips" post for residential property investors. I thought that was a great idea.

As a commercial property investor, I'm interested in the techniques that people have used, to increase commercial rents at rent review time, (apart from just getting a standard market rental valuation done and then negotiating with the tenant).

After all, as commercial property investors, it's our job to "farm" our tenants and to make sure the rents are at, at least true market value.

During times like now, there's not too much problem getting a rent increase due to market forces, however, that will all change in time to come.

What tips and techniques can you share, that have worked for you, when trying to obtain a rent increase?

Your input can help us all and I'm looking forward to hearing from anyone that has something to share in this area.

Cheers - Pete.

[Wezz]

One that's worked well for me is:

Firstly, I find out what the true market rental is for the particular property that is coming up for rent review, so I know roughly what dollar amount the square meter rental rate should be.

I then meet with the tenant and say something like, "instead of me getting a market valuation done, I'm happy for a 5% (for example) rental increase. If you're not happy with that, I'm happy to get a market rental valuation done, but if the market rental says that the rent should go up 12% (for example), then I will be likely to seek that 12% increase".

Of course, being an investor, I will always know what the current market rental is likely to be, before I use this technique, therefore, not shooting myself in the foot by obtaining a rent increase that is less than where it should actually be.

Pete.

[CherylSorin]

Hi
It is essential to make small regular, gradual increases as opposed to one big increase which could offend your tenants and force them to move out. You should draft a clear, concise and polite letter to give to your tenants. This letter should explain your reasons for raising the rent, reasons can range from high mortgages, rising taxes, changes in the real estate industry and high maintenance of the property. The letter should also explain how much the increase is and when the rent increase takes effect. Make sure you are giving the tenants sufficient notice period so that they are not expected to have to pay the increased amount within a short period of time.

[mattinvestor]

It seems like being able to increase rent to such a high rate could be detrimental to the tenants' financial ordeals. Does anyone have the scoop on any "rental" real estate news in Finland?