As a self storage facility owner, there may be times when you need to increase the rent due to various operational costs or market conditions. In these situations, it's essential to communicate transparently with your tenants through a clear, concise, and respectful letter to let them know you're raising rents.
If you need a little extra help, we've provided some tips for notifying self storage unit tenants about increased rental rates, plus a storage unit rent increase letter template you can customize.
Importance of a Rent Increase Letter
When increasing your storage unit rents, you must notify your tenants in writing to provide ample time to make informed decisions. This letter serves as a formal notice of the upcoming changes, and it can also be an opportunity to remind your tenants about the value they're getting from your facilities.
If you're worried about tenants not receiving a rent increase letter, we recommend sending it via Certified Mail, as this requires a signature.
Tips For Raising Your Rent
You may be worried about driving tenants off with a rate increase. However, rate increases happen all the time in self storage and real estate, so it’s come to be expected by tenants. Maintaining the current rate isn't always possible, and there are ways to communicate that to your customers without losing their tenancy.
Before sending out the rent increase letter, there are a few things to consider to ensure a smooth process:
- Set the expectation for the potential for a rent increase within the lease at signing so tenants aren't surprised. Make sure you follow these procedures, too!
- Give as much notice as possible so renters can plan their monthly budgets accordingly.
- Be transparent about why you're increasing the rent.
- Prepare for tenants to express questions, comments, and concerns. Have answers to anticipated frequently asked questions prepared in advance so you're not caught off guard, and answer tenants with compassion and understanding.
What To Include In The Rent Increase Letter
While each situation may differ, there are fundamental elements you should include in your rent increase letter to customers:
- Tenant's Name and Unit Number: Begin with a personalized greeting mentioning the tenant's name and their storage unit number.
- Announcement of Increase: Clearly state the amount of the increase and the effective date. If the tenant is currently receiving a discount, the verbiage could be reversed to reflect a "decrease in the discount" instead of an increase in rent. Tenants may be more accepting of the increase when it is worded as a decrease in the discounted rate they are receiving. If their new rate is still less than the street rate, they should also mention that to lessen the blow of the increase.
- Reason for Increase: Explain the reason for the increase. Be honest, and make sure the tenants understand that the decision wasn’t made lightly. Tenants are more likely to be understanding of a rent increase if an operator has made improvements to the facility. For example, if you've installed new security features, replaced old roll-up doors, or paved the lot, make sure to mention the improvements in the letter.
- Gratitude Statement: Close the letter by thanking them for their understanding and for their business so they feel valued as a customer.
Storage Unit Rent Increase Letter Template
Here's a simple template you can use and adapt to your specific needs:
Dear [Tenant’s Name],
We hope this letter finds you well. We are writing to inform you that there will be an increase in the monthly rental rate for your storage unit, number [Unit Number]. This change, which will be effective starting [Effective Date], is due to [Reason for Increase].
The new monthly rent will be [New Rent Price]. We understand that this increase might come as a surprise, but we assure you that this decision was taken after careful consideration. Our primary aim is to continue providing you with the best storage options in [Area].
Thank you for your understanding and cooperation, and for choosing [business name] for your storage needs!
Best regards,
[Your Name]
[Your Position]
This template is just a starting point. Remember, your communication should be tailored to your tenants and reflect the values and tone of your business. Clear communication can lead to better tenant understanding and acceptance of rent increases, fostering a strong, long-lasting customer relationship.
Self Storage Rent Increase FAQs
What is an acceptable rate of increase for self storage unit rent?
The acceptable rate of increase can vary depending on factors such as market conditions, location, and the quality of services provided. There's no hard and fast rule, but a range of 3-10% annually is generally considered reasonable.
How often can I increase the rent for a storage unit?
Local laws and regulations typically dictate the frequency of rent increases. However, it's common practice to evaluate rent prices annually.
How much notice should I give my tenants for a rent increase?
Again, this may vary by location due to specific local laws. However, a minimum of 30 days' notice is generally considered fair and appropriate. Check your state statute for guidance.
Some states may require operators to provide a 30-day notice, while others may require a 60-day notice. In CA, for example, tenants must be given 30 days' notice for rent increases of less than 10% and 60 days’ notice if the increase is more than 10%. Operators should also keep in mind that there are price-gouging laws against raising rental rates during a state of emergency.
What if my tenant refuses to pay the increased rent after sending rent increase letters?
If a tenant refuses to pay the increased rent, you may have the right to terminate the lease. Be sure to understand the legal implications and follow appropriate procedures in such situations.
Can I increase rent in the middle of a lease term?
Unless the lease agreement specifically allows for this, rent increases during an active lease term are typically not permissible. It's generally advisable to implement rent increases at the end of a lease term.
When should I raise rates?
There's no definitive answer to this question, as each self storage business may have different operational costs and market conditions. However, it's essential to regularly evaluate your expenses, competition, and market trends to make informed decisions about possible rent increases.
Some operators do rent increases on the tenant's one-year anniversary date and/or every 6 months, so operators can use that as a baseline.
Get Help from a Storelocal Consultant
A well-written storage unit rent increase letter can be an effective tool in communicating with your tenants while maintaining transparency and professionalism. However, if you have any doubts or concerns about rent increases, it's always best to seek guidance from a self storage consultant.
At Storelocal, our experienced consultants can offer expert advice on various operational and marketing aspects of your self storage facility, including rent increases. Contact us today to learn more about how we can help your business thrive.
