How Much Should You Raise the Rent? A Small Landlord's Renewal Playbook
Check the rules, price against real comps, then compare the increase with the true cost of losing a good tenant. A worked example with made-up numbers.
Every renewal comes down to the same question: how much can I raise the rent without losing a tenant I'd rather keep?
Raise too little for too long and you fall behind market while taxes, insurance and repairs climb. Raise too much and a reliable tenant leaves, the unit sits empty, and the turnover bill eats the whole increase and then some.
There's no universal "right" percentage. There is a repeatable way to land on a number you can defend, to yourself and to your tenant. Here it is.
Step 1: Check what you're allowed to do
Before you think about the number, check the rules that apply to your unit:
- Rent control or stabilization. Some states and cities limit how much rent can rise each year, or how often. Some exempt certain buildings (for example, newer construction or some owner-occupied small buildings). Your local housing agency or a landlord-tenant attorney can tell you what applies.
- Notice periods. Most places require written notice before a rent increase takes effect, and the required notice can grow with the size of the increase or the length of the tenancy. Your lease may require more.
- The lease itself. During a fixed-term lease you generally can't raise the rent unless the lease allows it. The increase usually takes effect at renewal or, for month-to-month tenancies, after proper notice.
- Subsidized tenancies. If a tenant uses a housing voucher, increases usually go through the housing authority's process.
Write down your deadline. If your notice must arrive 60 days before the lease ends, put the date on your calendar now. Missing it can mean waiting another cycle.
Step 2: Find out what the market actually says
"Market rent" is not what the highest listing on the block is asking. It's what comparable units are renting for.
Gather four to six comps:
- Same area, ideally within the same school zone or neighborhood.
- Same type and size: bedrooms, bathrooms, rough square footage.
- Similar condition and amenities: in-unit laundry, parking, updated kitchen, pets allowed, utilities included.
- Recent: listings from the last month or two, and note which ones rented fast vs. sat for weeks.
Adjust as you go. If your unit has no laundry and three comps do, your fair number sits below their average. A listing that has been sitting for 45 days is telling you its price is too high.
Then compare: is today's rent below market, at market, or above it? That single answer shapes everything else.
Step 3: Price the turnover you'd be risking
This is the step most landlords skip, and it's the most important one. If the tenant leaves instead of renewing, you pay for:
- Vacancy: weeks of zero rent while you clean, repair, market, show and screen.
- Make-ready: cleaning, paint, carpet or flooring repairs, small fixes that a long-term tenant tolerated.
- Leasing costs: listing fees, screening, your time, or an agent's placement fee.
- Utilities and carrying costs you pay while it's empty.
- Concessions if you have to offer a discount to fill it.
Add them up honestly. Then figure out the break-even vacancy: how many weeks of vacancy would wipe out a full year of the increase.
Break-even weeks = (monthly increase × 12) ÷ (new monthly rent × 12 ÷ 52)
If a modest increase earns you less in a year than two or three weeks of vacancy would cost, the increase only makes sense if you're confident the tenant will stay.
A worked example (hypothetical numbers)
Say a two-bedroom rents for $1,650. Four good comps average $1,742. You're considering 5%.
- New rent: $1,650 × 1.05 = $1,733 (rounded)
- Increase: $83/month, or $996 per year
- Weekly rent at the new rate: $1,733 × 12 ÷ 52 ≈ $400
- Break-even vacancy: $996 ÷ $400 ≈ 2.5 weeks
Now the turnover side. If the tenant left, you expect four weeks of vacancy, $1,200 in make-ready, $350 in leasing costs and about $110 of utilities while vacant. Lost rent plus costs is roughly $3,260.
So the increase earns about $1,000 a year if they renew, and costs you a couple of thousand dollars in year one if they leave over it. The new rent is still a bit below the comp average, so this increase is reasonable. But it shows why you wouldn't push to $1,850 on a tenant who pays on time and takes care of the place.
Step 4: Choose your number
Use the comparison to pick a lane:
- Well below market and a great tenant: close part of the gap now and part next year. Steady, predictable increases tend to go over better than a big jump after years of none.
- At market: a modest increase that tracks your rising costs (taxes, insurance, maintenance) is easy to explain.
- Above market: consider holding steady. The tenant can probably find something cheaper, and vacancy is expensive.
- A tenant you'd rather not renew: follow your lease and local law on non-renewal. Don't use a large increase as a back-door eviction. In some places that can create legal problems, and it's a poor way to run a business.
Whatever you choose, apply your approach consistently across tenants. Treating similar tenants differently invites fair housing trouble.
Step 5: Deliver the notice well
How you communicate matters almost as much as the number:
- Put it in writing in the format your state requires, with the effective date and new amount.
- Give more notice than the minimum when you can. Surprises make people shop around.
- Briefly explain what's driving the change (higher property taxes, insurance, maintenance). Keep it short and factual.
- Offer a choice if it fits your plans: for example, a slightly lower increase for a longer lease term.
- Mention what you've done: the new water heater, faster maintenance response. Tenants weigh the whole experience, not just price.
Step 6: Track every lease end date
Most renewal mistakes are calendar mistakes. A simple tracker with each lease's end date, required notice days and notice deadline means you'll never have to scramble or miss a window. Review it monthly.
The Landlord Operations Kit ($15) includes a rent roll and tenant ledger so you always know current rents and lease terms at a glance. A dedicated Rent Increase & Lease Renewal Calculator ($15) that runs the comp, turnover and break-even math above (plus a renewal deadline tracker) is available now in the Toolkit.
Common mistakes to avoid
- Never raising rent, then needing a big jump later.
- Using asking rents from listings that haven't rented.
- Ignoring turnover cost, which is often the biggest number in the decision.
- Missing the notice deadline, which can delay the increase a full lease cycle.
- Inconsistent treatment of similar tenants.
Related reading
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This article is for general educational purposes and is not legal or financial advice. Rent increase limits and notice rules vary by state, city and lease; check your local law before sending any notice. Example figures are hypothetical. — Jon, Everyone's Landlord