Raising Rents Without Losing Tenants? Here's the Strategy That Worked for Me
Dion McNeeleyPro Member
Rental Property Investor · Port Orchard, WA · Member since 2018 · 116 posts · 123 votesRaising Rents Without Losing Tenants? Here's the Strategy That Worked for Me
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Rene HosmanPro Member
Rental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votesIf you missed it - view the recording here!
23 Replies
- 1yRene HosmanPro MemberRental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votes
See you there Dion!
- Real Estate Agent · Salt Lake City, UT · Member since 2020 · 490 posts · 205 votes1y
Sweet excited to see what ya got!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Excellent topic. Only rookies don't do annual increases.
- Huntsville, AL · Member since 2018 · 578 posts · 864 votes1y
@Marcus Auerbach - I enjoy your posts, and you typically post really good information and insights. However, your comment of "Only rookies don't do annual increases" is disappointing and shortsighted for new investors. I am definitely not a rookie. But we have many tenants that we have not raised rent on. Let me give you the rationale:
1. I could care less about an additional $50 or $100/month if it means even one sooner turnover. Very few turnovers cost less than $1000 to $2000, and throw in the loss of rents and cost of utilities during the turnover time. For $50/month? No thanks.
2. I have several tenants who are clearly on a fixed budget. If I raise their rent, it will be a significant challenge for them, whereas I could care less about a small bump in monthly revenue. These are tenants who also take pride in their property, as they truly feel it is their home. They are already paying my mortgage every month with positive cash flow. Why put them in a crunch when it's already a favorable situation for both parties?
3. If you need an additional $50/month to make your numbers work, you are already overleveraged and in trouble if a cap ex arises.
Sure, I'd love to raise rent annually. But to imply that I'm a "rookie" for not doing it universally...yeah, I take exception to that.
- Lender · Los Angeles, CA · Member since 2025 · 40 posts · 17 votes1y
Quote from @Michael S.:
@Marcus Auerbach - I enjoy your posts, and you typically post really good information and insights. However, your comment of "Only rookies don't do annual increases" is disappointing and shortsighted for new investors. I am definitely not a rookie. But we have many tenants that we have not raised rent on. Let me give you the rationale:
1. I could care less about an additional $50 or $100/month if it means even one sooner turnover. Very few turnovers cost less than $1000 to $2000, and throw in the loss of rents and cost of utilities during the turnover time. For $50/month? No thanks.
2. I have several tenants who are clearly on a fixed budget. If I raise their rent, it will be a significant challenge for them, whereas I could care less about a small bump in monthly revenue. These are tenants who also take pride in their property, as they truly feel it is their home. They are already paying my mortgage every month with positive cash flow. Why put them in a crunch when it's already a favorable situation for both parties?
3. If you need an additional $50/month to make your numbers work, you are already overleveraged and in trouble if a cap ex arises.
Sure, I'd love to raise rent annually. But to imply that I'm a "rookie" for not doing it universally...yeah, I take exception to that.
Sustainability and stability can often outweigh squeezing every last dollar. It’s about context, not cookie-cutter rules, and dismissing that as a "rookie move" overlooks the nuance that experienced investors understand. You made very valid points, Michael.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Hi Michael! All valid points and considerations, I am totally with you. Especially the math: we estimate that a turnover will cost us on average about 5k between hard and soft costs. Totally not worth $50. And if my numbers don't work as an investor, that is really my problem - and the wrong approach to make it the tenant's problem.
I used to oppose rent increases for my first 7 or 8 years. The main reason why I became an advocate for annual rent increases is a long-term perspective. As an agent, I see too many leases that were signed 8 or 12 years ago and are wildly below market rent.
It is very tempting to skip an increase. And the next one. And before you know, 10 years have passed and you are still at the rent from 2015. Or 2010..
But all our expenses are indexed for inflation.Our cost for insurance has gone up a LOT even here in Milwaukee about $30 per single family this year (thanks FL and TX). Replacement costs have gone up massively (have you paid for a new roof lately? Almost double compared to when I started) and then you have interest rates.
Not increasing rents means your profit margin is shrinking every year with inflation.
So, how do we balance these conflicting forces? We monitor two things: market rent increases and wage increases. And we usually benchmark the lower of the two. This year it was definitely wage increases because our rental market is extremely hot. This way our long-term tenants stay slightly below market rents.
I know they are not happy about the increase, just like I am not happy about my expense increases. Most will probably shop it around and find out that they are still getting a pretty good deal (and 5-star service). As a result, despite the annual increases, our turnover rate is below 10%.
Not increasing rents creates a situation where you are falling more and more behind and then you have to make tough choices. A tenant can adjust for $50 much easier than if one day you have to sell the building and the new owner adjusts to market rent, resulting in a $500 increase.
I also run an annual survey with our RPA members (Rental Property Association of Wisconsin) and guess what: larger and more senior landlords are a lot more likely to be consistent with increases than newer and smaller owners.
- Huntsville, AL · Member since 2018 · 578 posts · 864 votes1y
@Marcus Auerbach - appreciate your detailed response.
I agree that not increasing rent routinely can absolutely start to put you at risk for the numbers going upside down with inflation.
The key here is that you are making decisions on rent increases based on tangible factors - the market rental rate and wage increases. That's absolutely valid and obviously a smart way to do it.
But the implication that someone should raise rent every year without qualifying that statement could lead folks to believe that they should raise rent $50 every year without consideration of whether it is appropriate or without being based on market analysis data. That was simply my concern with your original post.
We reset our rental amount every time we have a turnover based on the current market rates, regardless of the previous rent amount. For our established tenants, we do case by case decisions. If the tenant has been a nuisance, and the market validates the amount, we will raise their rent accordingly. If the tenant has been fabulous, pays on time, and never asks for anything except for appropriate repair calls, we typically will not raise their rent other than once every 2 to 3 years. Am I leaving some money on the table? Sure. Do I feel it's the right thing to do? Yep. Not everyone will agree with that, and that's perfectly fine with me.
Yes, we just paid for a roof 2 months ago (11k) and an HVAC (8k) last week (different properties). It isn't cheap, but you and I both know, it's the cost of doing business.
- Real Estate Agent · College Station, TX · Member since 2025 · 6 posts · 4 votes1y
Quote from @Michael S.:
@Marcus Auerbach - appreciate your detailed response.
I agree that not increasing rent routinely can absolutely start to put you at risk for the numbers going upside down with inflation.
The key here is that you are making decisions on rent increases based on tangible factors - the market rental rate and wage increases. That's absolutely valid and obviously a smart way to do it.
But the implication that someone should raise rent every year without qualifying that statement could lead folks to believe that they should raise rent $50 every year without consideration of whether it is appropriate or without being based on market analysis data. That was simply my concern with your original post.
We reset our rental amount every time we have a turnover based on the current market rates, regardless of the previous rent amount. For our established tenants, we do case by case decisions. If the tenant has been a nuisance, and the market validates the amount, we will raise their rent accordingly. If the tenant has been fabulous, pays on time, and never asks for anything except for appropriate repair calls, we typically will not raise their rent other than once every 2 to 3 years. Am I leaving some money on the table? Sure. Do I feel it's the right thing to do? Yep. Not everyone will agree with that, and that's perfectly fine with me.
Yes, we just paid for a roof 2 months ago (11k) and an HVAC (8k) last week (different properties). It isn't cheap, but you and I both know, it's the cost of doing business.
I agree with both of you here and believe most of it comes down to personal goals.
If your properties are paid off or cash flow very well and the increase in work that comes with tenant turnover is not worth an extra $50-$100 a month to you - Don't increase.
If after doing research you find rents are below market and your first priority is to maximize income - Increase.
Personally, I prefer a hybrid of these methods.
Every investor should know their costs associated with turning a unit and should know market rents.
If current rents are $50-100 below market and the increase doesn't cover turn costs this is my strategy:
1. Contact current tenants and explain to them how market rents are calculated and what their increase will be. This is one of the most helpful things I have found. It's easy to assume because someone is not in the industry they will not comprehend how this is calculated even if you explain it to them but it shows that you are not randomly increasing rents because you are a "greedy" landlord. Without the explanation regarding the increase I've found this is the default reaction.
2. Wait. If the tenants decide to renew at the new market rate - Great! It's the market economy in action. They have decided that it is beneficial to them to renew at the increased rate rather than move out.
3. Negotiate. If they say that they can not renew at current market rates - Ask what they could pay. Most tenants are willing and able to do a partial increase even if it doesn't bring the rents all the way up to the current market amount. If they say they can't do any increase at all and you would rather renew them with no increase - no harm done. Renew them at the current rent amount.Max rents with minimum turnover
- Investor · Regina, SK · Member since 2025 · 54 posts · 42 votes1y
I always look for win-win's I try to keep my rents on the lower end of average so I can bump up to keep things profitable, but still avoid tenant turnover. When I do rent increases I provide them with a "market analysis" of real recent comparable listings so they can see exactly where they are at and that even though I'm increasing the rent they can see it's still a deal. And this market analysis isn't really for them to see the deal but more for me to find the sweet spot and where I'm at compared to the market. I do it monthly for my own knowledge and to see if I'm leaving too much money on the table, etc. Having troubles attaching a screenshot of it, but basically it shows up to 5 comparable in the general area of town compared to their unit after the rent increase and also compares it to the citywide average. Shows calculations of their rent amount after increase vs the average of all compatibles and vs the city wide average and shows the savings both annually and monthly if they stay with me and the rent increase. I'm not a big fan of nickel and diming tenants every year with a $25 or $50 increase every year, but every few years I'll increase it as needed of 10-15% I have very little tenant turnover as it is, but have never lost a tenant over a rent increase.
- 1yMichael CalveyPro MemberHead of Sales at BiggerPockets · Denver, CO · Member since 2023 · 134 posts · 154 votes
I think @Dion McNeeley is going to have a lot of nuggets in this webinar. I'm excited to hear what value bombs he will have at BPCON this October in Las Vegas at the conference. In case anyone didn't know, Dion McNeely happens to be one of our keynote speakers this year.
- Member since 2024 · 6 posts · 8 votes1yIf you're living on a tight budget with very little money left at the end of every month, then a 10 or 15% increase every few years is going to be tough to handle. And the vast majority of renters do not have much money left over at the end of the month. if they could save up money each month and had great credit they probably would not be renting.
I definitely agree that little increases each year make a lot more sense to stay up to date with the market and inflation.
One trick I use to keep tenants with rent increases is one I learned from politicians. They often do work right before elections to win voters. I like to do little things to remind that I am taking good care of the property right before a rent increase. I may pressure wash, paint the fence, or do any upgrades I was thinking of doing anyways. - Member since 2025 · 86 posts · 25 votes1y
@Marcus Auerbach. Do you typically do annual rent increases? And if so, keeping it between $50-100? I'm curious to find out what the best model is so that I'm keeping tenants rent as reasonable as possible while also making sure I'm not losing a bunch on expenses. Thoughts on a rent freeze for tenants and still being fairly profitable? I'm okay with losing a bit of money if it means the tenants are happy and are living affordably.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
More and more and in recent years, and now, always. But it's not a specific amount, we just monitor fair market rent for our type of properties and I also look at annual wage growth in my State Wisconsin, as well as inflation.
Overall we try to keep up with inflation and typically stay a little below fair market rent. I want to make sure that it is always the overall best option for our tenants to stay: the best quality home for the price - compared to everything else on the market.
You can track some of the professionally operated apartment complexes in your area (typically new construction, 200+ units) and you will see that they are adjusting asking rent on a weekly basis depending on market dynamics.
- Real Estate Agent · Houston, TX · Member since 2025 · 59 posts · 31 votes1y
Looking forward to learning more!
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes1y
Great topic. Looking forward to the webinar.
I was informed by a couple of investor friends that they don't raise rents on their good existing tenants. I was completely shocked - this was coming from people in California, one who has kept the rent the same for at least 10 years (probably 15 years now). Their reasoning was: I bought the property in 2008 or in the 1990s, no mortgage now or very low mortgage payments, tenant is great and I don't them to lose a place to live. I appreciate that they're being charitable but this isn't a good business decision.
Don't they have increasing insurance payments (that's hitting us in fire zones especially) even though property taxes might be low (Prop. 13 is max 2% increase a year in California since 1978 unless a significant renovation with permits is done causing the property to be re-assessed)? Also deferred maintenance if a tenant has been living there for 20+ years.
So I kept the rent the same on my Indiana property for the next lease renewal while my property taxes increase significantly each year. I increased it the following years. I'm slightly under market now.
I'm trying to find a balance of how much to raise it: 3%, 5%, 6%, 10% (which is a lot for Midwest) but I did raise it close to the max allowed by local laws for my California properties.
- 1yRene HosmanPro MemberRental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votes
Quote from @Becca F.:
Great topic. Looking forward to the webinar.
I was informed by a couple of investor friends that they don't raise rents on their good existing tenants. I was completely shocked - this was coming from people in California, one who has kept the rent the same for at least 10 years (probably 15 years now). Their reasoning was: I bought the property in 2008 or in the 1990s, no mortgage now or very low mortgage payments, tenant is great and I don't them to lose a place to live. I appreciate that they're being charitable but this isn't a good business decision.
Don't they have increasing insurance payments (that's hitting us in fire zones especially) even though property taxes might be low (Prop. 13 is max 2% increase a year in California since 1978 unless a significant renovation with permits is done causing the property to be re-assessed)? Also deferred maintenance if a tenant has been living there for 20+ years.
So I kept the rent the same on my Indiana property for the next lease renewal while my property taxes increase significantly each year. I increased it the following years. I'm slightly under market now.
I'm trying to find a balance of how much to raise it: 3%, 5%, 6%, 10% (which is a lot for Midwest) but I did raise it close to the max allowed by local laws for my California properties.
I think asking about how to strike that balance is a great question for discussion at this webinar Becca!!
Can anybody who attended this webinar possibly share a few pointers they found helpful?
I was not able to attend the webinar (but would have loved to), and would appreciate hearing any tips or suggestions that were provided.Thanks in advance!
- Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 409 votes1y
As this event was in the past , maybe you could post the details of the strategy here?
- Investor · Central Virginia · Member since 2020 · 394 posts · 253 votes1y
Great strategy!!
Is there a replay?
- 1yRene HosmanPro MemberRental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votes
Quote from @Joe S.:
Is there a replay?
Yeah Joe it's linked here https://www.biggerpockets.com/resources/property-management/...
- 1yRene HosmanPro MemberRental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votes
If you missed it - view the recording here!
- 4moRachid AbadliBusiness MemberInvestor · Sacramento, CA · Member since 2024 · 129 posts · 37 votes
Late to this, but Becca's point about California deserves more detail for anyone landlording here.
AB 1482 caps your annual increase at 5% + CPI (maximum 10%), and you have to give 90 days' written notice for increases over 10% — but since you can't go over 10% anyway, the practical rule is usually 30 days' notice.
The thing most California landlords miss: the cap is calculated from the lowest rent charged in the prior 12 months, not necessarily the current rent. So if you gave a tenant a one-month discount or concession, that becomes your new baseline for calculating the maximum increase. I learned that the hard way.
Another nuance: if your property is exempt from AB 1482 (single-family home with the proper exemption notice, or built after 2005), you still have to prove the exemption. Just saying, "I'm exempt," doesn't cut it. You need the statutory notice language in the lease.
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