Strengthening Leverage in a Dreaded Rent Renewal for Higher End Property

[Vance Sander]

Hi -

I have a unit that rents for around 7k -  At that rate, I find renewals to be a difficult calculation where I seem to have very little upside to raise rent much, if at all. 

Let's say I can raise rent 5% - if the tenant balks, I'm looking at a broker commission of 7k + cleanup/paint + possibly new carpet + 1-3 months of downtime until a new tenant actually moves in - $30k+ range.  If tenant says ok, I've gained $4200 - seems like I've always got a huge incentive to keep the tenant, unless they're problematic for other reasons.

Is there some other strategy or analysis I could be doing to make me feel like I have more leverage?

Thanks for any input!

[Nathan Gesner]

Quote from @Vance Sander:

Unless the law requires it, you shouldn't have to replace carpet or repaint for every turnover, especially on a $7,000 rental.

It's a simple cost:benefit analysis. Is the additional 5% worth the risk of sitting vacant for 2-3 months? A 5% increase is only worth $4,200 which means sitting vacant for longer than two weeks is a loss for you. It seems pretty clear that it would be better to leave rent where it's at.

The tenant is also doing a cost: benefit analysis. Is it easier for them to pay a 5% increase, or is it better to find a new rental, put down the security deposit and first month's rent, pack everything up, and move just to save two weeks worth of rent?

5% rarely scares anyone away in my market. Your situation may be different because you have an A-class property. When the economy gets tight, cutting back on rent expenses may be one of the first things a rich renter does.