Good tenants, but have problems with rent increase

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Good tenants, but have problems with rent increase

Linda Roberts
Member since 2020 · 64 posts · 14 votes

Rental prices in my area have increased significantly. I'm confident I can rent this apartment for $2,750 or more. The current tenants have been living there for two years, paying $2,450 in rent. I proposed increasing the rent to $2,550 for next year.

They responded that a $100 increase feels high, and while they agree to some extent, they also want to adopt a dog from a shelter. I expressed my concerns—mainly that shelter dogs can require special care, and both tenants work full-time, which might make it difficult to meet the dog's needs. (Is that a fair concern?)

They seemed upset and countered with an offer to pay $2,500. I'm considering accepting this, possibly in exchange for help with gardening or snow removal. Alternatively, I could stick to $2,550, but that might result in unhappy tenants who are still paying below market rent.

What would be the right approach here?

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Emily Koelsch
Rental Property Investor · Memphis, TN · Member since 2022 · 48 posts · 43 votes
1y

This is tricky. For me, I think about the potential costs for me - i.e., if I raise rent and the tenant leaves, what are the turnover costs and vacancy costs. When you think about that, you might decide it's worth the risk or it's not. 

That said, I wouldn't get into a negotiation about it. I'd decide what change you're comfortable with, tell them when it will go into effect, and let them know how long they have to make a decision bout whether or not they want to stay (check your state laws to ensure you give them enough time to make this decision). 

The dog seems like a separate issue. I'd try to think about them separately. 

One tip going forward: for some properties, I include a 3% rent increase every year as party of the lease terms. This is something that doesn't overwhelm tenants, and then it helps to avoid getting too far below market values. Plus, there's no back and forth or confusion about it - tenants know it's coming. 

For these tenants, that'd be around a $75 monthly increase. They would probably be okay with that, and as long as you increase by 3% every year, you'll stay closer to competitive pricing and cover your rising expenses. 

Good luck!

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    1y

    You will be literally paying to PLAY property manager. Your PM would be charging $2,700, (if that’s market rent.) taking $200 in charges leaving you with $2,500, no dogs, and no hassles. 

    You should have told them you have to raise the rent to $2,700. They would have said “That seems high. How about $2,600?”  

    If $2,700 is market rent. While it might be too late to change your initial offer. (It probably isn’t, but whatever.) I’d confirm with a local PM that they could get $2,700 or more rent if you let them manage it. If so, I'd tell tenant that. Show them the comps. Then say the best you can do is $2,550/mo w/o dogs or $2,700/mo with 1 dog and a higher security deposit. But you might want to go MTM in case it doesn’t workout. You don’t want to get stuck with a year long lease. 

    6Reply
  • Linda Roberts
    OP
    Member since 2020 · 64 posts · 14 votes
    1y

    Thanks, I am in Massachusetts. No pet fees or pet deposit is allowed. I can set up rent higher and allow dogs, but this is for new tenants. Should tenants that stay for 2nd 3rd year pay below market, for how much?

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    1y

    I used to think they should pay at least a little under market but think about it. 

    If your place is worth $2,700 and they already live there. Will they take a day or two off from work to look at places and do the move. Pay for new applications and security deposits. Lose some of their current security deposit. Pack and move everything to pay the same? I assume they’re out $1,000 if everything goes perfectly. 

    I bet most people would pay $100/mo over market to not have to move. 

    Imagine this situation. You’re told your property taxes are going up $100/mo or you can move to an identical house 4 miles away and keep paying the same.  Is anyone that can afford to stay moving?

    ps. You can type @ symbol and someone’s name to get their attention. 

    Like @Linda Roberts. I didn’t know about the dog rule. But then do they even have to ask you about the additional dogs?

    5Reply
  • Emily Koelsch
    Rental Property Investor · Memphis, TN · Member since 2022 · 48 posts · 43 votes
    1y

    This is tricky. For me, I think about the potential costs for me - i.e., if I raise rent and the tenant leaves, what are the turnover costs and vacancy costs. When you think about that, you might decide it's worth the risk or it's not. 

    That said, I wouldn't get into a negotiation about it. I'd decide what change you're comfortable with, tell them when it will go into effect, and let them know how long they have to make a decision bout whether or not they want to stay (check your state laws to ensure you give them enough time to make this decision). 

    The dog seems like a separate issue. I'd try to think about them separately. 

    One tip going forward: for some properties, I include a 3% rent increase every year as party of the lease terms. This is something that doesn't overwhelm tenants, and then it helps to avoid getting too far below market values. Plus, there's no back and forth or confusion about it - tenants know it's coming. 

    For these tenants, that'd be around a $75 monthly increase. They would probably be okay with that, and as long as you increase by 3% every year, you'll stay closer to competitive pricing and cover your rising expenses. 

    Good luck!

    11Reply
  • Linda Roberts
    OP
    Member since 2020 · 64 posts · 14 votes
    1y

    Thanks @Emily Koelsch It's an interesting idea to add 3% rent increase to the lease. For example last year I was preoccupied with another 2 apartments and to secure tenants in this one, I only raced rent for $25. So rent increase of $100 this year created stress.

    2Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    1y

    You've had some good replies already.

    1. You don't propose anything, you do it. If you want to raise the rent by $100 then that's what you do. If the tenants don't like it they are free to move elsewhere. Never negotiate rent or anything else with your tenants. Set the rules and move on. 

    2. If these people have been good tenants you may want to strongly consider how much you want to get that market rate. A one month vacancy at those rates will kill a year of cash flow at the higher rate, for an unknown commodity (a new tenant). 

    3. Your concerns about adopting a dog are not unfounded but on paper it sounds like you have thoughtful, reasonable tenants. A lot of tenants will simply do it and sneak the animal in without saying anything. A shelter dog is going to be fixed, which is a major issue you want solved in a rental (so people aren't having puppies), and if they don't get a puppy often will end up with an adult dog that's already house trained. You would certainly want to do an amendment that covers everything that goes along with animals (yard clean up, damages, etc). You can also ask yourself if knowing these tenants as you do, if they had originally applied with a dog would you have approved their application?

    To some extent you've already thrown rocks into the machinery here with these tenants by getting into any discussion about how much the increase will be. If you want to keep them, I would split the difference with them, *tell* them that's the new amount, and determine if you want to allow an animal or not. Also, your preoccupation with properties the previous year is not really the tenant's problem. If you are going to factor rent increases, I would try to always do them somewhere around the rate of inflation just to avoid what you've now run into. 

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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    1y

    We always pull market rents from 3 sources, compile them to a number that makes sense to us and then send all this to tenant and ask, "market rent appears to be $x, you're currently paying $y, what do you think a fair increase is?"

    80%+ of the time, we get a reasonable amount we can counter to negotiate.
    Sometimes tenants even pick market rent!

    The other 20% of the time we get $0 or ridiculously low amounts. Usually, with the excuse this is all they can afford.

    To that we reply with facts about how much the property taxes, insurance and maintenance have gone up and if we can't keep pace with those, we might as well sell.

    That gets another x% to negotiate in good faith.

    The rest, we politely ask them for a recent paystub to support their claim about, "this is all I can afford". 

    Majority will NOT send it, so we then give them a take it or leave it amount.

    Regarding the dog, are you allowed to require Renter's Insurance with dog bite coverage?

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  • Linda Roberts
    OP
    Member since 2020 · 64 posts · 14 votes
    1y

    Thanks @Michael Smythe Could you please suggest where to check market rent other than Zillow?

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    1y

    Rent-O-Meter, Redfin, Realtor.com.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    1y

    You are the landlord, it is not up to them to bargain with you and if they can afford a dog, they can afford $100 more in rent if that is what the market supports.  Tell them the new rent is $2550 and if they don't like it, they are free to give notice and move.

    As Emily said, build in a standard rent increase to your lease and deal with the dog separately.

    4Reply
  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    Here’s how I’d approach this:

    Keep Rent Increases Reasonable but Strategic:
    I try to cap rent increases at no more than 4% annually, as long as that keeps us under market value. In your case, a $100 increase feels reasonable. You're still offering them a deal—if market rent is $2,700+, letting them renew at $2,550 saves them nearly $2,000 over the next year. Be sure to communicate that clearly so they understand the value they’re getting.

    The Dog Is a Separate Issue:
    You're right to have concerns about the dog. We allow pets but charge a pet fee and are very clear about expectations. I also make it known that if there are any signs of aggression or property damage, the pet may need to go. It’s all about setting boundaries early.

    Careful with Tenant Responsibilities Like Gardening/Snow Removal:
    I’ve had tenants handle lawn care, but even that can be hit or miss. If they don’t follow through, you’re stuck deciding whether to penalize them or just take care of it yourself. In many cases, it’s simpler to raise the rent slightly and hire out the maintenance. It keeps expectations clear and your property well-kept.

    Good luck!

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    1y

    A rent reduction of $250/month is a loss of $3,000/year. That's enough to replace a couple appliances. In two years, it could replace a furnace. In four years, it could pay for a new roof.

    You're looking at this the wrong way. They are at least $300 below market. You want to increase a little to keep them, but I think you should look at market rate and lower it slightly to entice them to stay. You control the cards (if you know what you are doing) and should rent your property for what it is worth. I recommend staying within 5% of market rate, even for the very best tenatns.

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  • Kate Sanchez
    Member since 2025 · 242 posts · 98 votes
    1y

    @Linda Roberts  It sounds like you’re approaching this thoughtfully, which is great to see. A $100 increase after two years of tenancy doesn’t seem unreasonable especially since the market rate is even higher.

    Clear pet terms can ease concerns if you allow the dog. Good luck!

    1Reply
  • Linda Roberts
    OP
    Member since 2020 · 64 posts · 14 votes
    1y

    Thanks @Nathan Gesner It's definitely make sense.  

    0Reply
  • Wesley W.
    Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
    1y

    Lots of good advice above. 

    One suggestion I have is consider only offering MTM leases. This gives you much more flexibility in situations like you're encountering.  In tenant friendly areas, term leases tend to obligate the landlord and not so much the tenant.  I've written about the benefits of MTM extensively on BP.

    Another thing I do, when I send written notice of the annual rent increase, is I share data from rentometer that shows the value they are receiving in terms if local comps and the average rent of similar assets within x miles of their address.

    Happy to provide an example if needed.

    2Reply
  • Andrew Street
    Member since 2019 · 1k+ posts · 292 votes
    1y

    Hey there Linda - Honestly, your proposed increase to $2,550 sounds totally fair given the market. But if the tenants have been solid and reliable, accepting $2,500 in exchange for help with snow removal or gardening could be a good middle ground. It keeps them happy and saves you time or money elsewhere.

    And your concern about the dog makes sense—shelter dogs can come with challenges, and if they’re both gone all day, it’s fair to ask how they’ll handle that. It’s not unreasonable, especially since it could impact the property.

    At the end of the day, keeping good tenants slightly under market might be worth it if it means avoiding turnover and keeping things smooth.

    I'd be happy to connect to share more ideas! 

    2Reply
  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    1y

    I never negotiate with the tenant "for services" as it is a recipe for disaster. We allow our tenants to have pets with a $50/mon pet rent. We would not lose a good tenant over $50 but I would suggest staying at the $100 and allowing them to have the dog. This is a fair compromise. 

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  • Christine Mulkins
    Rental Property Investor · Medford, OR · Member since 2017 · 94 posts · 115 votes
    1y

    You do not have to accept a dog that is a pet. If you are uncomfortable with the idea, then tell them you're sorry but you cannot accept the dog. If you are ok with the dog and feel like the tenants are responsible dog owners, you should be able to charge pet rent (check local laws) and add a refundable pet deposit.  If you're concerned with the dog doing damage, then charge a higher deposit. With regard to the rent increase, your increase is very fair based on the current rent. I would explain to them that your expenses have increased, that is: insurance, property taxes, water sewer, garbage (whatever expenses you're paying on their behalf).  Whenever my husband and I do a rent increase, we include a hand-written note explaining this and telling them we appreciate them. Our goal is hoping they understand we're not trying to stick it to them but this will help cover our expenses. It's only fair. Try hearing them out and seeing if you can come to a compromise with regard to the dog. And if you have to say no to this particular dog, that's ok. Leaving a dog stuck in a house all day while they work is not a good idea and at the end of the day, it's your property.  

    1Reply
    • Linda Roberts
      OP
      Member since 2020 · 64 posts · 14 votes
      1y
      0Reply
    • Christine Mulkins
      Rental Property Investor · Medford, OR · Member since 2017 · 94 posts · 115 votes
      1y

      @Linda Roberts oh my! It's even more strict than where I am in Oregon.  The pet deposit is the only added protection for your property from any damage from the dog. Consider telling them you really want them to stay but due to increased expenses on your end, you have to raise rents to cover those expenses. L Remind them it's only a 4% increase, which is very low over a 2-year period. Tell them you hope they understand and if they choose to move, you will be sad but understand if that's their decision. You sound like a really nice person and a great landlord. I don't think they're going to want to leave over a 4% rent increase. It's too much hassle on their end. But it's a business you're running and you have to protect the bottom line.  I doubt they will find another property that's less expensive with a nice landlord such as yourself. It's something they'll have to ponder over. Best of luck! 

      0Reply
  • Gustavo Delgado
    Houston, TX · Member since 2015 · 261 posts · 170 votes
    1y

    This is a business. Instead of "proposing" a rent increase, better to give them notice of the rent increase with ample amount of time 60 days. You don't need to give reason for the increase but if they must know point them to the current market rents and let them know it is still under market value. As far as a dog, just decline and let them know your insurance policy will not allow it. Once they realize that you are still under market value and they do their own search they will very likely just sign the new lease.

    1Reply
    • Eric Gerakos
      Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
      1y
      Quote from @Gustavo Delgado:

      This is a business. Instead of "proposing" a rent increase, better to give them notice of the rent increase with ample amount of time 60 days. You don't need to give reason for the increase but if they must know point them to the current market rents and let them know it is still under market value. As far as a dog, just decline and let them know your insurance policy will not allow it. Once they realize that you are still under market value and they do their own search they will very likely just sign the new lease.

      This. I never negotiate rent, or offer concessions etc. I don’t show comps or even discuss rent with tenants. Rents are determined by the market. My A properties have a waiting list and 0 vacancy or evictions…..
      0Reply
  • Dan Hawtree
    Member since 2025 · 24 posts · 10 votes
    1y

    All excellent points, reminding us a key aspect of negotiation: never assume the other side is free to walk away. There are pressures on both sides. 

    0Reply
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