Should I raise rents now or later?

Question

My single family houses are under market rents. Rents have risen steadily over the last few years as have my expenses. I'm still working a W2 job so extra income was not good for me on my taxes. However, I'm now sitting on over $2,200 a month in rents that I'm not collecting my not raising rents. I want to raise rents soon to cover my increasing expenses and also get ready to retire and live off the rents soon.

Concerns with raising rents:

1) Tenant turn over. I have great tenants right now, long term tenants. I hate the idea of taking on risky new tenants that are a PITA.

2) Vacancy. I have to give 60 days notice now per WA law. Summer is almost over. Should I wait until next year lest I get stuck with vacancy in the winter?

3) I could start raising rents with the tenants who are not likely to move. But Ultimately I need to start raising rents so I can start to live off them. I plan on working through March 2026 if I can  make it that long, so I COULD wait, but I'd rather have turnover if any, while I'm still employed.

Greg M. · Answer

The statement that "I'm still working a W2 job so extra income was not good for me on my taxes." is scary. The only time additional income is bad is if you're poor and it's going to cause you to lose government benefits that are move valuable the the extra income.

This is a business. Treat it like a business. Stop screwing around and picking a tenant here and there to raise or raising a little now and a little later. Figure out the market for a unit in your area in the same condition and raise the rent accordingly.

You can't be scared of vacancies in this business. If a tenant leaves because they can't afford a rent increase, it's fine. Keeping the rent low only prolongs the situation while costing you money. At some point the rent goes higher and they will leave. Would you prefer it now or in a couple of years when you've lost out on hundreds of dollars a month you could have received from another tenant?

Sean Smith · Answer

@Jack B. my philosophy has always been to raise rents routinely while keeping them slightly under market. It'd be worth a look at your current rents vs comparable rentals nearby (need to be similar size, location, and condition). If you can raise them while staying a few hundred under the competition, your chances of a tenant moving out are incredibly low.

Make sure to read up on HB 1217 too. Notice periods have changed, as well as some other important rules.

Drew Sygit · Answer

@Bethany Clement are YOU actually posting all these comments or your VA?

Drew Sygit · Answer

DM us if you'd like some pointers:)

David Peschio · Answer

Totally agree with Greg.  Have a process for increasing rents due to your market.  Set the expectation with your tenants and as he says - "treat it as a business."

Wesley W. · Answer

If your rents are grossly under market, nobody is going to move if you close 80% of that gap in one raise.  Just give them plenty of notice.

In hindsight, moderate annual raises should have been part of the plan all along.  Raising the rents 25% once every 5 years "hurts way more" than 5% each year (not to mention you get a bigger raise with the latter due to compounding).

James Mc Ree · Answer

Two thoughts:

1. You need to run your business as a business.

2. You are offering a better deal than your tenants can get anywhere. You have room to raise the rent.

You can't solely justify raising your rents because your costs go up. Tenants will relate, but don't see it. They see comparable properties and their rents. However, you can use rising costs as part of your justification which everyone will relate too in conext. Your utilities, groceries, insurance, taxes, and nearly everything else increased in price for you personally and your business over the past few years. I also suspect your vendors didn't ask if that's OK. All of their competitors were also raising their prices which is what made your vendors comfortable in raising theirs since you had no better comparable deal to choose, or so they think. Use the same rationale.

Know the value you offer and make sure your tenants know it too. You wrote that your rents are below market. Do your tenants know that? Embrace that as a marketing pitch to your tenants to make them want to stay. It looks something like this:

Your rent is increasing from $2,000 to $2,075 per month, effective October 1, 2025. I strive to keep your rent as low as possible to offer you the best value. I haven't raised your rent over the past 2 years for that reason, even though my costs have increased dramatically. Taxes, insurance, and maintenance are all much more expensive. I don't want to pass those costs on to you, but it becomes inevitable at some point. I recently looked at comparable properties on Zillow and saw the cheapest 5 of them renting for $2,200 - $2,350 per month. I feel that you still have a great value in your home at your new rent and it will help me to defray these increasing costs we all experience. Let me know if you disagree and we can discuss it.

I think tenants move for reasons related to the property itself or their perceived value of it. You can't do anything about property-related reasons. Examples of these are the tenants outgrew the place, need to move for a job, or to be closer to a loved one. Value reasons are largely on you, but not completely. Value reasons would include rent compared to comparables, condition of the property, your responsiveness to issues and neighborhood safety. You completely control the first 3 value reason examples. You can influence the 4th, but never completely control it.

Tenants will stay longer if they move into a place in great condition with awesome features, at a fair rent that is maintained well. They will like their landlord if the landlord is responsive their maintenance needs and may even recommend the landlord to their friends who are looking to move. These tenants will really appreciate your lagging rent increases (not too lagging!). Remind them of all these things and what you did for them over the past year when you raise the rent. They just might love you and ignore the increase.

Peter Mckernan · Answer

You should be raising rents each year on the tenants and if you get a little turn over that is okay. You need to keep up with inflation, raising taxes, higher labor and material costs on repairs, higher insurance, and also you need to be profitable. The big owners that have 5,000, 10,000 and 20,000 units are raising rents, model what they are doing in their business to what you should be doing.

Bethany Clement · Answer

I am! Trying to build real estate partnerships :)

Bethany Clement · Answer

Hi Jack, I saw your post about weighing the timing and risks of raising rents on your long-term tenants, and I wanted to connect. I work with clients on the Property Management side of things and am always looking to grow my network. Since you’re planning for retirement and want to balance keeping great tenants with covering rising expenses, have you considered gradual rent increases or a phased strategy to minimize turnover while still moving closer to market rents?

Should I raise rents now or later?

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