Should I increase the rent?

Question

TLDR; I purchased my first duplex last year with already long term tenants. One of units lease is coming up and I am not sure if I should raise the rent by 2 %. There was another property listed literally down the block and it got rented out for 100$ more than I have. Given the current market, i am not sure if I should be raising or keeping it as is for this year and increase by 4% near year. So far I am cash flowing ~250USD per month. Would appreciate your thoughts

Ryan Tessier · Answer

Are the tenants good? Do they take care of the property and not give you any more headaches than necessary with rent and repairs?

I have tenants who've occupied my units for over 15 years (much longer than I've owned them) and while I give them regular rent increases its not every year and I keep them well below market value. Partly for retention and partly for being ethical and not trying to squeeze absolutely every dollar I can out of good people.

If you raise the rent 2% and the tenant vacates the unit over the increase you will lose more than that on the vacancy before you find another tenant. Thats not even accounting the cost of cleaning painting and turning over the unit to get it rent ready.

If the tenant causes you routine problems and you want them gone anyway? Go nuts.

Also consider, no two properties are exactly the same. The unit down the block that rented for $100 more, does it have the same condition, the same amenities, square footage, washer, dryer, A/C, dishwasher, are utilities included in their rent? Tenants will pay extra for these things and new landlords sometimes look at nearby properties as comps when they're not really comparable.

Theresa Harris · Answer

Small increases add up over time and tenants are less likely to move with small increases.  Have your costs gone up?  What does a 2% increase amount to?  Are we talking $20 a month extra?  If so, I'd increase it.  Tenants get used to increases at lease renewal and then it isn't as hard for them when you do it.

Denise Supplee · Answer

Hi @Sino U. nice to meet you! If your tenants are solid and you value keeping them, a modest 2% increase makes sense to stay in step with the market without pushing them out.

Corby Goade · Answer

Keep your rents at market rates- that's your answer. Are you tapped in to the local market and have some good data to know where you should be?

David Krulac · Answer

@Sino U.  I would add that in the example I related earlier, the previous landlord never raised the rent.  He falsely conditioned the tenant to paying rent that each year became lower than the rising market rent.  So much so that the tenant mistakenly thought that they were paying market  rent when they actually were paying well below actual rents.  Every year the gap between actual rent and below market rent grows larger.  And every year the costs increase, taxes go up, insurance goes up, repairs go up, all expenses go up and every year some expenses go up.  The high inflation rate and high gas  prices translate to other bills.  The plumber I use used to charge $60 an hour, now they charge $105 an hour plus a $40 "trip charge".  The window replacement company I use formerly charged $189 per window plus other extras for capping, and disposal and sales tax plus other charges. The total was about $500 per window, the most recent job in August this year was $734 a window. At one property our insurance bill increased 400% in one year, and I shopped other companies and either the premium was higher or the coverage was less.  And several insurance companies that we used, stopped writing insurance totally in our states. I've been a rental provider for many years and can't recall many times when expenses costs were lowered.

Parris Taylor · Answer

@Sino U.Congrats on locking your first duplex. That’s where theory turns into rent checks.

You’re not choosing between a 2% or 4% raise. You’re choosing between transactional income and relational equity. A great tenant who pays, respects the place, and doesn’t burn your weekends is worth more than $100. One vacancy wipes that out fast.

Raise modestly (1–2%), communicate early, and keep it predictable. Tenants handle small, steady bumps better than surprises.

Pro tip: set automated 60-day (follow local compliance) renewal reminders and price off active comps within half a mile, not anecdotes.

Rent reviews should feel like portfolio rebalancing. Small, consistent, unemotional. That rhythm compounds trust, and trust compounds yield.

Ryan Spath · Answer

@Sino U.

Congrats on getting your first duplex that’s a big step. Personally, I’d lean toward a modest increase this year. Even if it’s not the full $100 difference, staying close to market keeps you from falling behind while still keeping good tenants in place. A 2% bump is fair and signals that rents do move with the market, and you can always adjust again next year once you see how expenses and tenant stability play out.

If your current tenants pay on time, take care of the place, a small increase now with open communication usually keeps everyone happy. Long-term, steady occupancy often beats chasing every last dollar of rent.

Kenneth Garrett · Answer

You did not mention what the current rent is, but 2% at $2000 a month is $40.  If the tenants have been decent a small increase is not a big deal.  I always try to have a nicer unit than the competition and stay slightly under rent.  This helps tenant retention.  The biggest cost landlords take on are when a tenant leaves.  Repairs, painting and vacancy kills deals. The cost of one month vacancy and repairs probably average $3000.  $100 rent increase is $1200.  Definitely not worth the trade off.  A modest increase won’t hurt, but I tend to only increase rent every 2 years.

David Krulac · Answer

@Sino U. What are other rents doing in your area, up, down or sideways?  Look at HUD Fair Market Rent for your area/zip code.  Are you above or below that MEDIAN rent where 50% are higher and 50% are lower.  Look at rents on Zillow, Craigslist and Rentometer as well as other sources.  You should be come the expert of rents in your area.

When I bought a multi-unit I inherited tenants from the previous owner.  One of the units was $550 rent for a 3 br units, well below market.  Months before the lease expired I notified the tenant in writing that the new rent would be $750.  The tenant called me yelling and screaming and even had her case worker call me saying the rent increase was unreasonable.  I told them both, even with the increase $750 is STILL below market rent, and that the tenant was free for find a cheaper place to live and I was giving them months of advance notice, so they could find a "better" place.  The tenant spent months looking for another place and could not find a single place less expensive than mine.  They ended up signing a new one year lease and ended up staying 3 more years. I know that a 36% rent increase is a big ask, but I knew the market and knew the rent was still low.  And I also knew that the former owner didn't keep up with the current market rents.  If I have a choice I like to take ownership of rental properties with no tenants, so that I get to pick my own tenants and set my own rent. BTW in all the years of renting I only lowered the rent on one property that went vacant during the winter.  After hundreds of tenants only 1 lowered rent!

Should I increase the rent?

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