When is the best time to increase rents? Winter, spring, summer?
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
When is the best time to increase rents? Winter, spring, summer?
Most Popular Reply
Melanie ThomasBusiness Member
Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votesFrom a strategy standpoint, I’m a big believer that rents should be reviewed and adjusted every single year, regardless of market or climate. Owner costs go up every year taxes insurance maintenance labor utilities compliance so skipping increases just compounds the problem.
What’s honestly more alarming to me as a professional PM is how many owners come to us who haven’t raised rent in years and haven’t done routine inspections. That’s usually where deferred maintenance, sticker shock, and sudden large increases come from.
In practice, we’ve found that small predictable annual increases are far less disruptive than skipping years and then trying to catch up. It’s not cheap for tenants to move, and most would rather renew with a reasonable increase than incur moving costs, application fees, deposits, and uncertainty.
As far as timing, winter markets do require more thought around turnover risk, but with strong demand even in January, the fear of winter vacancy is often overstated. MTM after year one gives you flexibility, but consistency and expectation-setting matter more than the exact month.
Bottom line: steady annual increases + proactive communication beats trying to time the “perfect” month in any market.
RentWerx Property Management4.73296 Reviews
31 Replies
- 8moGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
We increase rents whenever the market will bear it. (My properties are in Indy and it is very cold here today.) That means sometimes we are increasing rents in December and sometimes we have no increases in June. All our leases are between 9 and 16 month terms.
It is worth stating this. Realistically, rents are set by the residents. If the market is giving them other options, they will leave if your asking rents are too high. If the market is restrictive and they don't have a lot of options, rents will rise. That is why we look at it opportunistically. We have to take what the market gives us when it gives it to us, because sometimes it won't.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @Greg Scott:
We increase rents whenever the market will bear it. (My properties are in Indy and it is very cold here today.) That means sometimes we are increasing rents in December and sometimes we have no increases in June. All our leases are between 9 and 16 month terms.
It is worth stating this. Realistically, rents are set by the residents. If the market is giving them other options, they will leave if your asking rents are too high. If the market is restrictive and they don't have a lot of options, rents will rise. That is why we look at it opportunistically. We have to take what the market gives us when it gives it to us, because sometimes it won't.
Sounds like you are increasing rents with turnover and renewals? We don't do formal renewals, our lease automatically converts to a MTM and with the vast majority of our tenants staying for years, it comes down to an annual routine in spring.
I totally agree about the open market approach. We typically keep longterm renters slightly below market rents, but we do stick to our annual routine. You are right about taking the incrtease when the market allows, cost increases have a way of sneaking up on you and if you let that slide for a few years your bottom line keeps melting.
- Property Manager · Milwaukee, WI · Member since 2011 · 185 posts · 16 votes8mo
I think as you mentioned Spring is good time to send out the rent increase communication and also the lease to sign. If you send the notice in March with lease for Jun 1 rent increase. They have 30 days to sign the lease or send a 60 day vacate notice by the end of March. They may send vacate notice sooner than end of March. Or if you send it sooner than March, it could also work out if there are repairs and upgrades that you want to do the unit then you have some time before putting out in the market. If your tenants are usually University students, then very likely your new students tenants will sign lease starting in Aug only when they are back for Fall semester.
If you like your current tenants, then you can add more justification as to why you are increasing the rent - higher repair and maintenance costs, increased property taxes etc. At the end of the day they should be able to afford it (rent + electric + heating/ cooling) otherwise they should move.
I missed the RPA meeting last night as I was planning to come over :-). I have been a member for couple of years and only attend one meeting in person. I have attended more online meetings.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @Lokesh W.:
I think as you mentioned Spring is good time to send out the rent increase communication and also the lease to sign. If you send the notice in March with lease for Jun 1 rent increase. They have 30 days to sign the lease or send a 60 day vacate notice by the end of March. They may send vacate notice sooner than end of March. Or if you send it sooner than March, it could also work out if there are repairs and upgrades that you want to do the unit then you have some time before putting out in the market. If your tenants are usually University students, then very likely your new students tenants will sign lease starting in Aug only when they are back for Fall semester.
If you like your current tenants, then you can add more justification as to why you are increasing the rent - higher repair and maintenance costs, increased property taxes etc. At the end of the day they should be able to afford it (rent + electric + heating/ cooling) otherwise they should move.
I missed the RPA meeting last night as I was planning to come over :-). I have been a member for couple of years and only attend one meeting in person. I have attended more online meetings.
Yes, absolutley - good point: we do send a letter that provides reasoning. I am so used to doing that from my corporate days working for a constuction machinery manufacturer, that I did not even mention it; the annual price list goes out in spring along with a letter that states ".. due to increased cost in materials, components and labor.." so we send a similar letter to tenants citing usually taxes, insurance.
Thanks for beeing an RPA member, it is important! We spent over 100k last year on legislative efforts in Madison, we've got Koble in front of the Wisconsin supreme court, now we are dealing with the new Milwaukee fire/sprinkler ordinance and so many more.. And Capitol Day is comming up (we bring bus loads of investors to Madison and spend the day talking to law makers). And we are only funded by memebers; so please help bringing more people to the RPA! Maybe I'll see you there at the next meeting, event schedule on RPAWI.org
- 8moPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
Quote from @Marcus Auerbach:
Yeah, I don't experience it with the storms and all! But winter in any market is always a bad time to lose a tenant. So, getting a tenant pushed out with rents going up is tough for sure in the winter since no one is really looking to move over the holiday. The best is spring and summer since you can have a closer window from last tenant to new tenant coming in.
The McKernan Group4.954 Reviews - Property Manager · Milwaukee, WI · Member since 2011 · 185 posts · 16 votes8moThanks for all the great work at RPA! The first time i heard of Koble case was from my attorney when I wanted to file for damages and unpaid 6 Months rents from a long term tenant family who broke the lease and on his last week of stay; of course he turned out to hostile after they gave me the vacate notice to break the lease. My attorney sent me a link to this case and suggested that I just cut my losses and move on. Other than Evictions, he currently does not recommend any court action. I learned more about this case from RPA. Very informative! My new neighbor is a landlord so I will ask him to join RPA.
- 8moMelanie ThomasBusiness MemberReal Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
From a strategy standpoint, I’m a big believer that rents should be reviewed and adjusted every single year, regardless of market or climate. Owner costs go up every year taxes insurance maintenance labor utilities compliance so skipping increases just compounds the problem.
What’s honestly more alarming to me as a professional PM is how many owners come to us who haven’t raised rent in years and haven’t done routine inspections. That’s usually where deferred maintenance, sticker shock, and sudden large increases come from.
In practice, we’ve found that small predictable annual increases are far less disruptive than skipping years and then trying to catch up. It’s not cheap for tenants to move, and most would rather renew with a reasonable increase than incur moving costs, application fees, deposits, and uncertainty.
As far as timing, winter markets do require more thought around turnover risk, but with strong demand even in January, the fear of winter vacancy is often overstated. MTM after year one gives you flexibility, but consistency and expectation-setting matter more than the exact month.
Bottom line: steady annual increases + proactive communication beats trying to time the “perfect” month in any market.
RentWerx Property Management4.73296 Reviews- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @Melanie Thomas:
From a strategy standpoint, I’m a big believer that rents should be reviewed and adjusted every single year, regardless of market or climate. Owner costs go up every year taxes insurance maintenance labor utilities compliance so skipping increases just compounds the problem.
What’s honestly more alarming to me as a professional PM is how many owners come to us who haven’t raised rent in years and haven’t done routine inspections. That’s usually where deferred maintenance, sticker shock, and sudden large increases come from.
In practice, we’ve found that small predictable annual increases are far less disruptive than skipping years and then trying to catch up. It’s not cheap for tenants to move, and most would rather renew with a reasonable increase than incur moving costs, application fees, deposits, and uncertainty.
As far as timing, winter markets do require more thought around turnover risk, but with strong demand even in January, the fear of winter vacancy is often overstated. MTM after year one gives you flexibility, but consistency and expectation-setting matter more than the exact month.
Bottom line: steady annual increases + proactive communication beats trying to time the “perfect” month in any market.
I think a lot of investors that are activley growing their portfolio are distracted and don't pay attention to annual cost increases. And it happens easily, because with your portfolio growing also your rent roll is growing, so it looks like you are making more and easily masks the errosion you have on a per property basis.
I see the same thing with investors not increasing rent, especially smaller ones. It is an inconvinient conversation with tenants and easy to find an excuse why you should not do it. The go-to for many is of course "I don't want to have a vacancy over $50". But that is like saying I don't want to have an accident, so I don't drive..
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes8mo
In my experience in the northern areas, real estate prices increase in the spring when more new listings arrive. I say the first day of spring is the first day in FEB, where the temps reach 60 degrees. People get spring fever and are ready to get out of hibernation. BTW its 9 degrees here today.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @David Krulac:
In my experience in the northern areas, real estate prices increase in the spring when more new listings arrive. I say the first day of spring is the first day in FEB, where the temps reach 60 degrees. People get spring fever and are ready to get out of hibernation. BTW its 9 degrees here today.
We are probably a month behind you. This winter hits much harder than the last 5 which were rather mild. We actually have snow and on Friday it's going to be sunny and bitter cold -14F actual. I think I'll try the throwing hot water into the air trick. Last year Feb we had a week in the 60's, lets see if that happens again.
It feels right to do this in spring, but I think we will send out letters earlier this year
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes8mo
Quote from @Marcus Auerbach:
Quote from @David Krulac:
In my experience in the northern areas, real estate prices increase in the spring when more new listings arrive. I say the first day of spring is the first day in FEB, where the temps reach 60 degrees. People get spring fever and are ready to get out of hibernation. BTW its 9 degrees here today.
We are probably a month behind you. This winter hits much harder than the last 5 which were rather mild. We actually have snow and on Friday it's going to be sunny and bitter cold -14F actual. I think I'll try the throwing hot water into the air trick. Last year Feb we had a week in the 60's, lets see if that happens again.
It feels right to do this in spring, but I think we will send out letters earlier this year
-14F, I wish it were that warm right now......
As far as timing goes. Were doing renewal and non-renewal notices now, Jan & Feb. For March/April end's/move-outs. Any delay or turn, and your in April/May.
A 30 day notice is way too little notice IMO. 90'ish is the sweet-spot I think.
- 8moRyan RomingerBusiness MemberReal Estate Broker · Indianapolis, IN · Member since 2018 · 340 posts · 144 votes
In colder markets, many owners still time increases to late spring or early summer to minimize winter turnover risk, even if demand stays strong year-round. In warmer or Sun Belt markets, timing matters less, so increases are often tied more closely to lease anniversaries or cost changes rather than seasonality.
Intrigue Real Estate & Property Management4.6285 Reviews - 8moPatrick O'SullivanBusiness MemberProperty Manager · Phoenix, AZ · Member since 2024 · 525 posts · 197 votes
Timing is much less about seasons and more about market momentum. We do not really have a slow winter here. People move year-round, and demand tends to stay strong even in the hotter months when other markets slow down.
Because of that, we focus less on picking a perfect month and more on staying aligned with current market rents and rising operating costs. Taxes, insurance, HOA fees, and maintenance have all moved enough that skipping annual adjustments just creates bigger problems later.
For long-term residents, consistency matters more than timing. When tenants know to expect a reasonable annual increase, there is usually far less pushback. In our experience, smaller predictable increases lead to better retention than waiting and then trying to make a larger jump.
The biggest mistake we see is delaying increases out of fear of vacancy. If pricing is in line with the market, well-maintained homes rent quickly regardless of the month.
At the end of the day, the market tells you what it will support. Just stay close to the data and adjust accordingly.
get MULTIfamily Property Management4.7220 Reviews - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes8mo
@Marcus Auerbach your doing M2M is a bit different than me, I strongly dislike the uncertainty of M2M, but it has it's place, and it changes how I generally do it.
For me, I tackle rent increase at the onset of a lease. This conditioning properly set's expectations going forward.
When a prospective tenant applies, we go over there options. That in a multi-year lease, there annual rent increase is locked it, written right into the lease so everyone knows exactly what everything is for the duration.
And that upon a lease term expiring, rent increase will be reviewed for what market rate is at that time of upcoming lease expiration, and if the Landlord will be extending an option to renew or extend lease. Which Landlord may or may NOT do.
When asked for any certainties, I explain the simple truth; the only certainty is what's lock-up in a lease. No, renewals and extensions are never a certainty because none of us know the future. I can say how things seem today, if was expiring now, but who knows what the world will look like in 1, 2, 3+ years, anyone's guess.
When I instituted this, tenant complaints associated to renewals went down by over 90%. Just that simple simple action of clarification at the start.
And our % of persons who started with 3yr terms went up more then 300%. 2yr lease starts more then 200%.
The renewal rate of 3yr lease tenants, over 70%. And the occurrence of issues with such tenants miniscule.
Most issues and headaches happen in those 1yr tenancy.
I spoke to a Psychiatrist on the data, asking her to explain why I was seeing all this in the data. She said it made perfect sense to her. The mindset's are totally opposite. 1yr tenancy is transient, they are thinking of it as short-term situation, there focus of desire is somewhere/something else. So they treat it all like it's disposable, but in their minds it kind of is.
Vs those 3yr tenancy leases, there entering it with a long-term thought, that it's home. And that people get entrenched, so the emotional pain of leaving "home" is stronger than the draw of pleasure from moving on, so they stay longer, take greater care, because psychologically there invested.
And M2M is the kind of ultimate disposable thing. She stressed to think of the mindset, how there is 0 certainty, 0 knowing, that the kind of person comfortable with such was not aligned with my desire for the most responsible type tenants who'd have way too much unease with such unknown situation of M2M.
So for me, once I started doing that system, there has been next to 0 issues on rent increases because there already in the lease, the rate was pre-set and locked in.
At renewals, we simply provide a copy of the analysis that has the comp's and price justification. Most of time people accept that, because it's right there in black and white why the price is what it is. Vs a random notice just saying a # with no justification.
The only push-back I ever get is something they feel should modify that price. Unit is more aged features, worn out carpet, something to that effect. Fairly rare, but happens every once in a while. And most often, there is some legitimacy to it. So it get's discussed, negotiated, and 3/4 of time a happy middle ground is found.
Those who press on discount deals, for example the "I've been here ___ time, can't I get a discount for that?" No. No matter how many times I eat at Applebee's, I still gotta pay menu prices. The fair price is the fair price.
For any who want to argue how evil and greedy this is, let's be honest. You are literally paying a tenant to stay when you do such. It's a bribe to stay. I don't pay bribes. I don't deal with those who want to extort. Fair price is fair price. It's a business.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @James Hamling:
@Marcus Auerbach your doing M2M is a bit different than me, I strongly dislike the uncertainty of M2M, but it has it's place, and it changes how I generally do it.
For me, I tackle rent increase at the onset of a lease. This conditioning properly set's expectations going forward.
When a prospective tenant applies, we go over there options. That in a multi-year lease, there annual rent increase is locked it, written right into the lease so everyone knows exactly what everything is for the duration.
And that upon a lease term expiring, rent increase will be reviewed for what market rate is at that time of upcoming lease expiration, and if the Landlord will be extending an option to renew or extend lease. Which Landlord may or may NOT do.
When asked for any certainties, I explain the simple truth; the only certainty is what's lock-up in a lease. No, renewals and extensions are never a certainty because none of us know the future. I can say how things seem today, if was expiring now, but who knows what the world will look like in 1, 2, 3+ years, anyone's guess.
When I instituted this, tenant complaints associated to renewals went down by over 90%. Just that simple simple action of clarification at the start.
And our % of persons who started with 3yr terms went up more then 300%. 2yr lease starts more then 200%.
The renewal rate of 3yr lease tenants, over 70%. And the occurrence of issues with such tenants miniscule.
Most issues and headaches happen in those 1yr tenancy.
I spoke to a Psychiatrist on the data, asking her to explain why I was seeing all this in the data. She said it made perfect sense to her. The mindset's are totally opposite. 1yr tenancy is transient, they are thinking of it as short-term situation, there focus of desire is somewhere/something else. So they treat it all like it's disposable, but in their minds it kind of is.
Vs those 3yr tenancy leases, there entering it with a long-term thought, that it's home. And that people get entrenched, so the emotional pain of leaving "home" is stronger than the draw of pleasure from moving on, so they stay longer, take greater care, because psychologically there invested.
And M2M is the kind of ultimate disposable thing. She stressed to think of the mindset, how there is 0 certainty, 0 knowing, that the kind of person comfortable with such was not aligned with my desire for the most responsible type tenants who'd have way too much unease with such unknown situation of M2M.
So for me, once I started doing that system, there has been next to 0 issues on rent increases because there already in the lease, the rate was pre-set and locked in.
At renewals, we simply provide a copy of the analysis that has the comp's and price justification. Most of time people accept that, because it's right there in black and white why the price is what it is. Vs a random notice just saying a # with no justification.
The only push-back I ever get is something they feel should modify that price. Unit is more aged features, worn out carpet, something to that effect. Fairly rare, but happens every once in a while. And most often, there is some legitimacy to it. So it get's discussed, negotiated, and 3/4 of time a happy middle ground is found.
Those who press on discount deals, for example the "I've been here ___ time, can't I get a discount for that?" No. No matter how many times I eat at Applebee's, I still gotta pay menu prices. The fair price is the fair price.
For any who want to argue how evil and greedy this is, let's be honest. You are literally paying a tenant to stay when you do such. It's a bribe to stay. I don't pay bribes. I don't deal with those who want to extort. Fair price is fair price. It's a business.
There are some great nuggest in your post, James! I very much like the idea of discussing annual increases at the initial move in. I am adding this to our SOP - great idea.
The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status; amongst other things it extends Notice deadlines. Se we keep it stictly to 1 year and the way our lease is written it automatically extends to a MTM, which tenants love not realizing that this cuts both ways. It makes for example terminating leases much easier. And gives me flexibility with increases.
I am not worried about move outs with MTM. The #1 reason why our tenants move out is they buy a house and when that happens a lease is not going to stop them. I've been doing this combo 1year/MTM since forever and don't see a downside. BTW I would never do MTM to start with and we are talking with tenants about their intentions and you can always tell when someone has that multi-year approach, just by the way they are asking questions.
That also ties into one of our core philosopies: we rent very nice homes. New kitchen, bath, lighting etc - one of the reasons is that attracts very nice tenants. And they will also keep homes nicer, because it does really matter to them. They don't spill liquids inside cabinets, they don't ding trim and doors,..
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes8mo
Quote from @Marcus Auerbach:
Quote from @James Hamling:
@Marcus Auerbach your doing M2M is a bit different than me, I strongly dislike the uncertainty of M2M, but it has it's place, and it changes how I generally do it.
For me, I tackle rent increase at the onset of a lease. This conditioning properly set's expectations going forward.
When a prospective tenant applies, we go over there options. That in a multi-year lease, there annual rent increase is locked it, written right into the lease so everyone knows exactly what everything is for the duration.
And that upon a lease term expiring, rent increase will be reviewed for what market rate is at that time of upcoming lease expiration, and if the Landlord will be extending an option to renew or extend lease. Which Landlord may or may NOT do.
When asked for any certainties, I explain the simple truth; the only certainty is what's lock-up in a lease. No, renewals and extensions are never a certainty because none of us know the future. I can say how things seem today, if was expiring now, but who knows what the world will look like in 1, 2, 3+ years, anyone's guess.
When I instituted this, tenant complaints associated to renewals went down by over 90%. Just that simple simple action of clarification at the start.
And our % of persons who started with 3yr terms went up more then 300%. 2yr lease starts more then 200%.
The renewal rate of 3yr lease tenants, over 70%. And the occurrence of issues with such tenants miniscule.
Most issues and headaches happen in those 1yr tenancy.
I spoke to a Psychiatrist on the data, asking her to explain why I was seeing all this in the data. She said it made perfect sense to her. The mindset's are totally opposite. 1yr tenancy is transient, they are thinking of it as short-term situation, there focus of desire is somewhere/something else. So they treat it all like it's disposable, but in their minds it kind of is.
Vs those 3yr tenancy leases, there entering it with a long-term thought, that it's home. And that people get entrenched, so the emotional pain of leaving "home" is stronger than the draw of pleasure from moving on, so they stay longer, take greater care, because psychologically there invested.
And M2M is the kind of ultimate disposable thing. She stressed to think of the mindset, how there is 0 certainty, 0 knowing, that the kind of person comfortable with such was not aligned with my desire for the most responsible type tenants who'd have way too much unease with such unknown situation of M2M.
So for me, once I started doing that system, there has been next to 0 issues on rent increases because there already in the lease, the rate was pre-set and locked in.
At renewals, we simply provide a copy of the analysis that has the comp's and price justification. Most of time people accept that, because it's right there in black and white why the price is what it is. Vs a random notice just saying a # with no justification.
The only push-back I ever get is something they feel should modify that price. Unit is more aged features, worn out carpet, something to that effect. Fairly rare, but happens every once in a while. And most often, there is some legitimacy to it. So it get's discussed, negotiated, and 3/4 of time a happy middle ground is found.
Those who press on discount deals, for example the "I've been here ___ time, can't I get a discount for that?" No. No matter how many times I eat at Applebee's, I still gotta pay menu prices. The fair price is the fair price.
For any who want to argue how evil and greedy this is, let's be honest. You are literally paying a tenant to stay when you do such. It's a bribe to stay. I don't pay bribes. I don't deal with those who want to extort. Fair price is fair price. It's a business.
There are some great nuggest in your post, James! I very much like the idea of discussing annual increases at the initial move in. I am adding this to our SOP - great idea.
The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status; amongst other things it extends Notice deadlines. Se we keep it stictly to 1 year and the way our lease is written it automatically extends to a MTM, which tenants love not realizing that this cuts both ways. It makes for example terminating leases much easier. And gives me flexibility with increases.
I am not worried about move outs with MTM. The #1 reason why our tenants move out is they buy a house and when that happens a lease is not going to stop them. I've been doing this combo 1year/MTM since forever and don't see a downside. BTW I would never do MTM to start with and we are talking with tenants about their intentions and you can always tell when someone has that multi-year approach, just by the way they are asking questions.
That also ties into one of our core philosopies: we rent very nice homes. New kitchen, bath, lighting etc - one of the reasons is that attracts very nice tenants. And they will also keep homes nicer, because it does really matter to them. They don't spill liquids inside cabinets, they don't ding trim and doors,..
"The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status"
Ahh, ok, well that sure as heck changes things doesn't it.In MN market, we have a very different regulatory environment. There is no graduation of tenant rights, they get all of them day 1. To the extent that if a person is walking along, see's a vacant property, decides to break in, and make it there own, yup, they have tenant rights and have to go through eviction.
For those prospective tenant's working on buying, or planned to soon'ish buy, I also offer a special early termination clause for multi-year leases. That after 1yr tenancy, they can early terminate with minimum 90 day notice, ability to market and show property no less than 60 days, and for the exclusive reason of buying a home. Otherwise early termination clause/fee applies. I find quality tenants love this. Gives them certainty with flexibility.
My Achilles heal is pounding it into leasing agent's heads of having the proper conversations. With a handful of questions, simple questions, we can gauge how far away from being able to buy they are, Need Want & Interest, and then offer connecting to our finance pro who will get exact details of where they are, the path to get from where they are too where they want to be, with insight and guidance to help them get there.
And thus 17% of prospective tenants turn into future buyer clients, ie $$$$.
Baffles my mind. That's the #'s we see when one invests this tiny iota of effort, 17% of prospective tenants, not just actual tenants.
So say get 50 prospective tenant showings on a property, by the #'s 8 will convert and close.
And of placed tenants, when put this minimal energy into it to setup things for future buy, not only do you have superior optics of knowing well in advance tenants are now financially qualified and on the hunt for a buy so get into strategizing for relist, but the conversion % is astronomical.
Zillow buyer leads convert at what "as-high-as" 20%? These tenant leads convert in excess of 85%.
Every leasing team should be dialed in on such. If not, there is a mountain of $$$$ there leaving on the table.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @James Hamling:
Quote from @Marcus Auerbach:
Quote from @James Hamling:
@Marcus Auerbach your doing M2M is a bit different than me, I strongly dislike the uncertainty of M2M, but it has it's place, and it changes how I generally do it.
For me, I tackle rent increase at the onset of a lease. This conditioning properly set's expectations going forward.
When a prospective tenant applies, we go over there options. That in a multi-year lease, there annual rent increase is locked it, written right into the lease so everyone knows exactly what everything is for the duration.
And that upon a lease term expiring, rent increase will be reviewed for what market rate is at that time of upcoming lease expiration, and if the Landlord will be extending an option to renew or extend lease. Which Landlord may or may NOT do.
When asked for any certainties, I explain the simple truth; the only certainty is what's lock-up in a lease. No, renewals and extensions are never a certainty because none of us know the future. I can say how things seem today, if was expiring now, but who knows what the world will look like in 1, 2, 3+ years, anyone's guess.
When I instituted this, tenant complaints associated to renewals went down by over 90%. Just that simple simple action of clarification at the start.
And our % of persons who started with 3yr terms went up more then 300%. 2yr lease starts more then 200%.
The renewal rate of 3yr lease tenants, over 70%. And the occurrence of issues with such tenants miniscule.
Most issues and headaches happen in those 1yr tenancy.
I spoke to a Psychiatrist on the data, asking her to explain why I was seeing all this in the data. She said it made perfect sense to her. The mindset's are totally opposite. 1yr tenancy is transient, they are thinking of it as short-term situation, there focus of desire is somewhere/something else. So they treat it all like it's disposable, but in their minds it kind of is.
Vs those 3yr tenancy leases, there entering it with a long-term thought, that it's home. And that people get entrenched, so the emotional pain of leaving "home" is stronger than the draw of pleasure from moving on, so they stay longer, take greater care, because psychologically there invested.
And M2M is the kind of ultimate disposable thing. She stressed to think of the mindset, how there is 0 certainty, 0 knowing, that the kind of person comfortable with such was not aligned with my desire for the most responsible type tenants who'd have way too much unease with such unknown situation of M2M.
So for me, once I started doing that system, there has been next to 0 issues on rent increases because there already in the lease, the rate was pre-set and locked in.
At renewals, we simply provide a copy of the analysis that has the comp's and price justification. Most of time people accept that, because it's right there in black and white why the price is what it is. Vs a random notice just saying a # with no justification.
The only push-back I ever get is something they feel should modify that price. Unit is more aged features, worn out carpet, something to that effect. Fairly rare, but happens every once in a while. And most often, there is some legitimacy to it. So it get's discussed, negotiated, and 3/4 of time a happy middle ground is found.
Those who press on discount deals, for example the "I've been here ___ time, can't I get a discount for that?" No. No matter how many times I eat at Applebee's, I still gotta pay menu prices. The fair price is the fair price.
For any who want to argue how evil and greedy this is, let's be honest. You are literally paying a tenant to stay when you do such. It's a bribe to stay. I don't pay bribes. I don't deal with those who want to extort. Fair price is fair price. It's a business.
There are some great nuggest in your post, James! I very much like the idea of discussing annual increases at the initial move in. I am adding this to our SOP - great idea.
The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status; amongst other things it extends Notice deadlines. Se we keep it stictly to 1 year and the way our lease is written it automatically extends to a MTM, which tenants love not realizing that this cuts both ways. It makes for example terminating leases much easier. And gives me flexibility with increases.
I am not worried about move outs with MTM. The #1 reason why our tenants move out is they buy a house and when that happens a lease is not going to stop them. I've been doing this combo 1year/MTM since forever and don't see a downside. BTW I would never do MTM to start with and we are talking with tenants about their intentions and you can always tell when someone has that multi-year approach, just by the way they are asking questions.
That also ties into one of our core philosopies: we rent very nice homes. New kitchen, bath, lighting etc - one of the reasons is that attracts very nice tenants. And they will also keep homes nicer, because it does really matter to them. They don't spill liquids inside cabinets, they don't ding trim and doors,..
"The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status"
Ahh, ok, well that sure as heck changes things doesn't it.In MN market, we have a very different regulatory environment. There is no graduation of tenant rights, they get all of them day 1. To the extent that if a person is walking along, see's a vacant property, decides to break in, and make it there own, yup, they have tenant rights and have to go through eviction.
For those prospective tenant's working on buying, or planned to soon'ish buy, I also offer a special early termination clause for multi-year leases. That after 1yr tenancy, they can early terminate with minimum 90 day notice, ability to market and show property no less than 60 days, and for the exclusive reason of buying a home. Otherwise early termination clause/fee applies. I find quality tenants love this. Gives them certainty with flexibility.
My Achilles heal is pounding it into leasing agent's heads of having the proper conversations. With a handful of questions, simple questions, we can gauge how far away from being able to buy they are, Need Want & Interest, and then offer connecting to our finance pro who will get exact details of where they are, the path to get from where they are too where they want to be, with insight and guidance to help them get there.
And thus 17% of prospective tenants turn into future buyer clients, ie $$$$.
Baffles my mind. That's the #'s we see when one invests this tiny iota of effort, 17% of prospective tenants, not just actual tenants.
So say get 50 prospective tenant showings on a property, by the #'s 8 will convert and close.
And of placed tenants, when put this minimal energy into it to setup things for future buy, not only do you have superior optics of knowing well in advance tenants are now financially qualified and on the hunt for a buy so get into strategizing for relist, but the conversion % is astronomical.
Zillow buyer leads convert at what "as-high-as" 20%? These tenant leads convert in excess of 85%.
Every leasing team should be dialed in on such. If not, there is a mountain of $$$$ there leaving on the table.
We have a move in conversation checklist, just topics to talk about. IMO you can add a lot of language into your lease, but nobody really reads it, nobody cares. And that is not even a dig on tenants: I don't read the lease agreement when I rent a car at the airport, I just sign it and want the keys!
But talking about things that matter goes a long way: we go over not mounting TV's in bedrooms, lawn care and why we need a lint catcher on the washer. About 30 points. I'll add annual rent increases - that was a great suggestion from you!
What's your early termination fee? We just charge one month rent and allow 30 day notice. I don't see the benefit in longer, as we typically find new tenants in 2 weeks.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes8mo
Quote from @Marcus Auerbach:
Quote from @James Hamling:
Quote from @Marcus Auerbach:
Quote from @James Hamling:
@Marcus Auerbach your doing M2M is a bit different than me, I strongly dislike the uncertainty of M2M, but it has it's place, and it changes how I generally do it.
For me, I tackle rent increase at the onset of a lease. This conditioning properly set's expectations going forward.
When a prospective tenant applies, we go over there options. That in a multi-year lease, there annual rent increase is locked it, written right into the lease so everyone knows exactly what everything is for the duration.
And that upon a lease term expiring, rent increase will be reviewed for what market rate is at that time of upcoming lease expiration, and if the Landlord will be extending an option to renew or extend lease. Which Landlord may or may NOT do.
When asked for any certainties, I explain the simple truth; the only certainty is what's lock-up in a lease. No, renewals and extensions are never a certainty because none of us know the future. I can say how things seem today, if was expiring now, but who knows what the world will look like in 1, 2, 3+ years, anyone's guess.
When I instituted this, tenant complaints associated to renewals went down by over 90%. Just that simple simple action of clarification at the start.
And our % of persons who started with 3yr terms went up more then 300%. 2yr lease starts more then 200%.
The renewal rate of 3yr lease tenants, over 70%. And the occurrence of issues with such tenants miniscule.
Most issues and headaches happen in those 1yr tenancy.
I spoke to a Psychiatrist on the data, asking her to explain why I was seeing all this in the data. She said it made perfect sense to her. The mindset's are totally opposite. 1yr tenancy is transient, they are thinking of it as short-term situation, there focus of desire is somewhere/something else. So they treat it all like it's disposable, but in their minds it kind of is.
Vs those 3yr tenancy leases, there entering it with a long-term thought, that it's home. And that people get entrenched, so the emotional pain of leaving "home" is stronger than the draw of pleasure from moving on, so they stay longer, take greater care, because psychologically there invested.
And M2M is the kind of ultimate disposable thing. She stressed to think of the mindset, how there is 0 certainty, 0 knowing, that the kind of person comfortable with such was not aligned with my desire for the most responsible type tenants who'd have way too much unease with such unknown situation of M2M.
So for me, once I started doing that system, there has been next to 0 issues on rent increases because there already in the lease, the rate was pre-set and locked in.
At renewals, we simply provide a copy of the analysis that has the comp's and price justification. Most of time people accept that, because it's right there in black and white why the price is what it is. Vs a random notice just saying a # with no justification.
The only push-back I ever get is something they feel should modify that price. Unit is more aged features, worn out carpet, something to that effect. Fairly rare, but happens every once in a while. And most often, there is some legitimacy to it. So it get's discussed, negotiated, and 3/4 of time a happy middle ground is found.
Those who press on discount deals, for example the "I've been here ___ time, can't I get a discount for that?" No. No matter how many times I eat at Applebee's, I still gotta pay menu prices. The fair price is the fair price.
For any who want to argue how evil and greedy this is, let's be honest. You are literally paying a tenant to stay when you do such. It's a bribe to stay. I don't pay bribes. I don't deal with those who want to extort. Fair price is fair price. It's a business.
There are some great nuggest in your post, James! I very much like the idea of discussing annual increases at the initial move in. I am adding this to our SOP - great idea.
The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status; amongst other things it extends Notice deadlines. Se we keep it stictly to 1 year and the way our lease is written it automatically extends to a MTM, which tenants love not realizing that this cuts both ways. It makes for example terminating leases much easier. And gives me flexibility with increases.
I am not worried about move outs with MTM. The #1 reason why our tenants move out is they buy a house and when that happens a lease is not going to stop them. I've been doing this combo 1year/MTM since forever and don't see a downside. BTW I would never do MTM to start with and we are talking with tenants about their intentions and you can always tell when someone has that multi-year approach, just by the way they are asking questions.
That also ties into one of our core philosopies: we rent very nice homes. New kitchen, bath, lighting etc - one of the reasons is that attracts very nice tenants. And they will also keep homes nicer, because it does really matter to them. They don't spill liquids inside cabinets, they don't ding trim and doors,..
"The reason we do only 365 day leases (like Jan 1st to Dec 31st and NOT Jan 1st which is 366 days) is because that would provide tenants with a different legal status"
Ahh, ok, well that sure as heck changes things doesn't it.In MN market, we have a very different regulatory environment. There is no graduation of tenant rights, they get all of them day 1. To the extent that if a person is walking along, see's a vacant property, decides to break in, and make it there own, yup, they have tenant rights and have to go through eviction.
For those prospective tenant's working on buying, or planned to soon'ish buy, I also offer a special early termination clause for multi-year leases. That after 1yr tenancy, they can early terminate with minimum 90 day notice, ability to market and show property no less than 60 days, and for the exclusive reason of buying a home. Otherwise early termination clause/fee applies. I find quality tenants love this. Gives them certainty with flexibility.
My Achilles heal is pounding it into leasing agent's heads of having the proper conversations. With a handful of questions, simple questions, we can gauge how far away from being able to buy they are, Need Want & Interest, and then offer connecting to our finance pro who will get exact details of where they are, the path to get from where they are too where they want to be, with insight and guidance to help them get there.
And thus 17% of prospective tenants turn into future buyer clients, ie $$$$.
Baffles my mind. That's the #'s we see when one invests this tiny iota of effort, 17% of prospective tenants, not just actual tenants.
So say get 50 prospective tenant showings on a property, by the #'s 8 will convert and close.
And of placed tenants, when put this minimal energy into it to setup things for future buy, not only do you have superior optics of knowing well in advance tenants are now financially qualified and on the hunt for a buy so get into strategizing for relist, but the conversion % is astronomical.
Zillow buyer leads convert at what "as-high-as" 20%? These tenant leads convert in excess of 85%.
Every leasing team should be dialed in on such. If not, there is a mountain of $$$$ there leaving on the table.
We have a move in conversation checklist, just topics to talk about. IMO you can add a lot of language into your lease, but nobody really reads it, nobody cares. And that is not even a dig on tenants: I don't read the lease agreement when I rent a car at the airport, I just sign it and want the keys!
But talking about things that matter goes a long way: we go over not mounting TV's in bedrooms, lawn care and why we need a lint catcher on the washer. About 30 points. I'll add annual rent increases - that was a great suggestion from you!
What's your early termination fee? We just charge one month rent and allow 30 day notice. I don't see the benefit in longer, as we typically find new tenants in 2 weeks.
Our early termination clause is rather long, about 3/4 a page, because it doesn't just have the legalize but it explains what it means in plain English, which take a bit longer.
It's minimum 60 day notice, defined as 2 full months. And tenant is liable for rents and all that up to the date of move out. The fee adjusts depending on length of lease signed into. 1yr is 1 months rent, 2yr is 1.5, 3yr is 2 mnths.
Although....
As I explain to tenants, it's not absolute, things can be waived by Landlord. And if they work with us, it's kept neat, clean, we can readily market and show the unit, And can secure a back-2-back tenant or similar type ideal outcomes, fee's can be lessened all the way to 100% waived.
It circles back to that ethos of just talking with people, explaining things, and when they know and understand the situation, most are not only agreeable but an ally in it.
Some, while rare but does happen, say F-it, bill-em, they don't want anyone coming around and want to be left alone until ___ date.
While we do have the rights, per lease agreement, to FORCE entry and showing in that last 30 days, we all but never do. Not worth it, trying to do such in a confrontative state of things. Again, very rare but I've had it happen a handful of times.
Another unique piece I do is a Pre-Move Out inspection. Try to do it about 30 days before. Tenants ask why, we explain it's so we all have a heads up on any issues, if any, and if there is anything that could impact there security deposit wouldn't they rather know sooner vs after the fact. A question they can't say no to.
And during that, I do another odd-ball thing for our industry, I take an "exit survey". Yeah, I want to know what they liked, loved and hated about leasing there, with us. And why there moving. You get great insights that can help in releasing, and operations. It's an awesome validation when they say nothing was wrong, they loved the place they just bought a home or are relocating and really, liked it so much leaving was a hard decision. Or, maybe find out there is an unknown issue, like a harassing neighbor, or other unknown negative impactors.
The issue I see is so many PM companies live all but exclusively in a reactive state. I strongly lean to Proactive. I like solving problems BEFORE there a problem.
- Investor · Rochester Area, NY · Member since 2012 · 79 posts · 17 votes8mo
Everyone goes on a 12 month lease, then it goes month to month. Typically, for ease of tracking, I send everyone a 90 day notice of rent increases and try to get all tenants on a 1/1 increase schedule. Most of my tenants are > 2 years with most > 5 years.
When a tenant leaves, I do a refesh and make major market adjustments at that time.
- 8moTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
When your lease is up and you need to give tenants notice-ie 30-60 days before it ends depending on your local laws.
If you are month to month, then likely spring-after they've got caught up with Christmas bills and before they plan for summer holidays.
- Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes8mo
I raise them annually to keep up with my landord (city taxes, insurance,water bill)
If you fall too far behind then you may become Landlordlocked. Meaning you need to do a larger than normal increase to sustain the property. Before i raise them i check out craigslist, market place for competition and keep the rents just below the comparables.
- Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes8mo
Unfortunately if you get a vacancy in winter you end up with the misfit applicants too.
Horse a piece. Maybe raise the rents conservatively
- 8moJorge VazquezBusiness MemberReal Estate Broker · Tampa, FL · Member since 2017 · 1k+ posts · 679 votes
Great question. We do something similar. We try to structure leases so expirations fall in March or April instead of deep winter. That way if there’s turnover, it happens in the strongest leasing season, not when demand slows.
We also incentivize tenants to sign longer leases to push dates out of winter altogether. In colder markets, winter increases can work because tenants don’t want to move, but we still prefer announcing earlier and timing the effective date closer to spring. In sun belt markets, it’s easier since demand stays steady year round, but even there we like spring and early summer for cleaner transitions and less friction.
Graystone Investment Group4.6268 Reviews- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @Jorge Vazquez:
Great question. We do something similar. We try to structure leases so expirations fall in March or April instead of deep winter. That way if there’s turnover, it happens in the strongest leasing season, not when demand slows.
We also incentivize tenants to sign longer leases to push dates out of winter altogether. In colder markets, winter increases can work because tenants don’t want to move, but we still prefer announcing earlier and timing the effective date closer to spring. In sun belt markets, it’s easier since demand stays steady year round, but even there we like spring and early summer for cleaner transitions and less friction.
That's interesting. I thought FL might slow down during the peak summer heat, because who wants to carry furniture in hot & humid weather? But we also have a similar phenomenon here: people are naturally apprehensive to move during winter. They imagine deep snow. However, statistically conditions are most likly to be cool and dry, actually perfect to move. That's why I am actually not that concerned about lease exiration dates. I used to do things like 15 months to carry it through winter and into spring, but A.) tenants are self regulating and generally don't want to move in winter and B.) in Wisconsin leases over 365 days fall in a different legal category.
- Member since 2025 · 242 posts · 98 votes8mo
@Marcus Auerbach Smart move! Aligning increases with tax hikes is key. Given your strong Jan demand, shifting earlier could boost your NOI sooner. Trust your data and good luck - you've got this!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Quote from @Kate Sanchez:
@Marcus Auerbach Smart move! Aligning increases with tax hikes is key. Given your strong Jan demand, shifting earlier could boost your NOI sooner. Trust your data and good luck - you've got this!
That's actually what I am realizing now in this discussion: in past years we've waited well into spring - across the portfolio that's a huge amount of money lost, just on timeing.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes8mo
Koble whiped out a few investors in Wisconsin. In short if you have "illegal language" in your lease you may be ordered by a judge to return all rents ever received from that tenant. If other tenants find out, they may ask the same, in a MF that can be financially catastrophic.
Look up 10 deadly sins in Wisconsin landlord-tenant law. The latest version of the lease you can get from Wisconsin Legal Blank is clean. If you have old leases, sign new ones when you renew.
I hope that we can get AB202 passed, that would resolve the issue.
- 7moClare PitcherBusiness MemberProperty Manager · Milwaukee, WI · Member since 2024 · 162 posts · 97 votes
Hey Marcus — thanks again for all your help at RPA!
Welcome Home Milwaukee is currently in the process of sending out lease renewals for leases expiring in April and May. We ask tenants to notify us at least 60 days in advance if they plan to stay or move out.
Our rent analysis came back with an average 4% increase this year. Some tenants may be eligible for up to a 2% discount: 1% for having no late payments in the past 12 months and an additional 1% for being with us for five or more years.
This approach works well for us since we primarily offer 12-month leases. However, if we had more month-to-month leases, I agree that April–June would be a better time to announce an increase in case tenants decide to move. That’s when we see the majority of our showings and applications.
Welcome Home Milwaukee4.4453 Reviews - Property Manager · Milwaukee, WI · Member since 2011 · 185 posts · 16 votes7mo
@Marcus Auerbach - Thank you! That lease did not have any illegal language but was an older version. Yes, I have seen the WI Legal Blank leases and other documents.
- 7moLindsay DavisBusiness MemberReal Estate Broker · Birmingham, AL · Member since 2019 · 322 posts · 200 votes
To answer your question first, my take is that annual rent increases, timed based on the tenant’s move-in date rather than the season of the year, makes the most sense.
However, I would like to mention for the record that higher property taxes aren’t a good reason for rent increases. That’s because rents are driven by the market—what tenants are willing to pay and what comparable units are priced at—rather than how much your expenses are going up.
From the tenant’s perspective, they care that they’re getting a fair deal in relation to what they could get elsewhere; your P&L is irrelevant to them.
In other words, if you find yourself in a down market where market rents are flat or declining, you may have difficulties raising your rents, even if your expenses are going up.
Spartan Invest4.8134 Reviews- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes7mo
Quote from @Lindsay Davis:
To answer your question first, my take is that annual rent increases, timed based on the tenant’s move-in date rather than the season of the year, makes the most sense.
However, I would like to mention for the record that higher property taxes aren’t a good reason for rent increases. That’s because rents are driven by the market—what tenants are willing to pay and what comparable units are priced at—rather than how much your expenses are going up.
From the tenant’s perspective, they care that they’re getting a fair deal in relation to what they could get elsewhere; your P&L is irrelevant to them.
In other words, if you find yourself in a down market where market rents are flat or declining, you may have difficulties raising your rents, even if your expenses are going up.
Yes for sure; we monitor market rents and also wage growth. But what I hear from a lot of investors, they get triggered by the annual property tax bill and that sets their timing to be very early in the year. We have full 4 seasons and have historically lined up our annual increases with the spring market April/May.
Inventory plays a role. Announcing the rent increases very early also means that tenants see very few options for rent on the market place, while when you announce it in April, there are a lot more options available..
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