Rent increase & lease renewal

6 Replies

With the rising markets, many of our properties are overdue for a rent increase. We normally sign a 12 month lease initially, then let it go month to month. This has worked well for us from a tenant retention standpoint. I believe that if you go to someone each year and ask them to sign a new 12 month lease, you create two problems:

1) You force the tenant to make a decision about staying 12 more months or moving right away. If the tenant was considering moving and they are forced to make a decision, many people will make the decision to move. When the lease simply goes month to month it is easy for the tenants to put off moving for a couple more months, which goes on indefinitely. I have one set of tenants that have been "about to move" for 3 years now.

2) Each year when you show up to sign that lease, you remind the tenant that they have been there for X number of years, paying the greedy landlord rent.

This post isn't meant to be a debate on 12 month leases vs. automatic month to month renewals. My question is:

How do you go about raising the rent when a tenant is on a month to month lease?

Do you have to sign a whole new lease agreement or just send a rent increase letter stating that all other terms will remain the same, with the exception of the rent increase?

If it matters, I am in Michigan.

Any thoughts?


You can do a rental increase either way. I prefer to renew a 12 .onth lease every spring. This is the poont in which I can update my lease with any legal changes over the past year or rules changes and rental increases. Then you can also go over ahat type of service you have provided over their stay and the benefits of your property.

it is my belief that most tenants will not leave unless they have a good reason too. Such as location or you are not doing your job providing value, or family dynamics change requiring a different spot. Who wants to mess up their yeae by moving??

Hey Josh,

For those folks on month to month leases we just send a rent increase letter stating that all other terms will remain the same, with the exception of the rent increase...

However, for most of our tenants I like to do what @Kyle Hipp described above me.

How's the apartment going?:)

And it does matter that you're in Michigan. It makes you a better person

Thanks @Michael Dundon .

The apartments are going good (I think I was a little stressed when we met up a couple weeks ago, lol) Should be 100% occupancy by next week.


I am not sure about the real estate laws in Michigan. I would suggest you find out the answer if a residential lease under 12 months has to be in writing. Many states only require a written lease if the lease is 12 months or longer. That said and assuming no written lease is required as the lease is now month to month, then increasing the rent could be in as simple as a phone call and have tenant accept the new lease payment, I would then follow up with a letter about the conversation and their acceptance of the increase rent. If a written lease is required I would just do an amendment to your existing lease increasing the rent and have the tenant sign.

Good Luck

@Josh Sterling I just got done doing this for about 35 residents in a large apt community. I have my mgmt company give them a letter that is structured as follows:

- thanks them for being a resident and says we're grateful to have them

- reminds them of some improvements we've done to the property

- says it's renewal time and we'd like to offer them a month-to-month or discounted 12-month lease

- says we have had to slightly increase their overall rent due to expenses and inflation but reminds them if they sign a 12-month lease the rent will be lower compared to staying month-to-month

- lists out two options (both an increase from previous rent) and, again, shows them the actual $ amt that would be saved when compared to the new month-to-month rent

- says if they believe they have a special circumstance then feel free to call our community manager to discuss (only a handful called)

I did this two months ago to 29 residents and nobody moved out. Fingers crossed these next 30 generates the same result.

I do 12 month or longer leases. My single family houses are all located in a plus areas. If people leave during the middle of the year I am sol because there is a definite moving season in military areas!

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