Raise Rent Letter

46 Replies

Why are you raising rent? Is it currently below market?

If so, say that in your letter. Let your tenants know that rents in the area for similar properties are higher than what you are charging, and based on the expenses you incur to keep the property in great shape, you need to increase the rent to market levels.

Of course, also throw in how great they are as tenants, how much you appreciate them, and any concessions you're willing to make in order to retain them (for example, if they've been there for a year, offer to paint a room for them or put a nice fan in the master bedroom; if they've been there for several years, perhaps offer to replace the carpeting in a couple rooms; etc).

Remember, it's MUCH cheaper to keep existing tenants -- even if you're getting a bit below market rents or have to provide incentives -- than it is to replace tenants.

I just sent out a round of these letters to my tenants the other night. I made sure to thank them for being such good tenants. I explained to them that the rent increase was necessary to help offset the increases in my property taxes and insurance. I also gave them 60 days before it would take effect. Around 90% of my tenants are multi year tenants so I am pretty confident that no one is going to leave.

If you only have a handful of tenants, why not call them to discuss? Sending a letter is very impersonal (IMO), even if you sugarcoat it. After all, it will sound like "you're a good resident, here is the rent increase, eat it".
Tell them it's inevitable and ask how much of an increase they can handle. They will give you the number they're comfortable with.

John, my lease states there is a 3% raise in rent when the renewal come around.

Here's what I did. I wrote each tenant a letter stating due to the economy we have decided NOT to raise the rent a full 3% and that only a 1.75% rent raise will occur. I gave them the new amount and told them when they could expect to pay it.

I then gave them a choice of $75 gift certificate to one of three local places

1) grocery place
2) walmart
3) restaurant

They were to check the place they wanted to recieve the gift certificate and notified that upon renewal the certificate would be sent. They needed to sign the form, date it with their choice of gift and return it to me in a self addressed stamped envelope.

NOW - I have their signatures on file that they understand the new amount they have to pay and when it starts and they feel GREAT because they got a renewal gift.

I've only utilized this method once, but it worked GREAT. I LiTERALLY just sent rewewals out for two units yesterday. I'll let you know how it goes.

I only wish to raise rent on a coulpe of tenants that have been there forever, one was in the house when I bought it and when I tried once to raise rent threatened to move out so I relented. Now I think that its a landlords market and I could prob raise it. He is only paying $350 a month and I think $425 is what I would ask for a new tenant. I would prob only raise it $25 a month for now. Other tenant is 3 year tenant with the best early pay record and I havent been called for a repair in that time. She is paying $400 and a $25 dollar raise still seems cheap.. My wife says not to mess with it but I feel its my job to do so!!! Still deciding

I like that gift card idea smitnlit! I make sure to thank my tenants every chance I get for keeping the houses looking nice, I also make it a point to raise rents once a year, even if its only $5; I also send them a list of comparable rents in the area so they see they are getting a great deal.

david, it depends on the city, local economy, vacany rate, and in some cases which parts of town...i have a 2 bedroom house rented for 375...bought it for 10k, so i'm fine with 375 for now...2 blocks over i own a 4 unit that each apartment is rented for 450...go figure...one block is not as desirable as the other

If you are at all like most landlords, you dislike rent raises for fear of vacancies.

To have the desired effect, raising rents requires a policy as carefully outlined as your rent collection policy, one calculated to minimize tenant dissatisfaction and resentment. Rent raises under this policy should occasion neither a mass revolt nor a mass exodus of your tenants because they should come to understand that your rent raises are fair and, therefore, acceptable.

This policy should involve six elements - careful preparation, proper timing, extended lead time, reasonable increments, amicable notices, and personal contact.

Careful preparation for rent raises consists of much more than merely preparing the notices to change terms of tenancy. Prepare by keeping up with your bookkeeping every month so you know how much your expenses are and how high you need to raise the rents in order to operate profitably.

The best time to deliver the rent increase notice is right after tenants have paid their rent, when the have put rent out of their minds for another month and it's no longer a matter of immediate concern.

Normally any changes in terms of tenancy, including rent increases, require a lead time equal to the rental period. This isn't enough lead time for rent increase notices. I recommend doubling the lead time for rent increase notices. Here's why.

Upon receiving a thirty-day notice that their rent is going up, some tenants have a knee-jerk reaction and immediately give notice that they're going to move. They know that they're supposed to give you 30 days notice, and they feel that they have to register a quick protest to your notice. Your notice is a threat to them, and they feel certain that they can find a better place to live for less. Even when the discover that they can't, they may feel to proud to cancel their intention to move.

Your tenants will appreciate a 60 day notice. They will feel far less threatened when you give them time to consider their alternatives.

You should know what rents are reasonable for your rentals and you will also then know how much the raise should be. because your final figure will usually be the result of numerous compromises you may want to select and increment which is psychologically more acceptable to your tenants. The more acceptable numbers are those which are not multiples of 5. $12, for example, is better than $10, and $18 is better than $15. Such figures lead tenants to believe that their increases have been carefully calculated to match actual increases in operation expenses rather than to include still more arbitrary profit for the owner, round up, of course, to the nearest $5.

You are taking a calculated risk of creating vacancies with any rent increase you give, but that risk increases somewhat if the rent increase exceeds the consumer price index. If you have timidly lagged behind the marketplace and you now have to raise your rents much higher, you may want to do so even knowing full well that some tenants are going to vacate. Wish them well, and then don't get yourself into the same bind again. Raise your rents on an annual basis from then on.

You should announce your raises officially in writing using honest, sympathetic notices. The notice should soften the blow with some reasons for the raise and an expression of your personal concern about the possible hardships the increase might cause.

Use of a cold impersonal legal notice like the Notice of Change in Terms of Tenancy if you wantm but add to it your own personal message. Mention the tenant by first name in a handwritten aside and apologize for the increase, saying that you are trying to maintain the tenant's dwelling as best you can, but it is impossible to do so unless you raise rents.

Or you might want to prepare your own complete notice using personal wording like this - As you know, we are living in inflationary times, and even though I do my best to keep costs down, there's no way I can reduce the expenses of this building back to what they were a year ago. I have absorbed these increases as long as I could, but now I am forced to increase you rent by $___, or ___% from $____ per month to $____ per month, effective ____, 20__.

You may deliver a rent increase in person or by mail, but personal delivery is preferable because it provides an opportunity to discuss the reasons the the increase with your tenants on a personal level.


Just wanted to update everyone. My raise the rent letters with gift certificate for good tenancy were received 4/5 - I got both back by today with signatures acknowleging the new rent and where they wanted their gift certificates!!!!

My super duper great tenant not only mailed me back my letter acknowlegement and gift cert request BUT MY RENT CHECK for next month!!!! NOT even post dated....

I will forever use this method. BEST gift certificates I ever bought!! I just made me an extra $450 this year in rent raises without a blink!

Just wanted to update everyone. My raise the rent letters with gift certificate for good tenancy were received 4/5 - I got both back by today with signatures acknowleging the new rent and where they wanted their gift certificates!!!!

My super duper great tenant not only mailed me back my letter acknowlegement and gift cert request BUT MY RENT CHECK for next month!!!! NOT even post dated....

I will forever use this method. BEST gift certificates I ever bought!! I just made me an extra $450 this year in rent raises without a blink!

Smitnlit - I like your idea of giving them something along with the rent increase. When you renew their leases are you doing it for another one year term or do you let them go month-to-month? Just wondering if any of them that are on month-to-month leases get their gift certificate then move out a couple months later?

All my leases are yearly. We have a property right on the beach and we compete with summer rentals and we don't want to deal with that. We found having full time tenants that the place was better taken care of.

The first year we owned the building, we had a young girl in our 1 bedroom who ended up breaking her lease in September (started May 1) and you could tell she only wanted to be there for the summer,b ut by the time she moved out we finally caught on. She got a sweet deal.

Anyways, I have two renewals at a higher amount. It's a good strategy.


I would not do it in a letter, I would meet with them in person and tell them how upset you are with your partner. Explain that he or she wants to raise their rent 50 bucks per month, and you are furious because they are good people! Then ask them if they can do a 25 dollar increase. Tell them you will go to bat for them to get your partner down a little. Tell them if they get an increase, you will make sure you do (fill in the blank) a new ceiling fan, paint job, front door, etc... this way they feel they get some value for the increase.

I personally do not advocate lying, but this is a good technique. You will leave there a hero and get more money too.

Ah, this has reminded me to get out my calendar and check on lease expirations. I do the same as many have posted: give a longer than required notice (60 days vs 30), mention what a terrific tenant they are and how I've reflected this fact in the amount of the increase, encourage them to call me if they wish to discuss this matter or any other, etc. I check the comps and I am sure that my tenants are well aware of the comps (I do sometimes send them a list - which I get courtesy of management companies trying to get my business!). I ask them to let me know if they need any repairs. I send a simple "Lease Addendum" with my letter and a self-addressed envelope (stamped) for return. I, too, have many long-term tenants and I try to keep them happy and also keep the rents close to market. It can be a tough balancing act. I'd rather do a letter (and include the addendum) than a phone call; just as I'd rather let the answering machine record a message than pick up the phone. Listening to the message gives me time to think and not get boxed in when caught off-guard on a request. My mother used to tell me that whenever a tenant asked for something your first response should be NO or I have to discuss it with my spouse, business partner, etc.

btw - I sent all my tenants smoked turkeys at Christmas. It was a huge hit.

I send them Craigslist links to show them that other very similar units are charging higher rents and then pick a new rate that's lower than the ones I just sent them to show them I'm still giving them something lower than what I might get should they leave.

Thanks to everyone for the quick responses. I will be doing this through my property management company. Any other guidelines i should know about? I have asked one of the companies about their style of raising the rent and they do NOTHING like this. I don't want to step on anyone toes but they do work for ME. How can i bring this to them nice way?

If I were paying them then I would want to know what their method is and the success rate of their method. You and they would not want to spike your vacancies by not doing this professionally and with a touch of class.

I'm still new to being a landlord (3rd year) but I haven't raised the rent at all and would be scared to. Even though I could probably get an extra $100 a month. I figure if they move out then you replace carpet, paint, make repairs, spend a month getting a new tenant (that might be a terrible one). So my +$100 a month can easily turn into -$5k and a bad tenant.

I really can't imagine risking a good tenant for $25/mo. $300 is like a day's work for possibly months of repairs and looking for tenants. I would much rather keep a tenant in the house for as long as possible. I figure ever time a tenant leaves it will cost me around $3000 or so in wasted time, repairs, lost rent, etc.

Like I said though I'm still new to this but I would only really want to raise the rent if I didn't like the tenant.

I agree with you Rick E. Turnover is the biggest cost to a LL; particularly a small landlord. I've gone 3 yrs without rent increases at times. Much depends on the rental market and the particular tenant. I've had tenants make beautiful improvements to my homes. I've had tenants who haven't called me for anything in 8yrs. I do believe, however, that tenants expect rent increases. These increases have to be managed well. It's best to keep up with small increases rather than to suddenly hit someone with a large "catch-up" increase.

You could wait for a turnover to occur and then raise the rent majorly, but my goal is not to have turnover...so I'd be undermarket for years!

Here is mine (between the =======) -- I sometimes add a "two year" guarantee as well.



Dear xxx,

Thank you for being a tenant here at xxx Main St. Our goal is always to provide nice places to live, at a fair price. Whenever the prospect of raising rent comes up, I take a good hard look at it, to make sure it’s necessary. In that light, I have decided it is necessary to raise the rent on your unit, effective Feb 1, 2012 to $695 from $675. This is to partly to offset the increasing cost of property taxes, insurance, heating oil, maintenance costs, and upgrades to the building over the past year or so.

Even after this increase, I believe we are still at or below the average market rent for a unit of this type. I hope you agree. I’ve seen 2 BR apartments either much smaller or in much worse condition (and grumpier landlords!) renting for $650-700 very close by. I promise to always keep rent increases as low as possible, striving to keep up only with the rate of inflation and market value.

Renters Insurance
If you do not already have renter’s insurance, I suggest that you give it serious consideration. This protects your personal belongings in case of fire, burst pipes, burglary or other disasters. My property insurance policy does not cover your personal belongings. Also, if it is your negligence that causes a disaster, you could be held liable for any damage to the property of others. A renter’s policy usually provides personal liability coverage. By signing up for this with your auto insurance company, you may be entitled to a 5% discount on your auto insurance. Renter’s insurance is also relatively cheap, often less than $100 per year.

Thanks again for renting from us. I hope to have you under our “roof” for years to come.

Ken and Deb LaVoie
Southern Angel Properties, LLC