Rent increase to keep up with inflation and higher costs to maintain the property

[Jeni Nikolova]

Hello,

What is a good and (if possible) kind way to communicate to tenants that if they were to renew the lease, the rent will be increased at the legally allowed rate, which in this case is 10%?
They are currently in their third year and last year had $0 increase but the rent price includes pool and garden service.

I posted the home on Zillow, at 13% above the current rent, and there is a healthy amount of interest so my guess is the current rent is way below market rate.

I would appreciate insight from people who have gone through this and/or others who have good advice.

[Alan Asriants]

If youre below market and havent increaed rent I encourage you to do so. Give them the proper amount of notice and stay within your state/county limits. 
It is a simple message:
Hello Tenant,
This text is a 60-Day notice to inform you that starting March 1st 2023 your rent will increase from 1500 to 1650/m. This is due to inflation, increased pricing in costs of goods, increased property taxes and homeowners insurance. If you have any questions please don't hesitate to reach out to me. 

(Make sure to add any state required language)

[Benjamin Aaker]

Thank you for trying to be a kind landlord. Any time the rent increases, it's felt negatively. An explanation of why you are raising the rent, rather than simply because everyone else is doing it, gives a little help. In my opinion, it's best to let the tenants know up front, before signing, in the lease, that you will be increasing rent every year by x dollars or y percent. If they know ahead of time, this makes it easier.

[Conner Olsen]

Quote from @Jeni Nikolova:

Hello,

What is a good and (if possible) kind way to communicate to tenants that if they were to renew the lease, the rent will be increased at the legally allowed rate, which in this case is 10%?
They are currently in their third year and last year had $0 increase but the rent price includes pool and garden service.

I posted the home on Zillow, at 13% above the current rent, and there is a healthy amount of interest so my guess is the current rent is way below market rate.

I would appreciate insight from people who have gone through this and/or others who have good advice.

Look up the BP podcast with Dion. I think the title is 'Lazy Real Estate Investor'. He gives great examples on how to raise rents without making improvements.