Would you show a tenant your expenses to justify a rent increase?

Question

Posting this for the BiggerPockets Investor Brief, and the best replies might run in Thursday's edition.

On last week's BiggerPockets Podcast (episode 1347), Amelia McGee said her plan for raising the rent on one of her rentals is to "take them all of my expenses and say, look, I have to raise your rent." Henry Washington said he's shown tenants his numbers before: "I've literally never had a tenant be upset about it, not once."

Some landlords would rather eat a month of vacancy than open their books to a tenant.

Which camp are you in: show the numbers, or keep your books to yourself? And if you've tried it, how did the tenant take it?

JD Martin · Answer

Not in a million years. I run my rentals as an absolute dictator. I dictate the terms, you agree or you find alternative housing.

Chris Seveney · Answer

I don’t show tenants my books. None of their business

Joe Villeneuve · Answer

I can't believe anyone would answer yes to this. First, it's none of their business. Second, if your tenant can do basic math, by default, you are also telling them how much cashflow (profit) you are making on them. Why in the world would you do that?

Just have in your original lease agreement a potential minimum rent increase of 5% (you fill in your number here) per month upon their annual renewal. Notice the two most important words here are "potential" and "minimum". This sets them up for that increase before the fact.

Eric Gerakos · Answer

Never felt the need to defend rent increases. I buy where demand in high, not where it's cheap.

Jaron Walling · Answer

The only reason I'd share information like that is if you're renting to family. My brother's family rented for 5 years and raised his first child in our property so I felt obligated to share. We kept rent low which really helped my brother establish his career. It slowly killed our CF but no regrets.

Also, I wouldn't recommend renting to family. It's tricky and hurts relationships if managed wrong.

Ayush Rustagi · Answer

I never had the experience to defend rent increases.

In my experience, one of my tenants(in Indiana) has lived for almost 5 years now and I have only increased rent once

There shouldn't be any need to increase the rent if the tenant stays and wants to keep renewing.

Long answer for a short question

Matthew Drouin · Answer

I don’t do this. Because quite simply the old adage: “don’t answer questions that aren’t asked if you”. It usually invites more questions and then I have to explain the whole business and the nature of capital markets, etc.

Tenants aren’t stupid. Your send them the renewal offer and then they look at what’s out there and if their rental is the same price or lower than what’s on the market.

The data is there at their fingertips.

How I justify rent increases on inherited tenants is building their trust first preemptively making common area improvements and better management and maintenance.

Divin Kanyama · Answer

@Garrett Brown I'm in the show-some-numbers camp, with a small twist: I'd share the story behind the increase rather than hand over the whole ledger. Most tenants aren't upset by a rent increase itself. They're upset by surprise and by not understanding why it's happening. A short, calm explanation covering rising taxes, insurance and repair costs, along with what the new rent compares to in the neighborhood, tends to turn a demand into a conversation. It also helps to give plenty of notice, put it in writing and follow your lease and local rules. Opening every line of your books isn't necessary, and it can invite debates about costs that have nothing to do with the rent. But hiding behind silence can cost you a good tenant, and a month of vacancy is rarely cheaper than a ten-minute explanation. Amelia's and Henry's approach clearly works for them, and I'd say it works best when you've built a good relationship before the increase. Just keep in mind this is my general take and not legal advice, so check your local notice requirements before sending anything.

David Krulac · Answer

@Garrett Brown I've told this story before. I inherited a tenant from the previous owner, and I think he inherited this tenant from the owner before him. And the Seller was a don't wanter, and never raised rent. It was a two unit where the owner occupied one unit and rented one unit. (kind of a house hack). He had no other tenants and no other rental properties, but was dying to get rid of this property and move to a single family owner occupied home in the country. So much so that he sold me the property for the exact price he had paid. The sole tenant was under lease and I was not able to raise the tenant's rent until their lease expired. I notified the tenant 4 months before expiration that the rent would be raised $200 per month from the current $500 per month for a 3 bedroom unit. She protested mightly, and I suggested that she had plenty time to find a cheaper/better place to live. She said that the $200 rent increase was unconscienable and I said even with that increase the rent was still below market rent. After looking for 4 months, the tenant could find no cheaper or better property for the money and signed the new 1 year lease, They also signed 2 subsequent lease renewals at higher rents!

Muyees Ayilara · Answer

@Garrett Brown — I wouldn't — and I'm on Henry Washington side on outcome, but not on method.

Henry said "I've literally never had a tenant be upset about it, not once" — I believe him — because tenants respect transparency — but showing ALL expenses trains tenant to think rent = your costs + small profit — and next year when insurance drops $200 or you refinance lower — they expect rent to drop — rent isn't cost-plus — rent is market.

What I do instead — Boynton Beach / Delray 33446 — small landlord mindset + lender:

Don't show books — show drivers — not dollars.

I don't show: mortgage, fees, cash flow, equity — tenant doesn't need to see that.

I do show:

Market: "Same floorplan at 7777 Monarch leased Dec 2024 $2,800 — you are at $2,400 since 2022 — new market $2,750-2,900"

3 drivers — no receipts: "Taxes +18%, HOA $120 to $195, insurance escrow now required paid in full at closing or prior"

Choice: "Option A $2,750 12-month — Option B $2,600 15-month early renewal"

I tested full numbers once — tenant pulled my PAPA Tax $0 paid green — said "why increase?" — I lost leverage because I opened books.

For brief: Keep books to yourself — show market + 3 cost drivers as context — not justification. Justification is lease + market — not expenses.

How did tenants take it? Zero vacancy last 2 turns — because choice + early notice — not because they saw my spreadsheet.

Would you show a tenant your expenses to justify a rent increase?

Would you show a tenant your expenses to justify a rent increase?

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