How to Gracefully Raise the Rent on Good Tenants (Without Losing Them)

By PropsManager Team · Rent & Finance · Apr 28, 2025

Let me be blunt: losing a good tenant over a $75 rent increase is one of the most expensive mistakes a landlord can make. Between vacancy costs, turnover cleaning, marketing, and the risk of getting a worse tenant next time, you're looking at $3,000 to $5,000 down the drain—minimum.

But here's the other side of that coin. If you never raise the rent, you're essentially giving yourself a pay cut every single year. Property taxes go up. Insurance premiums creep higher. That water heater isn't getting any younger. And inflation? It doesn't care about your feelings.

So how do you thread the needle? How do you raise the rent on a tenant who pays on time, keeps the place clean, and never calls you at 2 AM about a clogged toilet—without pushing them out the door?

I've been through this conversation dozens of times. Some went great. A few went sideways. Here's everything I've learned about doing it right.

Why Rent Increases Are Non-Negotiable for Landlords

Let's start with the math, because the math doesn't lie.

The average annual increase in operating costs for rental properties runs between 3% and 5%. Property taxes alone have jumped an average of 4.1% per year nationally over the last decade. Homeowner's insurance? Up 12.1% in 2023 alone, according to the Insurance Information Institute. If you're holding rent flat while your expenses climb, your margins are shrinking every single year.

Here's a real example. Say you're renting a unit at $1,400/month. Your annual operating costs rise by 4%—that's roughly $672 more per year you're paying out. If you don't raise rent at all over three years, you've effectively eaten $2,000+ in increased costs. Multiply that across a couple of units and you're talking serious money.

A modest annual increase of 3% to 5% isn't greedy. It's responsible business management. And most tenants—especially good ones—understand that.

The True Cost of Tenant Turnover

Before you even think about how much to raise rent, you need to understand what happens when a good tenant leaves. This is the calculation that should guide every rent increase decision you make.

Here's a rough breakdown of turnover costs for a typical unit renting at $1,500/month:

That $50/month rent increase you're considering? It brings in $600 over a year. If the tenant leaves because of it and you eat $3,000 in turnover, you've just lost four years of that increase in one shot. Keep that number in your head every time you draft a rent increase letter.

This is why the "graceful" part matters so much. It's not just about being nice—though that's important too. It's about protecting your bottom line.

Timing Your Rent Increase: When to Have the Conversation

Timing isn't everything, but it's close.

Give 60 to 90 Days' Notice (Minimum)

Most states legally require 30 days' notice for month-to-month leases and that increases take effect at lease renewal for fixed-term leases. But legal minimums are just that—minimums. They're not your target.

I always aim for 60 to 90 days. Here's why:

• It shows respect. You're treating your tenant like a partner, not a revenue line item.
• It gives them time to budget. A $100/month increase is a lot easier to absorb when you've had two months to prepare for it.
• It reduces emotional reactions. Nobody likes surprises when it comes to money. The more lead time you give, the less likely they are to react from a place of panic.

Avoid Bad Timing

Don't drop a rent increase letter on someone right before the holidays. Don't do it the same week they mentioned their hours got cut at work. Don't do it during a maintenance crisis when the HVAC is on the fritz.

Read the room. If your tenant just had a baby or is dealing with a family emergency, waiting an extra month to send that letter isn't going to kill your margins—but it might earn you years of loyalty.

Align with Lease Renewals

The natural moment for a rent increase is at lease renewal. Your tenant is already expecting some kind of conversation about the next 12 months. Folding a modest increase into the renewal discussion feels organic rather than adversarial.

If you're managing lease renewals across multiple properties, tools like PropsManager's lease management features can automate renewal reminders and help you track when each unit is due for a rate adjustment—so nothing slips through the cracks.

How Much Should You Raise the Rent?

This is where a lot of landlords get it wrong. They either raise too little (leaving money on the table every year) or too much (triggering turnover that costs way more than the increase would've earned).

The 3% to 5% Annual Sweet Spot

For most markets, a 3% to 5% annual increase keeps you aligned with rising costs without shocking your tenants. On a $1,500/month unit, that's $45 to $75 per month. Most tenants won't even blink at that range—especially if you handle the communication well.

Do Your Market Research First

Before you set a number, check what comparable units in your area are renting for. If your tenant is paying $1,450 and similar units are going for $1,650, you have a lot of room. If they're already at market rate, a big increase is riskier.

Sites like Zillow, Rentometer, and local MLS data can help, but nothing beats actually calling a few competing properties and asking about availability and pricing. That 15 minutes of research could save you thousands.

If you want to learn more about setting the right price for your market, check out our guide on how to set the right rent price for your market.

Consider the Tenant's Track Record

Not all tenants are equal, and your pricing should reflect that. A tenant who's been with you for four years, always pays on time, and has never caused a single issue? Maybe they get a 3% increase instead of 5%. That small gesture of appreciation can buy you another four years of hassle-free tenancy.

On the flip side, a tenant who's been late twice and had noise complaints? Market rate. Every time.

The Exact Script: What to Say (and What Not to Say)

This is the part most landlords dread. So let me give you the actual words to use.

The Rent Increase Letter Template

Here's a framework that's worked consistently well:

Dear [Tenant Name],

I hope you're doing well. I wanted to reach out well in advance of your lease renewal on [date] to discuss a small adjustment to your monthly rent.

As you may be aware, property operating costs—including property taxes, insurance, and maintenance—have increased significantly over the past year. To keep up with these rising expenses while continuing to maintain the property at the standard you deserve, we'll be adjusting the monthly rent from $1,450 to $1,500, effective [date].

I want you to know that we genuinely value having you as a tenant. Even with this adjustment, your rent remains below the current market rate for comparable units in the area, which are averaging $1,650–$1,700.

If you have any questions or would like to discuss this further, please don't hesitate to reach out. We'd love to have you stay.

Warm regards, [Your Name]

A few things to notice about this letter:

• It leads with advance notice. Not a demand.
• It explains the "why." Rising costs are real—and most tenants understand that.
• It anchors to market rate. When your tenant sees they're still $150–$200 below comparable units, the $50 increase suddenly feels reasonable.
• It's personal. "We genuinely value having you as a tenant" isn't fluff—it's strategy.

What NOT to Say

• "Rent is going up. Deal with it." Obviously. But you'd be surprised how many landlords basically communicate this.
• "I need more money." Your financial situation isn't the tenant's problem. Frame it around costs, not your wallet.
• "Everyone else is getting an increase too." This makes it feel impersonal and bureaucratic.
• Don't apologize. You're running a business. Be respectful, be transparent, but don't be sorry for keeping your property profitable.

Sweeten the Deal: Add Value with the Increase

This is the secret weapon that most landlords completely overlook. When you pair a rent increase with a tangible improvement, the conversation changes entirely. It goes from "you're paying more" to "you're getting more."

Low-Cost Upgrades That Make a Big Difference

• New smart thermostat ($50–$150): Saves the tenant money on utilities and makes the unit feel modern.
• Fresh caulking and weatherstripping ($30–$50): Shows you care about the property's condition.
• Pressure wash the patio or driveway ($100–$200): Instant curb appeal boost.
• New kitchen faucet ($75–$150): Small upgrade, big visual impact.
• Add a ceiling fan ($100–$200 installed): Tenants love these, especially in warmer climates.

You don't have to spend a fortune. Even a $100 improvement—mentioned in the same breath as a rent increase—can completely change how the tenant receives the news. They're not just paying more; they're getting something.

For more ideas on maintaining and upgrading your properties efficiently, read our post on rental property maintenance checklists for landlords.

Handling Pushback: When the Tenant Negotiates

It's going to happen. Good tenants know their value, and some of them will push back. That's actually a healthy sign—it means they want to stay but need to feel heard.

Listen First

When a tenant says "That's more than I was expecting," don't immediately defend the increase. Just listen. Ask them what they had in mind. Sometimes the gap between your number and their comfort zone is $25/month—and meeting in the middle costs you $300/year but keeps a $3,000+ turnover at bay.

Offer a Longer Lease for a Smaller Increase

This is one of my favorite moves. Tenant doesn't want to go from $1,450 to $1,525? Offer them $1,500 if they sign an 18-month lease instead of 12. You get guaranteed occupancy for an extra six months, and they get a lower increase. Everybody wins.

Know Your Walk-Away Number

Before you enter any negotiation, know the lowest number you'll accept. Factor in your costs, your market position, and the value of the tenant. If your floor is $1,480 and they won't go above $1,450, you might decide the $30/month difference ($360/year) isn't worth the fight. Or you might decide it is. Just know your number going in.

The "Phased Increase" Option

For larger increases—say you've been way below market and need to jump by $150 or more—consider phasing it in. Raise by $75 now and $75 in six months. This makes a big number feel manageable and shows you're willing to work with your tenant.

Rent Increase Checklist for Landlords

Before you send that letter, run through this checklist:

• Researched current market rates for comparable units
• Calculated your increased operating costs (taxes, insurance, maintenance)
• Determined the increase amount (ideally 3%–5%)
• Checked state and local laws for required notice periods
• Verified the increase doesn't violate any rent control ordinances
• Drafted a professional, personal rent increase letter
• Planned a property improvement to pair with the increase
• Prepared for potential negotiation (know your floor number)
• Set a reminder to follow up if you don't hear back within 2 weeks
• Documented the increase in your property management records

If you're juggling rent increases across multiple properties, keeping track of all this manually is a nightmare. PropsManager handles lease tracking, rent adjustments, and tenant communication from a single dashboard—so you can manage increases at scale without dropping the ball. Check out our pricing plans to see which tier fits your portfolio.

State Law Considerations: Don't Skip This Step

Rent increase rules vary wildly by state and even by city. Some key things to know:

• Rent control jurisdictions (parts of California, New York, Oregon, etc.) cap annual increases—often at 3% to 10% plus inflation.
• Required notice periods range from 30 days to 90 days depending on the state and the size of the increase.
• Section 8 and subsidized housing have their own rules around rent adjustments.
• Retaliation laws in many states prohibit raising rent in response to a tenant exercising legal rights (like requesting repairs).

Always check your state's landlord-tenant statute before sending any rent increase notice. When in doubt, a quick call to a local real estate attorney is $100 well spent.

For landlords dealing with lease renewal negotiations more broadly, our article on how to handle lease renewals and negotiations covers the full picture.

Long-Term Strategy: Building Rent Increases into Your Business Model

The landlords who struggle most with rent increases are the ones who treat them as one-off events. The ones who thrive? They build predictable, incremental increases into their entire business model.

Set Expectations from Day One

When you sign a new tenant, mention in the lease—or at least in the welcome conversation—that annual rent adjustments are standard practice. Something like: "We typically adjust rents annually to keep up with market conditions and rising costs. We always give plenty of advance notice and keep our rates competitive."

This plants the seed early. When the first increase comes, it's expected—not a surprise.

Use a Consistent Annual Schedule

Pick a time of year and stick with it. I do all my increases in January, timed with New Year leases. Some landlords prefer spring (when demand picks up and tenants are less likely to move in winter). Whatever works for you—just be consistent. Irregular, random increases feel arbitrary even when they're not.

Track Everything

Keep a spreadsheet—or better yet, use PropsManager's property management tools—to track each unit's current rent, last increase date, market rate, and next planned adjustment. When you can see your entire portfolio at a glance, you make smarter, more consistent decisions.

Explore More PropsManager Resources

Looking for the right property management software? Check out our in-depth guides:

• Compare Property Management Software — See how PropsManager stacks up against Buildium, AppFolio, Rent Manager, and Propertyware.
• Software for Small Landlords — Built for landlords managing 1–50 units without the enterprise price tag.
• AI-Powered Property Management — Discover how automation can save you 5–10 hours per week.
• Solutions for Property Managers — Scale from 50 to 500+ units without scaling your costs.

Frequently Asked Questions

How often should I raise the rent on a good tenant?

Once per year is the standard in the industry. Annual increases of 3% to 5% keep your income aligned with rising operating costs and market conditions. Skipping a year here or there for an exceptional tenant is fine, but going two or more years without any increase starts to hurt your margins significantly and makes the eventual adjustment feel larger and more jarring.

What's the best way to deliver a rent increase notice?

A written letter—either mailed or emailed—is the professional standard and creates a paper trail. Many landlords follow up the letter with a brief in-person or phone conversation, especially for long-term tenants. This personal touch shows respect and gives the tenant a chance to ask questions. Always keep a copy of the notice in your records. Some states have specific delivery requirements, so check your local laws.

Can I raise the rent in the middle of a lease term?

Generally, no. If a tenant is on a fixed-term lease (for example, a 12-month lease), you typically cannot increase the rent until the lease term expires—unless the lease itself includes a provision for mid-term adjustments. Month-to-month agreements are more flexible, but you still need to provide proper written notice, usually 30 to 60 days depending on your state.

What should I do if a tenant threatens to leave over a rent increase?

First, don't panic. Take their concern seriously and open a dialogue. Ask what amount they'd be comfortable with. If they're a truly great tenant, consider meeting partway—the cost of a modest concession is almost always less than the cost of turnover. You might also offer a longer lease term at a slightly lower increase or pair the increase with a property improvement. If the tenant ultimately leaves over a reasonable, market-aligned increase, it may just be the cost of doing business.

Is it legal to raise rent by any amount I want?

In most states without rent control, yes—you can raise rent by any amount as long as you provide proper notice. However, just because you legally can doesn't mean you should. Large increases trigger turnover, damage your reputation, and can attract legal scrutiny if they appear retaliatory or discriminatory. In rent-controlled areas, annual caps apply and violations can result in serious penalties. Always research your local regulations first.

Keep Your Best Tenants and Your Best Margins

Raising rent doesn't have to be adversarial. When you do it right—with generous notice, transparent reasoning, market data to back it up, and maybe a small upgrade thrown in—most good tenants will sign the renewal without a second thought. They know moving is expensive too, and they value a landlord who communicates openly and maintains the property well.

The landlords who consistently retain great tenants while keeping their rents competitive are the ones who treat rent increases as a regular, professional part of the business—not an awkward confrontation to avoid for as long as possible.

If you're ready to streamline rent increases, lease renewals, and tenant communication across your entire portfolio, schedule a demo with PropsManager and see how our platform takes the headache out of property management. From automated rent reminders to lease tracking and maintenance coordination, it's everything you need to run a professional operation—without the spreadsheet chaos.