How to Raise Rents the Right Way (NEVER Lose a Tenant)

As a landlord, raising the rent is often the most stressful part of the job. You’re balancing your bottom line with the fear of losing a reliable, "set-it-and-forget-it" tenant.

In a recent video from BiggerPockets, the host shared a masterful strategy for getting rents up to market value without scaring off your best renters. Here is the breakdown of how to handle the "catch-up" period and keep your cash flow growing.

1. Address the Gap Immediately

The biggest mistake landlords make is letting rent sit far below market value for years because they like the tenant. The problem? When you finally have to raise it, the jump is so large it forces the tenant to move.

If you’ve just purchased a property with an existing tenant paying way below market (e.g., $350 when the market is $500+), don’t wait. Address the situation in the first year.

2. The "Slow and Steady" Increment Strategy

The video highlights a specific case study of a 6-unit building where a tenant was paying only $350. Instead of hitting them with a $150 increase all at once—which is a sure way to get a "Notice to Vacate"—the landlord used a phased approach:

• Month 1–3: Keep the rent at the original price to build rapport.

• Month 4: Implement a small $25 increase.

• Month 6: Implement another $50 increase.

• Year 2: Move to full market rent.

By spreading a $100 increase over 12 months, the tenant can adjust their budget gradually. It feels like a series of small "nips" rather than one giant "bite."

3. Put It in Writing (The Lease Clause)

You don’t have to wait for the annual renewal to raise the rent if you plan ahead. The video suggests building these increments directly into the lease agreement. When a tenant signs a lease that says, "Rent is $800 for months 1-6 and $850 for months 7-12," they aren't surprised when the bill changes. It’s an agreed-upon roadmap rather than a sudden demand.

4. Communication is Your Best Tool

Don't be a "faceless" landlord. If you are raising rent to catch up to market rates:

• Explain the "Why": Mention rising property taxes, insurance, or utility costs.

• Show the Data: Briefly mention that similar units in the area are renting for $X, but because they are a valued tenant, you are keeping them at $Y (a slightly lower "loyalty" rate).

• Offer Upgrades: Sometimes a $100 "thank you" (like a new ceiling fan or a carpet cleaning) can make a $50/month rent increase feel much more palatable.

The Bottom Line

Turnover is the "silent killer" of real estate profits. The cost of cleaning, painting, and marketing a vacant unit usually far outweighs the extra $50 a month you'd get from a new tenant.

By using the incremental approach mentioned in the video, you protect your relationship with your tenant while ensuring your investment remains profitable.