How Much Should I Raise Rent This Year? A Landlord's Complete Guide
Learn exactly how much to raise rent on your rental property. We cover market analysis, tenant retention, timing, and the data-driven approach smart landlords use.
Figuring out how much to raise rent is one of the most important decisions you'll make as a landlord each year. Raise too little and you're leaving money on the table. Raise too much and you risk losing a good tenant—which can cost you thousands in turnover.
So what's the right number? Let's break it down.
The Real Cost of Getting It Wrong
Before diving into percentages, let's talk about what's at stake.
Turnover is expensive
The average cost of tenant turnover is $2,500 to $5,000+ when you factor in vacancy, cleaning, repairs, marketing, and your time. For many landlords, that's 1-2 months of rent gone.
This is why blindly applying a 5% increase every year isn't a strategy—it's a gamble.
What the Data Says About Rent Increases
Based on market research and landlord surveys, here are typical annual rent increase ranges:
| Tenant Quality | Recommended Range | Notes |
|---|---|---|
| Excellent | 2-3% | Keep them happy; they're worth gold |
| Good | 3-5% | Standard increase for reliable tenants |
| Risky | 4-7% | Higher risk justifies pushing closer to market |
But these are just starting points. The "right" increase depends on your specific situation.
5 Factors That Determine Your Rent Increase
Researching local rental market on computer
1. Local Market Rent
What are similar units renting for right now? If you're 15% below market, you have room to push. If you're already at market, tread carefully.
How to check: Look at Zillow, Apartments.com, or Rentometer for 2-3 bedroom units in your zip code.
2. Tenant Quality
This is huge. An excellent tenant who pays on time, takes care of your property, and never complains is worth keeping at all costs.
The math is simple: a $50/month increase isn't worth a $3,000 turnover cost.
3. Time Since Last Increase
If you haven't raised rent in 2+ years, your tenant is expecting an increase. You can likely push a bit higher (4-5%) without pushback.
If you raised rent 6 months ago? Slow down.
4. Local Rent Control Laws
In rent-controlled areas (parts of California, New York, Oregon, etc.), you may be legally capped at 3-10% annually. Always check your local laws first.
5. Your Relationship with the Tenant
Do they communicate well? Do they report issues promptly? Have they been flexible when you needed access for repairs? Good relationships are worth preserving.
The Expected Value Approach
Here's how sophisticated landlords think about rent increases:
Instead of asking "What's the maximum I can charge?", ask: "What increase maximizes my expected income over the next 12 months?"
This means weighing:
- Extra income if they stay × probability they stay
- Minus: Turnover cost × probability they leave
For example:
- A 3% increase with 95% retention might beat
- A 6% increase with 75% retention
The math often favors moderate, consistent increases over aggressive ones.
When to Push Higher
There are times when a larger increase makes sense:
- You're significantly under market (10%+ below comparable units)
- The tenant is risky anyway (late payments, complaints)
- You've made significant improvements (new appliances, renovations)
- Local market is hot and you could easily re-rent
When to Stay Conservative
Keep it modest when:
- You have an excellent tenant (reliable income is valuable)
- The unit is older and might not command top dollar
- You're already at or above market
- The tenant has been there 5+ years (they may leave on principle)
A Simple Framework
If you want a quick rule of thumb:
The 3-3-5 Rule
- Excellent tenants: 2-3% max
- Good tenants: 3-4%
- Below-market units: Up to 5% to close the gap
Adjust up or down based on the factors above.
How TenantKeep Helps
We built TenantKeep to take the guesswork out of rent increases. Our system:
- Analyzes your tenant quality and lease history
- Factors in turnover cost for your specific unit
- Calculates the expected value of different increase levels
- Recommends three options: Conservative, Recommended, and Aggressive
You get data-driven recommendations, not guesses.
Related Reading
- When to Raise Rent: Timing Your Lease Renewal Right
- 4 Legitimate Reasons to Raise Rent
- How to Explain a Rent Increase to a Good Tenant
The Bottom Line
The "right" rent increase isn't a fixed percentage—it's the number that maximizes your long-term income while keeping good tenants.
For most landlords with solid tenants, that's somewhere between 2-4% annually. But the specific number depends on your market, your tenant, and your goals.
Don't leave money on the table. But don't chase dollars that cost you more in turnover.
Have questions about your specific situation? TenantKeep analyzes your property data and gives you personalized recommendations. Get started free.