Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

How to Raise Rent: Everything You Need to Know

Written by Than Merrill

Jump To

Depending on which side of the transaction someone falls, a rental increase can be received differently. For tenants, a rent increase may be welcomed to account for added amenities, or it may cause financial strain. Investors, on the other hand, might see a rental increase as the only way to cover rising operational costs or perhaps expand business. Given the complexities of the situation, increasing rent is something that should always be done carefully and strategically.

There are a number of reasons investors or landlords may choose to raise the rent on a given property. A few examples include:

  • Property tax increases

  • Rising maintenance costs

  • Business expansion

  • Market fluctuations

  • Property improvements

No matter what the specific reasoning is, it’s important to correctly approach the situation. All rental increases must be in compliance with local laws and tenants must be given reasonable notice. The following guide will outline how to raise the rent and the best ways to navigate the process.

Tips for Raising Rents on Your Properties

The goal of a rental increase is to boost your monthly cash flow (for whatever reason) without pushing tenants out. Sounds easy enough, right? In reality, the process requires a certain degree of preparation to make sure everything runs smoothly. Landlords and investors must take time to research market averages and provide tenants with advance notice. On top of that, many states have laws that dictate limits for rental increases which must also be taken into account during this time. Therefore, it is crucial that your unit is priced in line with rent laws and market value.

Luckily, there are a few steps you can follow to ensure your next rent increase is both lawful and effective. Read through the following tips as you consider how to raise rent:

  • Cite state and local rent laws to ensure increases are in compliance with regulations

  • Research the neighborhood and look for average rental prices and tenant turnover

  • Determine a proper rent increase by evaluating the status of the property

  • Submit a formal rental increase letter to tenants with a proper amount of notice

[ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

rental increases

Research Local Rental Laws

Arguably, the most important factor when raising rents is acting in compliance with state and local laws. You need to make sure your real estate investing business observes any regulations in the area. The first step in doing so, should be to conduct research on the area. Look up your state online and seek out .gov and .org websites, which will contain the most reliable information. Depending on your state, there may be regulations outlining the frequency at which rental increases can be implemented or how they can be communicated to tenants.

After confirming any state laws, cross reference city and county regulations in which the property is located. Certain cities have established rent control laws dictating how much landlords can increase rent within a given period of time. For example, Los Angeles real estate investors can only increase rent by up to 5 percent within a given year. Keep an eye out for changing regulations, particularly if you live in a popular market, and monitor the news for new housing policies. The research phase of the process will help answer, “how much can a landlord raise rent?”

Do Market Research

Before planning a rental increase, get an idea of how your property is priced in relation to other units. This will help you decide by how much to make the increase. Research surrounding buildings and neighborhoods and look for the rental prices of similar units in your area. Websites like Zillow and Trulia are great tools, as they pull property listings and market insights. Take notes on the average rental cost, unit size and amenities being offered near your property. These factors will help you determine if your rental increase will lead to boosted profits, or potential vacancies.

Reviewing a property’s history of rental increases can serve as a point of reference for future changes. Perhaps rent has not increased in a few years making the units are currently under priced. On the other hand, there may be a system in place for gradually increasing rent year by year. If you are new to a building, reference old lease agreements and rent payments to learn more.

Calculate How Much to Raise Rent

A standard rental increase is calculated by taking a percentage of the existing monthly rent, typically anywhere from one to ten percent. For example, if you are renting an apartment for $1450 a three percent increase would be about $43. Most tenants will expect an increase around this amount, especially if it is during a lease renewal. If you want to raise the rent by a higher percentage, sometimes the best approach is to implement incremental increases, rather than all at once. That means you could increase it by $43 for two years in a row, resulting in a six percent increase over time. Not only does this method make it easier for tenants to acclimate to the higher rental price, it also can help you act in compliance with regulations in your area.

To determine an exact increase for your rental property, use your market research as a reference point. The purpose of this information is to help ensure your price is in line with comparable properties; that way you can maximize monthly rental income and minimize potential move outs. If you have different unit types with different rental rates, calculate those accordingly. A set price increase may not be applicable to each unit type in your property. Keep this in mind as you determine your new rent prices.

Send the Rent Increase Letter to Tenants on Time

The key to a successful rental increase lies in how you communicate the change with the tenants. Your approach to a rental increase letter should be two-fold: first, it should follow any legal regulations in the area. Second, it should be handled with care in order to respectfully communicate with tenants. Most states will require 60 days notice for a rental increase. Depending on the type of lease you have with residents (fixed-term or month-to-month) you will need to communicate the increase differently.

A common question is, “can a landlord raise the rent without notice?” The short answer is no. The long answer is: even if you could increase the rent without notice, tenants would likely leave your rental property as soon as they could. A rental increase letter should include the price of the increase, the new monthly rent, the date it will start, and any other relevant information. If you are raising the rent to cover the cost of new amenities, highlight that information in the letter. While you are not required to include an explanation, most tenants will respect the transparency. Remember, sending a rent increase letter to tenants with advance notice is both legally required and helpful to your residents.


A rent increase can be a stressful, yet often necessary, part of the job as an investor or landlord. Before getting started, consult local laws and market prices to make sure your business stays on track. Once you have settled on a percent increase, alert your tenants with advance notice. When handled correctly, a rental increase can improve your overall business while still maintaining positive relationships with tenants. With the right research, and the right price, increasing rent on a property can help boost your business and avoid unnecessary move outs at the same time.

Did this help you learn how to send a rent increase letter to tenants? Share any lingering questions in the comments below.