If you have the ability to raise the rent on an existing tenant—because the tenant is on a month-to-month lease or a renewal term is coming up—would you? Should you?
At first glance, the answer seems obvious. If your property is renting for $1,500 per month and comparable properties are getting $1,700, why wouldn’t you increase the rent?
But maximizing rent doesn’t always mean maximizing profit.
In an ideal world, every rent check you receive would reflect current market rent for the property. You’re happy. The tenant is happy. Everyone wins.
But that’s not always how it works in the real world.
In our own portfolio of rental properties, we haven’t always been the best—or most consistent—when it comes to keeping every property at optimal rent levels.
So why wouldn’t we simply raise rents to bring them more in line with the market? It would be more profitable, right?
It may be less straightforward than you think.
Let’s say your tenant currently pays $1,500 per month, but you’ve determined the property could rent for $1,700. That additional $200 per month represents $2,400 per year.
Sounds like an easy decision.
But what happens if the tenant leaves?
If the property sits vacant for two months, you’ve already lost $3,000 in rental income. Then you have to consider cleaning, repairs, maintenance, marketing, and the time it takes to find and sign a new tenant.
Suddenly, that $2,400 annual rent increase doesn’t look quite as simple.
Pros of Increasing Rent on an Existing Tenant
Receive more income from your investment. If you’re significantly below market rent, you’re potentially leaving money on the table. A rent increase can improve your property’s monthly and annual cash flow.
Help offset rising costs of ownership. Property taxes, insurance, materials, labor, utilities, and other expenses seem to be constantly rising. Increasing rent can help offset some of those higher costs.
Potentially improve financing terms. For loans that consider property cash flow, higher rental income can improve the property’s debt-service coverage ratio (DSCR) and, depending on the loan program, potentially improve qualification or loan terms.
Support property value. A property producing market-level rents may be viewed as more valuable than an otherwise comparable property that is significantly under-rented. This can matter when selling the property, but it can also be relevant when refinancing, since the appraised value can affect how much you can borrow.
Cons of Increasing Rent on an Existing Tenant
Risk of the tenant leaving. This is the biggest concern. A vacant property produces $0 in rental income.
Turnover costs. Turnover takes both time and money. How long will it take to get the property ready to re-lease? How much rental income will you lose while it’s vacant? What repairs, cleaning, or renovations will be necessary? Is the additional rent worth the potential turnover costs?
It may hurt the landlord/tenant relationship. Nobody likes to hear that their rent is going up. Even when the increase is reasonable and justified by the market, the tenant may not see it that way. That could affect your relationship going forward.
Legal risk. Make sure you understand whether and when you’re legally allowed to increase the rent, as well as any applicable notice requirements or other restrictions. The rules can vary depending on your location, the type of tenancy, and other circumstances.
Our Own Experience
Tenant turnover has become one of the more expensive parts of our rental home business.
Between the cost of getting a property ready for a new tenant—even if that only involves minor repairs, cleaning, mudding and touch-up painting—and the time the home sits vacant without producing income, the losses add up fast and quickly eat into the bottom line profit of a property.
Because of that, we rarely increase rents if we have a good, paying tenant in place.
We have increased rents on a few occasions, but generally only when the difference between the market rent and what our existing tenant was paying had become too large to ignore.
A few examples: In 2026, we raised the rent on one tenant. From a landlord’s perspective, her response was perfect. She acknowledged how the market had changed since she originally signed her lease, was appreciative that we hadn’t raised the rent sooner, and thanked us.
In 2025, we also raised the rent on just one tenant. In this case, the tenant was not happy at all. She told us that she had never heard of a landlord raising the rent, and our interactions with her became less pleasant going forward.
Our advice: If you’re prepared for the latter response, you’ll be even more appreciative when a tenant responds pleasantly.
Finding a new tenant also takes time and resources. You have to market the property, communicate with potential tenants, show the property, screen applicants, and sign a new lease. For me, this is not an enjoyable part of owning rental homes, so there’s value in not having to do it more often than necessary.
Recommendations for Landlords
Discuss potential rent increases up front. Before signing a lease, be clear about how and when you may increase the rent. If you want to build in annual increases, spell that out in the lease.
Consider a smaller, incremental increase. If you already have a tenant in place and a rent increase is permitted, consider whether a smaller or phased increase makes sense.
For example, it may be difficult for a tenant to quickly adjust to an additional $200 in monthly rent. You could spread the increase over several months rather than making the entire adjustment at once (e.g. increase $50/month for 4 months).
You’re giving up some additional rent in the short term, but it could be the difference between keeping a good tenant and dealing with turnover.
Use market data to support the increase. If you tell your tenant that the rent is increasing by $200 next month without any explanation, they’re probably not going to be thrilled.
Instead, be prepared to explain why you’re making the change. Look at comparable rental properties in the area and understand where your property fits within the current market. You can also explain how your costs of ownership—such as taxes, insurance, repairs, and maintenance—have changed over time.
You don’t necessarily have to convince the tenant that the increase is a good thing. But providing some context can make the conversation more reasonable and understandable.
Final Thoughts
A tenant who pays consistently, takes care of your property, and doesn’t cause problems is pretty valuable in the rental home business.
In other words, you could say you’ve found the golden goose.
If you have this kind of tenant, you’re surely taking a risk when you send a rent increase notice.
But a rental property is an investment, and like any investment, the numbers matter.
If you’re considering raising the rent on an existing tenant, don’t look only at how much additional rent you could collect. Consider the potential cost of losing the tenant as well.
How long would it take to find a new tenant? How much rental income could you lose during the vacancy? How much could turnover and repairs cost? And how long would it take to recover those costs through the higher rent?
Sometimes, accepting a little less than market rent can be a worthwhile tradeoff for keeping a reliable tenant in place.
The highest rent isn’t always the most profitable rent.
Thanks for reading this week’s Experience, and best of luck in your real estate investing journey!
-BROCK