Lease Renewal Guide
Dec 5, 2025
How to set rent for a lease renewal without losing tenants
Raise too much and your tenant leaves. Raise too little and you bleed money for 12 months. Here is how to get the number right.
The renewal math
Turnover is the most expensive mistake you can make
What turnover actually costs
1 month vacancy
$1,500
Cleaning and paint
$500 to $1,000
Marketing and screening
$200 to $500
Total minimum
$2,200 to $3,000
The math nobody does
A $50/month rent increase nets you $600 per year. Sounds reasonable. But if that $50 pushes a good tenant out the door, you are looking at $2,200 to $3,000 in turnover costs plus the risk of a worse tenant.
That $600 gain just became a $1,600 to $2,400 loss. In one decision.
The flip side is real too. If you are $150 below market and hold flat because you are afraid of turnover, you are giving away $1,800 per year. That is $9,000 over a 5 year tenancy.
The goal is not to avoid raising rent. It is to raise it the right amount, backed by data, not guesswork.
Know your position
The 3 renewal scenarios
Every lease renewal falls into one of three buckets. You need to know which one you are in before you send the renewal letter.
Below market
Your rent is 5% or more below what the unit would command today. You are leaving real money on the table every single month. Your tenant knows it too. They are not going anywhere.
You can raise rent and they will still stay.
At market
Your rent is within 3% of current market. This is the sweet spot. You are maximizing income without giving your tenant a reason to shop around. Small adjustments only.
Hold steady or adjust with inflation.
Above market
Your rent is above what the market supports. This happens when rents flatten or dip and you kept raising 3% on autopilot. Any increase here risks losing the tenant.
Hold flat or lower rent to retain.
The process
How to figure out where you stand
You cannot make a good renewal decision without one critical number: what would your specific unit rent for today if it were vacant?
Run comps on your own unit
Not the neighborhood average. Not what the 2BR down the street is asking. You need an estimate for your unit with its specific bedroom count, square footage, amenities, and condition. A 2BR with in-unit laundry and updated finishes commands $150 to $300 more than the same floor plan with shared laundry and original fixtures.
Compare current rent to market rent
Once you have your comp-adjusted market rent, the math is simple. Subtract your current rent from the market number. That gap tells you which of the three scenarios you are in and how much room you have to move.
Decide your raise based on the gap
The gap between current rent and market rent determines your move. Not your costs. Not what you want. Not what you raised last year. The market sets the ceiling. The turnover math sets the floor. Your job is to land between them.
The hard part is step one. Getting comp-adjusted market rent for your specific unit is not something you can do in 5 minutes on Zillow. Zillow shows asking prices for whatever is listed right now, with no adjustment for amenity or condition differences. That is where RentJudge comes in.
Get the number right
Know what your unit is worth before you send the renewal letter
"What is market rent?" is the wrong question. The right question is: "What would my specific unit rent for today, with its specific amenities, condition, and location?"
The neighborhood average is noise. Your unit is not average. It has a specific bedroom count, specific finishes, specific parking situation, specific laundry setup. All of that matters when a tenant compares your renewal price to what else is available.
Real comps
RentJudge pulls active and closed listings near your property. Closed listings show what units actually rented for, not just what landlords wished they could get.
Visual AI
Upload photos and RentJudge scores your unit's condition. Granite countertops, stainless appliances, fresh paint. It factors in what Zillow ignores.
ML adjustments
Every comp is adjusted for amenity and condition differences using machine learning trained on real listing data. No guessing. No ranges. A precise number.
The framework
The renewal pricing framework
Once you know your unit's current market rent, the decision is straightforward.
5% or more below market
You have significant room to raise. Increase 3% to 5%. Do not try to close the entire gap in one renewal. A $200 jump feels aggressive even when the data supports it. Split it across two renewal cycles. Your tenant will absorb a $75 raise. They will start looking at $200.
Example: Market rent is $1,800, you are charging $1,650. Raise to $1,700 to $1,725.
Within 3% of market
You are in the sweet spot. Hold flat or raise $25 to $50. This covers cost increases without giving your tenant a reason to shop around. A $25 raise on a $1,500 unit is $300/year of income with near zero risk of turnover.
Example: Market rent is $1,550, you are charging $1,525. Raise to $1,550 or hold.
At or above market
Do not raise. Any increase here pushes your tenant toward the exit and you will not find a replacement at a higher price. If you are more than 5% above market, consider lowering rent by $25 to $50 to lock in the renewal. A small concession beats a $3,000 turnover.
Example: Market rent is $1,400, you are charging $1,475. Hold at $1,475 or lower to $1,450.
Avoid these
Common renewal pricing mistakes
The automatic 3% raise
"I raise 3% every year." This is lazy pricing. In a hot market, 3% leaves money on the table when the market moved 8%. In a soft market, 3% pushes you above market and your tenant starts browsing Zillow. The market does not move at a fixed rate. Your rent should not either.
Waiting until the last minute
You need to make this decision 60 to 90 days before the lease ends. Not 30 days. Not 2 weeks. Your tenant needs time to decide, and you need time to find a replacement if they leave. Last minute renewals lead to panic decisions and month-to-month tenancies at stale rents.
Pricing based on your expenses
"My taxes went up $100/month so I need to raise rent $100." Your tenant does not care about your tax bill. They care what the same unit costs down the street. If the market does not support a $100 raise, you cannot pass it through just because your costs increased.
Ignoring the tenant relationship
A tenant who pays on time, takes care of the unit, and never calls with problems is worth $50 to $100/month in avoided headaches. Factor that into your renewal math. Replacing a great tenant with an unknown is a gamble that goes beyond the dollar amount.
Using neighborhood averages
"The average rent for a 2BR in my zip code is $1,600." Great. But your 2BR has no laundry, no parking, and outdated finishes. The $1,600 average includes renovated units with garages. Neighborhood averages tell you nothing about what your specific unit is worth.
No data, just vibes
"I feel like $50 is fair." Feelings are not a pricing strategy. Your tenant will check Zillow. If they find 3 comparable units for less, they will leave. If you had run comps first, you would know whether $50 is conservative, aggressive, or right on target.
The human side
Renewals are not just about numbers
Timing matters
Send the renewal letter 60 to 90 days before lease end. This gives you time to run comps, set the price, and give your tenant a fair window to decide. It also gives you time to list the unit if they pass.
Sending a renewal 2 weeks before expiration is a negotiation you have already lost. The tenant has all the leverage because you have no time to find a replacement.
Perception drives decisions
A $100/month raise feels aggressive even when the market supports it. Tenants do not think in percentages. They think in dollar amounts. $100 more per month is $100 less for groceries. That is how it lands.
If you need to make a large increase, back it up with data. Show them comparable units. Show them the market has moved. A tenant who understands why will accept what a tenant who feels gouged will not.
Know your number before you send the letter
RentJudge gives you a comp-adjusted market rent estimate for your exact unit. Not the neighborhood average. Your unit, with its amenities and condition, priced against real comps. Free to use.
Run Your Renewal Comp FreeRentJudge provides automated rent estimates for informational purposes only. Renewal pricing decisions should account for local rent control laws and lease terms. Always verify with local market data before setting final rent prices.