Last year we pushed rent increases across 147 units in our portfolio. Average increase: $65 per month. That's meaningful. Not a token $20 bump. A real adjustment that added over $114,000 in annual revenue across the portfolio.

The retention rate after those increases? 94%. Only 9 tenants out of 147 moved out. And of those 9, I would argue only 3 left specifically because of the rent increase. The other 6 were moving for life reasons, job relocations, buying a house, family changes.

For context, the national average retention rate on rent increases is around 70% to 75%. That means on a typical portfolio, 25 to 30 out of every 100 tenants leave when rents go up. We lost 6%. The difference between 6% turnover and 25% turnover on 147 units is roughly $112,000 in avoided turn costs.

So the rent increases added $114,000 in revenue, and the retention rate saved $112,000 in turn costs. That's a $226,000 swing from doing one thing right: communicating the increase properly.

Here's exactly how we did it.

Why Most Landlords Get This Wrong

The standard rent increase process at most properties looks like this. Thirty days before the lease expires, the tenant gets a letter. "Your new rent is $X. Sign the renewal or vacate by Y date."

That isn't communication. That's a demand letter. And tenants respond to demand letters exactly how you would expect. They get defensive. They start shopping other apartments. They feel disrespected, even if the increase is modest and fair.

The mistake is treating a rent increase as a transactional event instead of a relationship conversation. You're asking someone to pay more money for the place they live. The place where they sleep, eat, and raise their families. If the first time they hear about it's a form letter 30 days before it takes effect, you have already lost the conversation.

The 90-Day Framework

We start the renewal process 90 days before lease expiration. Not 60. Not 30. Ninety. Here's why.

At 90 days, the tenant isn't in panic mode. They have time to absorb the information, think about it, and make a rational decision. At 30 days, they're in fight-or-flight mode. They feel cornered. And cornered tenants either leave or withhold rent in protest.

At 90 days, you also have time to adjust. If a tenant pushes back hard and the math says keeping them is better than turning the unit, you can negotiate. At 30 days, there's no room for negotiation because the deadline is already on top of you.

Day 90: The Heads-Up

The first touchpoint isn't the formal rent increase notice. It's a personal, conversational communication. In our case, Nicole's team sends a message through AppFolio that reads something like this:

"Hi [Name], your lease at [address] comes up for renewal on [date]. We wanted to reach out early so you have plenty of time to think about your plans. We would love to have you stay. In the next few weeks, we will be sending over your renewal offer with updated terms. If you have any questions or want to talk through anything, just let us know."

No number yet. No increase mentioned. Just a warm signal that says "we're thinking about your renewal and we value you as a tenant." That message does three things. It sets the expectation that a change is coming. It gives the tenant time to prepare mentally. And it positions the relationship as collaborative, not adversarial.

Day 75: The Renewal Offer

This is the formal communication. And this is where most of the work goes.

Our renewal letter isn't a form. It's a one-page document that includes:

The current rent and the new rent. Clear and specific. "$1,050 to $1,115 per month, effective [date]."

The reason for the increase. This is the part that most landlords skip entirely, and it's the most important part of the letter. We explain specifically what's driving the increase. Real reasons. Not excuses.

Our standard framing includes items like:

Property tax increases (with the actual dollar amount when possible)

Insurance premium increases

Maintenance and improvement investments we have made in the last 12 months

Market comparisons showing that our rate is still competitive

Here's an actual excerpt from one of our renewal letters:

"Property taxes on this building increased by $4,200 this year, and our insurance premium went up 18%. Over the past 12 months, we invested $32,000 in property improvements including new hallway lighting, parking lot resurfacing, and upgraded common area landscaping. Your adjusted rent of $1,115 remains competitive with comparable units in the area, which are currently leasing at $1,100 to $1,175."

That paragraph does the heavy lifting. It tells the tenant three things: costs are going up and that isn't your fault, we're reinvesting in the property you live in, and your new rate is still fair relative to the market. All three of those messages matter.

The value reminder. We include a brief section highlighting what the tenant gets that they might be taking for granted. Things like 24-hour emergency maintenance response, online rent payment, recent property improvements. Not in a salesy way. Just a factual reminder that this isn't a bare-bones operation.

The renewal options. We typically offer two options: a 12-month renewal at the stated rate, and a month-to-month option at a $75 to $100 premium. The 12-month option looks like the obvious choice, which is the point. We want lease commitments, not month-to-month tenants who can leave with 30 days notice.

Day 60: The Follow-Up

If the tenant hasn't responded by day 60, we follow up. Not with another letter. With a phone call or a direct message.

"Hey [Name], just wanted to check in on the renewal offer we sent over. Do you have any questions? Anything I can help with?"

This call catches the tenants who lost the letter, forgot about it, or have been meaning to respond but haven't gotten around to it. It also catches the tenants who have concerns but aren't comfortable raising them on their own.

About 30% of our renewals are finalized during this follow-up conversation. Some tenants just need a nudge. Some have questions they didn't want to ask in writing. A few want to negotiate, and this is where we decide case by case whether a small concession (holding the increase to $50 instead of $65, for example) is worth the retention.

Day 45: Decision Point

By 45 days out, we need a decision. If the tenant hasn't signed the renewal, we send a final communication making the options clear. Renew at the offered terms, go month-to-month at the premium rate, or provide notice to vacate.

This is the firm communication. Friendly but clear. "We need to hear from you by [date] so we can plan accordingly." At this point, the relationship groundwork has been laid. The tenant has had 45 days to process, ask questions, and decide. This isn't a surprise.

The Math Behind the Softness

I know what some landlords are thinking. "That's a lot of hand-holding. Just send the letter and let them decide."

Sure. You can do that. Here's the math on what it costs you.

A single unit turn in our market runs $3,500 to $5,000. Lost rent, make-ready-process-that-gets-units-leased-in-7-days), marketing, leasing labor. Call it $4,000 average.

On 147 units, the difference between 94% retention and 75% retention is roughly 28 additional move-outs. At $4,000 each, that's $112,000 in additional turnover cost.

The time Nicole's team spends on the 90-day renewal process is approximately 12 to 15 hours per quarter for the entire portfolio. At fully loaded labor cost, that's maybe $800 to $1,000 per quarter in additional staff time.

So you can spend $3,000 to $4,000 a year in extra labor on the renewal process and save $112,000 in turn costs. That isn't softness. That's a 28x return on time invested.

The Increase Ceiling

One more thing that matters. There's a psychological ceiling on rent increases that most tenants will absorb without seriously considering a move.

In our market, that ceiling is roughly $75 per month for a standard renewal on a B-class unit. Below $75, most tenants grumble but stay. Above $75, you start losing people. Above $125, expect significant turnover regardless of how well you communicate.

If the market justifies a larger increase, I phase it. A $150 gap to market gets split into two renewal cycles: $75 this year, $75 next year. You get to market rate in 24 months instead of 12, but you keep the tenant and avoid a $4,000 turn cost. The math works every time.

The exception is a turn. When a unit goes vacant, all restrictions are off. Renovate, reprice to full market, and lease to a new tenant who's paying from day one. Phased increases are for occupied units where retention is the priority.

What Changed Our Numbers

The 90-day framework, the transparent explanation, the personal follow-up. None of this is revolutionary. None of it requires technology or consultants or a massive process overhaul.

It requires thinking of tenants as customers. Customers who deserve to be informed, respected, and communicated with like adults. When you do that, they stay. When you don't, they leave. And the financial gap between those two outcomes is the biggest operational lever in property management.

Every property manager knows how to write a rent increase letter. Very few know how to write one that makes people want to stay.

If your properties aren't performing the way they should, let's talk. Reach out at Tanner@TopTierInvestmentFirm.com or visit toptierinvestmentfirm.com.

Tanner Sherman is the Principal and Managing Broker of Top Tier Investment Firm in Omaha, Nebraska. He co-hosts the Freedom Fighter Podcast with Ryan of Avara Investments.

The Rent Increase Letter That Kept 94% of Our Tenants