How to Raise Rent Without Losing Good Tenants

Published January 1, 2026

The best rent increase is one your tenant accepts without looking elsewhere. Here's how to get the number right and handle the conversation.

The best rent increase is the one your tenant accepts without opening Zillow. That might sound like a low bar, but after 15 years of managing more than 200 units across El Segundo, Torrance, Hawthorne, Redondo Beach, and the broader South Bay, I can tell you that how you handle rent increases determines your retention rate more than almost anything else.

Most owners think about rent increases as a math problem. What is the market rate, what am I charging, what is the gap. But it is also a relationship problem. Timing and communication matter as much as the number. Get any of those wrong and you lose a good tenant over an amount that will cost you far more in turnover than it would have generated in additional rent.

Start With Data

Before you decide on a number, you need to know what the market actually supports. Pull 10 to 15 comparable listings within half a mile of your property. Match on unit size, bedroom count, condition, and amenities. Do not compare your 1970s two bedroom to a 2020 new build with quartz countertops and in unit laundry. Tenants will not make that comparison favorably.

Look at what is actively listed and what has recently leased. Active listings tell you what landlords are asking. Recent leases tell you what tenants are actually paying. There is often a gap, and the leased numbers are the ones that matter.

We pull these comps for every unit before making any renewal recommendation. Sometimes the data tells us to raise rent. Sometimes it tells us the current rent is already at market and a raise would be counterproductive.

Legal Requirements

California law requires specific notice periods for rent increases. For increases under 10%, you must provide at least 30 days written notice. For increases of 10% or more, the notice period extends to 90 days.

As a best practice, we always provide at least 60 days notice regardless of the increase amount. This gives tenants time to budget and takes the shock out of the notice.

AB 1482, the Tenant Protection Act, caps annual rent increases at CPI plus 5% or 10%, whichever is lower, for covered properties. Most multifamily buildings built before 2005 with more than two units are covered. Single family homes and condos are generally exempt if proper notice has been given. Newer construction built within the last 15 years is also exempt. Check your specific situation because the exemptions have nuances.

The Sweet Spot

Through years of tracking tenant responses to various increase amounts, we have identified a clear pattern in the South Bay market.

Increases of 3% to 5% annually are absorbed by tenants without significant friction. On a $2,500 unit, that is $75 to $125 per month. Tenants expect costs to go up. They budget for it. They renew without drama.

Once you push above 7%, behavior changes. Tenants start browsing rental listings. They compare your unit to what is available. Even if your price is at market, the act of shopping introduces the possibility of leaving. Some will find something comparable and give notice. Others will stay but with resentment that affects the relationship going forward.

The Improvement Justification

One of the most effective approaches is tying rent increases to visible improvements. When tenants can see where their money is going, the increase is much easier to accept.

"We replaced all the dishwashers in the building, repainted the hallways, and resurfaced the parking lot. Based on these improvements and current market conditions, we are adjusting rent by 4%."

That framing changes the entire conversation. The tenant sees value. They recognize that the property is being maintained and improved. They feel like the increase is justified rather than arbitrary.

Never Surprise Your Tenants

The single biggest mistake I see landlords make is surprising tenants with rent increase notices. A formal letter arriving in the mail with no prior conversation is a terrible way to handle this.

A 60 second phone call can be the difference between a renewal and a move out. "Hi Sarah, your lease is coming up for renewal in about 60 days. I wanted to give you a heads up that we are looking at a modest increase based on market conditions. I will be sending the formal details next week, but I wanted to talk to you about it first."

That call costs you one minute. It tells the tenant they are valued. It gives them a chance to ask questions in a low pressure setting. And it dramatically increases the likelihood of renewal.

Our renewal conversations start 60 days before the lease expires. When possible, we do them in person or by phone rather than by email or letter. The personal touch matters more than most owners realize.

Weigh the Increase Against Turnover

Here is where most owners get the rent increase decision wrong. They focus on the upside of the increase without weighing it against the downside of turnover.

A $100 per month increase generates $1,200 per year in additional revenue. But turnover costs $3,000 to $5,000 when you account for vacancy, make ready, and marketing.

This means a $50 increase that retains the tenant is financially superior to a $150 increase that triggers a move out. The $50 increase generates $600 per year with zero turnover cost. The $150 increase generates $1,800 per year but costs $3,000 to $5,000 in the first year, meaning you are underwater for two to three years before you break even.

And that assumes you rent the unit at your target price, which is not guaranteed. I have seen plenty of units sit at the higher price for weeks before the owner eventually drops it, losing even more.

The Aggressive Increase Trap

I see this play out at least a few times a year. An owner looks at market rents, sees a gap, and decides to close it all at once. The logic makes sense on paper: "My unit is $300 below market. I should fix that."

But a $300 jump on a $2,200 unit is nearly 14%. That requires 90 days notice under California law, and more importantly, it almost guarantees the tenant will shop alternatives. Even if they do not find something cheaper, the process of looking often leads to moving.

The better approach is closing the gap over two or three renewals. A $100 increase this year, another $100 next year, and $100 the year after that. You reach the same destination without losing the tenant or eating turnover costs.

What We Do at Schofield Properties

For every renewal in our portfolio, we follow the same process. We pull current market comps for the specific unit. We assess the tenant's payment history and relationship quality. We factor in how long they have been in the unit and what turnover would cost. Then we recommend a specific increase amount with the rationale behind it.

We handle the conversation with the tenant, manage the renewal paperwork, and track acceptance rates so we can continuously refine our approach. Our retention rate of 78% compared to the market average of 65% is a direct result of this disciplined process.

If you are planning rent increases for your properties and want a second opinion on the numbers, or if you want to see how your rents compare to current market conditions, we are always happy to run the analysis. Send us the address and we will pull the comps for you.

Topics: rent increases, tenant retention, property management, california landlord, AB 1482

Get a free management quote

Back to the Schofield Properties blog

Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.