Renewal season: the arithmetic of raising rent against the cost of turnover

A renewal decision looks like a question about rent and is actually a question about turnover cost. Add it up honestly for a single unit: the weeks vacant while it is marketed, the make-ready — paint, cleaning, carpet or floors, the small repairs a sitting tenant tolerated — the leasing commission if someone else fills it, the advertising, and the utilities the owner now pays. Then compare that total against twelve months of the increase being considered. Very often a moderate increase with a good tenant staying beats a larger increase that produces a vacancy. Sometimes it does not, particularly where the sitting rent is far below market and the gap will only widen. Timing is the other half. Renewal conversations should start well before the lease ends — far enough out that the tenant has not begun looking, and far enough that if they decline, the unit can be marketed while it is still occupied rather than after it is empty. Lease notice provisions set the floor, not the plan. Two habits reduce turnover more than any pricing decision: fixing things quickly, and not surprising the tenant. A renewal offer that arrives ten days before expiry with a large number on it reads as an eviction with extra steps. And stagger the expirations. A building where every lease ends in the same month has concentrated its entire vacancy risk into one season, which is a decision even when nobody made it. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com