Definition
Lease renewal means renewing the lease at term end, typically with updated rent rates and terms. Market rents guide rate adjustments.
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Lease renewal decisions should balance rent increases with occupancy risk. Market rents, tenant quality, and local conditions guide rate adjustments. Typically, rent increases 2-5% annually in healthy markets. Early renewal conversations (60-90 days before expiration) maximize retention of quality tenants.
Pro Tip
Keep quality tenants with modest increases. Turnover costs often exceed modest rent freezes.
Example
After 1 year, a landlord offers lease renewal at $1,350/month (12.5% increase from $1,200) or the tenant moves out