Definition
Rent increases at lease renewal improve cash flow. Annual increases of 3-5% match inflation plus market appreciation.
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Annual rent increases typically match inflation (2-3%) plus market appreciation (1-2%), totaling 3-5% in healthy markets. Some markets allow larger increases (5-10%+), while rent control areas restrict increases. Rent increases must comply with local laws and lease terms. Aggressive increases risk vacancy; conservative increases leave money on table.
Pro Tip
Increase rents gradually toward market rates. Losing quality tenants costs far more.
Example
A landlord increases rent from $1,200 to $1,260 (5%) at lease renewal, improving annual cash flow by $720