🔄 Lease Renewal Guide for Landlords

Lease renewals are one of the most financially significant moments in property management. A well-managed renewal retains a quality tenant, reduces vacancy costs, and keeps your investment performing. A poorly managed renewal — letting good tenants leave through inaction or alienating them with a harsh increase — can cost months of vacancy and thousands of dollars in turnover costs.

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The True Cost of Tenant Turnover

Before deciding on a renewal strategy, understand what losing a tenant actually costs:

• Vacancy loss — typically 4–8 weeks before a new tenant moves in: $2,000–$8,000+ depending on rent
• Marketing costs — listing fees, photography, signage: $100–$500
• Cleaning and repairs — even a clean tenant turnover costs $200–$1,500
• Screening costs — applications, background checks: $50–$200
• Lost productivity — your time showing the unit, processing applications: significant

Total turnover cost: typically $3,000–$10,000+ per vacancy. This is the math against which you weigh any rent increase amount.

Step 1: Start the Process 90 Days Early

Begin 90 days before expiration — 60 days at the very minimum. This gives you time to evaluate, make decisions, communicate, and respond to the tenant’s decision without being rushed into a holdover situation.

Calendar reminders: 90 days out (begin evaluation), 60 days out (send renewal offer), 30 days out (follow up with non-responders), 60 days out (send non-renewal notice if not renewing).

Step 2: Evaluate the Tenant Objectively

Before deciding to renew, honestly assess the tenancy:

A tenant who scores green across the board is worth a discounted renewal rate to retain. A tenant with multiple red flags may not warrant renewal — send a non-renewal notice now so you have time to find a better replacement.

Step 3: Determine the New Rent

Research three data points before setting the renewal rent:

• Current market rate — what comparable units in your area are renting for right now. Check Zillow, Apartments.com, and local listings.
• Current rent vs. market — if you’re already at market rate, an aggressive increase will push the tenant to look at alternatives. If you’re below market, you have more room.
• Tenant’s replacement cost — if this tenant leaves, realistically how long will it take to re-rent and at what rate? Factor this into your decision.

General guidance: quality tenants in good standing warrant a modest 3–5% increase that keeps pace with costs. At-market increases (6–10%) are appropriate when current rent is significantly below market. Above-market increases almost always result in turnover unless the tenant has strong reasons to stay.

Step 4: Send the Renewal Offer in Writing

Your renewal offer should include:

• The new monthly rent amount
• The proposed new lease term (12 months or month-to-month)
• Any changes to lease terms from the current lease
• A response deadline (30 days is standard)
• What happens if they don’t respond (you’ll begin the process of listing the unit)

Step 5: Execute the Renewal or Send Non-Renewal Notice

If renewing: Use a lease renewal agreement (a signed addendum to the original lease is often sufficient), or a completely new lease with updated terms. Both approaches work — a new lease gives you the opportunity to update any outdated provisions. All tenants must sign.

If not renewing: Send a written non-renewal notice at least 30–60 days before lease expiration (check your state’s required period). This triggers the tenant’s obligation to vacate by the lease end date, and protects you from a holdover situation where you may owe relocation notice.

Renewal vs. Month-to-Month — Which Is Better?

Frequently Asked Questions

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