THE MATH ON DOING NOTHING If you have a tenant paying $1,500 per month and the market is at $1,750, that’s $3,000 per year in unrealized income per unit. On a 10-unit building, even if only half the units are below market by that margin, you’re looking at $15,000 annually that isn’t showing up on your rent roll or in your NOI. And it doesn’t stay static. Every year you don’t change rent, the gap gets wider and harder to close without risking a tenant who’s been there long enough to have real options.
HOW TO ACTUALLY DO IT
1. Know your effective rent Pull active listings on Zillow and Apartments.com for your submarket and unit size. But don't just look at asking rents. Many buildings are advertising concessions. One month free on a 12-month lease is effectively an 8% discount on the asking price. Strip those out and figure out what tenants are actually paying net.
ONE MONTH FREE ON A 12-MONTH LEASE IS EFFECTIVELY AN 8% DISCOUNT ON THE ASKING PRICE.
2. Move in increments If you're $200 below market, a $100 increase at first renewal and $75 to $100 at the next gets you close without triggering a search. Frame it professionally. You don't owe an explanation, but one helps. Across the country, landlords are facing higher insurance premiums, property taxes, repairs, labor, and maintenance costs. Florida is one of the clearest examples: landlord insurance averaged roughly $5,376 per year for $300,000 in coverage in 2025, more than double the national average. Costs are rising everywhere, and tenants understand that pressure because they are feeling it too.
3. Target just under market, not at it In a soft market with elevated vacancy, pricing $50 to $75 below a comparable vacant unit nearby is a feature of your strategy, not a flaw. You're buying retention with a small discount. The math almost always works in your favor.
PAGE 23
Powered by FlippingBook