The 8% Renewal on a Three-Year Resident With Open Work Orders
Unit 214 is a two-bedroom renting at $1,310 to a resident of three years. Market comps for comparable two-bedrooms run $1,375–$1,400, and the community is at 94% occupancy. Her lease expires in 45 days. Two work orders are still open: a slow drain requested 11 days ago and a bedroom outlet that trips the breaker, requested three weeks ago. She has complained twice about noise from the unit above. The owner has instructed an 8% increase on all renewals. A typical turn here takes 14 days and about $1,100 in make-ready, and your average marketing cost per lease is roughly $450.
1. Is the 8% increase economically sound for this resident? Show the math.
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What the 8% is worth.
- 8% of $1,310 = $104.80/month, new rent $1,414.80
- Annualized: $104.80 x 12 = $1,257.60
- Market midpoint is roughly $1,387.50, so an increase to market would be about $77.50/month, or $930 per year.
What a turn costs.
- 14 days of lost rent at $45.83/day = $642
- Make-ready: $1,100
- Marketing cost per lease: $450
- Total: roughly $2,190, before any risk of the unit sitting longer than 14 days
The marginal question. If she leaves, you re-lease at market ($1,375–$1,400). The 8% only beats that scenario by $15–$40 per month. Paying back a $2,190 turn at $27–$40/month takes roughly 55 to 80 months. The extra two points above market is not economics - it is a rounding error dressed up as revenue.
The bigger issue: the three-week-old electrical work order is a habitability and retention problem, not a line item. Presenting any increase while it is open tells the resident exactly what her tenure is worth to the community. Fix the units first, then price to market with a documented matrix you can apply consistently to every renewal.
2. What must happen before the renewal offer is presented?
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Close the operational debt first.
- Escalate both work orders to the maintenance supervisor with a completion date inside seven days. The tripping breaker is a safety item, not a convenience item - treat it as urgent.
- Verify the repairs in person or by follow-up call. A closed work order in the system is not the same as a fixed outlet.
- Pull the noise complaint file. Were the upstairs residents contacted in writing, and was the resident told what was done? If the answer is 'nothing happened,' the renewal conversation is really about that.
- Review her payment history and tenure - three years with clean payments is a retention asset worth naming out loud.
- Build a written comp grid with three to five current comparables and get owner sign-off on a renewal matrix before you sit down. If the number is negotiable in the room, you will negotiate it.
Do not present a renewal while a resident has an open safety work order, and do not offer a 'sorry about the repairs' rent concession in place of a repair - it converts a maintenance failure into a permanent revenue loss.
3. She counters with 'I'll stay if you keep my rent where it is.' How do you handle the conversation?
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Structure the conversation before the counter arrives.
- Open with tenure and the service history, not the number. Acknowledge the drain and the outlet specifically, and say what was done and when.
- Present the offer with its reasoning - market position, what has been invested in the property, and what her rent covers.
- On the counter: do not negotiate against yourself. Do not ask 'what would it take?' That invites a number you cannot accept.
Options that are not a rent cut:
- Change the term, not the rate. A 13- or 14-month renewal moves her expiration out of a peak vacancy month and costs nothing in rent roll. A lower rent is permanent; a shifted expiration is not.
- Installment or payment-date adjustment if cash timing is the real issue.
- A one-time, documented concession - only if the owner approves the same treatment for any similarly situated resident, and only with an expiration date.
What not to promise: do not promise the noise will stop (you cannot control a neighbor's behavior - describe the enforcement process instead), do not disclose anything about the upstairs resident's lease or status, and do not offer a future rent credit to buy the signature. If she says no, accept it professionally, confirm the notice requirements, and let her know the door is open.