Lease is coming up. Do you renew the current tenant or start fresh with a new one? The answer depends on the tenant, the market, and whether the cost of turnover is worth the potential upside of a new lease.

Here's how to think through the decision.

The Real Cost of Turnover

Before you decide not to renew, do the math on what a vacancy actually costs you.

Direct costs:

• Vacancy loss: Average vacancy is 2-4 weeks. At $1,500/month rent, that's $750-1,500 in lost income.
• Make-ready: Paint, cleaning, repairs. Budget $500-2,000 depending on unit condition.
• Marketing: Listing fees, photography, showing time. $200-500.
• Screening: Application processing, background checks. $50-100 per applicant.

Total turnover cost: $1,500-4,000+ per unit.

If your current tenant is paying on time and taking care of the property, that's a steep price to pay for the chance to bump rent $50-100/month. It takes 15-40 months of that increase just to break even on the turnover cost.

When to Renew

Renewing is almost always the right call when:

• The tenant pays on time. Consistent rent payment is worth more than a marginal rent increase.
• The unit is well-maintained. A tenant who takes care of your property saves you money on every turnover you avoid.
• Market rents haven't moved significantly. If comparable units rent for the same or only slightly more, there's no financial reason to risk a vacancy.
• You can adjust rent in the renewal. Most renewals include a rent increase. A 3-5% annual bump keeps you close to market without the risk of losing a good tenant.

Renewal lease considerations:

• You can update lease terms (pet policy, parking, late fee structure) during renewal
• Month-to-month vs. fixed term: month-to-month gives you flexibility but less income predictability
• Send the renewal offer 60-90 days before the current lease expires to give everyone time to plan

When to Go New Lease

A new tenant makes sense when:

• The current tenant is a problem. Late payments, lease violations, neighbor complaints, property damage. Don't renew a headache just to avoid vacancy.
• You're significantly below market rent. If comparable units are renting for 15-20%+ more, a new lease at market rate can justify the turnover cost within a few months.
• You're doing major renovations. If you're upgrading the unit (new kitchen, flooring, appliances), you need the unit empty anyway. A new lease at the post-renovation rate makes sense.
• The tenant wants to leave. If they've given notice or indicated they won't renew, start marketing immediately. Don't wait until move-out day.

The Rent Increase Question

The most common reason PMs consider not renewing is wanting to raise rent beyond what the current tenant will accept.

Before you push for a big increase, consider:

• What's the actual market rate? Check comparable listings, not just what you think it should be.
• Will the tenant accept a smaller increase and stay? Negotiation beats vacancy.
• What's your average days on market for this unit type? If it takes 30+ days to fill, factor that vacancy cost into your rent increase math.

Example scenario:

Current rent: $1,400/month. Market rate: $1,600/month. Turnover cost: $3,000.

• If you renew at $1,500 (+$100/month), you earn $1,200 more per year with zero vacancy.
• If you go new lease at $1,600 (+$200/month), you earn $2,400 more per year but spend $3,000 on turnover plus lose 1 month of rent ($1,600). Net: you're behind for 2+ years.

The math usually favors the renewal unless the rent gap is large or the tenant is problematic.

Legal Requirements

Both renewal and non-renewal have legal notice requirements that vary by state.

Common requirements:

• Notice period: Most states require 30-60 days notice of non-renewal. Some (like NH) require as little as 30 days. Others require 90 days for certain lease types.
• Rent increase caps: If you're in a rent-controlled jurisdiction (parts of CA, OR, NY, NJ), there are limits on how much you can increase at renewal.
• Just cause requirements: Some jurisdictions require a valid reason not to renew (OR, some CA cities). You can't simply choose not to renew because you want to raise rent beyond the cap.
• Written notice: Verbal non-renewal doesn't count. Always provide written notice with the specific date the lease ends.

A Simple Decision Framework

Ask these three questions:

1. Is the tenant a good tenant? Pays on time, maintains the unit, follows lease terms. If yes, lean toward renewal.
2. Is the rent gap worth the turnover cost? Do the math above. If the gap is less than 10-15%, it almost never is.
3. Are there lease terms you need to change? You can update most terms in a renewal. You don't need a new tenant to get a new late fee policy.

If the answer to #1 is yes and #2 is no, renew. It's that simple most of the time.