Real estate & rental
Rental Lease Renewal Calculator
Works the economics of a renewal, where it is almost always cheaper than replacing.
Result
Tenancy rules are set by state and often by city, and they are among the most locally variable areas of law there is. Deposit limits, notice periods, late fee caps, interest on deposits and rent increase restrictions all differ and change. This is arithmetic, not legal advice; check your own jurisdiction before relying on any of it. The probability of them leaving is a judgement, not a measurement, and it rises sharply once the increase exceeds what comparable properties are asking. A good tenant paying slightly under market is frequently worth more than the gap.
Get a Free Business AuditHow the calculation works
The renewal rent against the alternative of a turnover, counting the vacancy, the make-ready work, the leasing cost and the rent the new tenant would pay. The comparison usually favours renewal by a wide margin, which is why a renewal at slightly below market frequently beats a new tenancy at market.
What moves the number
- Renewal rent against expected market rent.
- Expected vacancy if the tenant leaves.
- Make-ready and leasing costs on turnover.
- The tenant's payment and care history, which has value.
Where this one goes wrong
A sitting tenant who pays on time and looks after the property is worth more than the rent differential in most cases, and pushing a renewal to full market rent to capture a modest increase regularly costs a multiple of it. Run the comparison. Any renewal increase also has to respect local caps and notice requirements, which apply to renewals as much as to increases within a tenancy.
Before you quote
- Compare the renewal against the full cost of a turnover.
- Weigh the tenant's history, not only the rent.
- Observe local caps and notice rules on any increase.
Questions
About this calculator
Should I renew below market rent?
Frequently yes, because the turnover costs avoided usually exceed the rent differential by a wide margin. A sitting tenant who pays on time and cares for the property is worth more than a modest increase, and the arithmetic generally confirms it.
What does a renewal save?
The vacancy, the make-ready work, the cleaning and repainting, the listing and screening, and the time. Together those commonly run to several months of rent, which is the figure a renewal decision should be weighed against.
Do notice rules apply to renewals?
Yes, and so do local caps on increases. A renewal with an increase is an increase for these purposes, so the required notice period and any limit on the amount apply the same way as mid-tenancy, which is worth confirming locally.
The formula
expected value = gain x probability they stay - turnover cost x probability they leave
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Current rent ($). Enter your own figure; the page starts at $2,400.
- Market rent ($). Enter your own figure; the page starts at $2,600.
- Increase you are considering (%). Enter your own figure; the page starts at 6%.
- Total cost of a turnover ($). Enter your own figure; the page starts at $3,600.
- Days vacant if they leave. Enter your own figure; the page starts at 21.
- Chance they leave (%). Enter your own figure; the page starts at 30%.
The result updates as you type, so you can try a figure, see what it does to net expected gain, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Current rent | $2,400 |
| Market rent | $2,600 |
| Increase you are considering | 6% |
| Total cost of a turnover | $3,600 |
| Days vacant if they leave | 21 |
| Chance they leave | 30% |
What comes out
| Result | Value |
|---|---|
| Net expected gain main result | -$367.50 |
| Rent after the increase | $2,544.00 |
| Gain if they stay | $1,728 |
| Cost if they go | $5,257 |
| Increase that breaks even on the risk | 7.82% |
The expected value is -$367.50. At a 30 chance of losing the tenant, an increase above about 7.82% costs more than it gains.
How sensitive the answer is
Holding everything else steady and changing only current rent, this is what happens to net expected gain. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Current rent ($) | Net expected gain |
|---|---|
| $1,200 | -$723.75 |
| $1,800 | -$545.62 |
| $2,400 example above | -$367.50 |
| $3,600 | -$11.24 |
| $4,800 | $345.01 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Current rent ($)
- A money amount, starting at $2,400.
- Market rent ($)
- A money amount, starting at $2,600.
- Increase you are considering (%)
- A percentage, between 0 and 40, starting at 6%.
- Total cost of a turnover ($)
- A money amount, starting at $3,600.
- Days vacant if they leave
- A number, between 0 and 180, starting at 21.
- Chance they leave (%)
- A percentage, between 0 and 100, starting at 30%.
What the results tell you
| Result | What it is |
|---|---|
| Net expected gain | The headline result. A money figure. |
| Rent after the increase | A money figure. |
| Gain if they stay | A money figure. |
| Cost if they go | A money figure. |
| Increase that breaks even on the risk | A percentage. |
What is not in this number
Property figures here exclude the costs that decide whether a deal works: vacancy, maintenance, management, capital expenditure and the transaction costs at both ends. A return that looks strong before those frequently does not survive them.
Keep going
Related calculators
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.