Renew, Raise, or Let Them Go Month-to-Month? The Renewal Decision

Renewal season is when most Collin County landlords lose money without realizing it. Not because they made a dramatic mistake. Because they made a lazy one: they either auto-renewed at the same rate without checking the market, or they pushed a raise that cost them a good tenant and triggered a turnover that wiped out twelve months of upside.

There's a structured way to think through this. I want to walk you through it.

Texas Has No Rent Cap — The Real Constraint Is the Math

Let's start with the legal question, because it comes up every time. There is no statewide rent control in Texas. You can raise rent by any amount at renewal, as long as you give proper written notice before the lease term ends. For a standard 12-month lease, Texas law requires at least 30 days' written notice before you implement a rent change (and many leases include their own notice periods — check yours).

That's the ceiling. The real question isn't what the law allows. It's what the market supports and what the numbers actually justify.

The number most owners miss: A single turnover in a McKinney rental typically costs $2,800–$4,500 all-in — vacancy days, make-ready, and re-leasing fees combined. A $125/month raise that triggers that turnover takes 23–36 months to break even.

The True Cost of Turnover (Run the Math Before You Send That Notice)

I run this calculation on every renewal in our portfolio before we recommend a rate. It's straightforward, but most owners never do it.

Assume your home rents for $2,400/month in McKinney. That's roughly $80/day in lost rent. A typical Collin County re-leasing cycle — vacancy, make-ready, and new-tenant placement — runs 35 to 50 days in a normal market (longer in Q4). So just the vacancy component is $2,800–$4,000 before you spend a dollar on paint or carpet cleaning.

Add in the make-ready. In my experience across our portfolio, a standard turnover make-ready on a 3BD/2BA runs $800–$1,500 depending on how the outgoing tenant left the property. (If you want to understand what you can actually charge back on that make-ready, security deposit deductions in Texas have specific rules that trip up a lot of owners.)

Add re-leasing costs if you're paying a management fee or leasing commission. Now you're at $3,500–$5,500 total, conservatively.

Here's the break-even table for a $2,400/month home:

The only scenario where chasing a raise makes clear financial sense is if (a) the market genuinely supports it, (b) the increase is large enough to close the break-even gap fast, and (c) you have real reason to believe the tenant won't leave over it. All three conditions need to be true at once.

When to Raise, When to Hold, When to Walk Away

The decision framework I use has three levers: market rate, tenant quality, and your own operational bandwidth.

Raise the rent when: The market has moved meaningfully above your current rate. If comps in Stonebridge Ranch or Trinity Falls are coming in $150–$200 above what you're currently charging, that gap is real money. A well-positioned raise, communicated early and professionally, is often accepted by tenants who understand the market. The critical piece is timing — give 60 days' notice when you can, not the legal minimum of 30. It signals respect and gives them time to decide without feeling cornered.

Hold rent when: You have a low-maintenance, on-time-paying tenant in a stable or slightly softening market. This is more common than people think right now. North Texas leasing trends show that supply has increased across several Collin County submarkets, which means a departing tenant isn't guaranteed to be replaced quickly at a higher rate. A tenant who pays on time, doesn't generate maintenance calls, and treats the property well is worth real money. Price that correctly before you push them out.

Don't renew when: The tenant has been a chronic late payer, has generated repeated maintenance issues tied to misuse, or you have credible reason to believe they're not caring for the property. A below-market renewal with a bad tenant is the worst outcome. At that point, the turnover cost is actually an investment in getting the right occupant in the seat.

The Month-to-Month Question

Some owners default to letting leases roll month-to-month without thinking it through. Here's my take.

Month-to-month has two sides. The instability side: you're one 30-day notice away from a vacancy with no runway to prepare. In a neighborhood like Cambridge Crossing in Frisco or a newer build pocket in Prosper, that might not be a big deal in April. In November, a surprise vacancy is a real problem.

The upside side: if you charge a meaningful month-to-month premium, it compensates for that instability. In our portfolio, a standard month-to-month premium runs $100–$200/month above the renewal rate. That premium has two functions — it pays you for the flexibility risk, and it gently nudges tenants who have long-term intentions toward signing a new annual lease.

When month-to-month makes sense: The tenant has told you they're likely moving within 6 months (job change, home purchase). You want to keep income flowing without locking into a 12-month term at a rate that may not reflect the market by the time they leave. The premium covers the optionality.

What doesn't make sense: letting a lease roll month-to-month at the same rate as an annual renewal, with no premium. That's giving the tenant full flexibility at your expense.

The Problem with No Process (And What a Documented Workflow Fixes)

I've talked to owners in McKinney, Celina, and across Collin County who handled renewals on gut feel. They got a notice email from their management company (or remembered the date themselves), made a quick call on the rate, and sent the renewal offer. No market pull. No turnover math. No documented decision date.

The risk isn't that they made a catastrophically wrong call. The risk is that they made a slightly wrong call, 12 months in a row, without ever knowing it. $50/month under market on three properties, over five years, is $9,000 in unrealized rent.

Our renewal workflow at DWC runs on documented decision dates. Ninety days before a lease expires, I pull current market comps for that specific submarket. Sixty days out, the owner gets a written renewal recommendation with the turnover math attached. Forty-five days out, the notice goes to the tenant. There's no ambiguity about who makes the call or when.

If you're self-managing and want a starting point on tenant screening and risk-reduction frameworks that feed into that renewal decision, that's a good companion read.

Make the Renewal Decision Once, With a Calculator

Before you send any renewal offer, run the numbers. What's your current rate versus market comps? What would a 35-day vacancy actually cost you? What's the probability this tenant leaves over a $100 increase versus a $150 increase?

The answers aren't always obvious until you write them down.

If you want help running that math on your specific property, the Rent vs. Sell Calculator at DWC is a good starting point for understanding what your home should actually be generating — and whether a renewal at current rate is leaving money on the table or protecting it.

Frequently Asked Questions

How much can I raise rent at renewal in Texas? Texas law sets no limit on how much you can raise rent at renewal. The practical ceiling is the local market rate — what a comparable home would lease for today. In McKinney and Collin County broadly, renewal increases in our portfolio typically run $75–$200/month when the market supports them. Anything higher than that needs to be backed by hard comp data, or you risk triggering a turnover that costs more than the increase earns.

Is there rent control in Texas? No. Texas does not have statewide rent control, and state law actually preempts cities from enacting their own rent control ordinances. Your only legal constraints at renewal are the notice requirement (generally 30 days before the lease term ends) and whatever terms your existing lease specifies.

Is it better to raise rent or keep a good tenant at the same rate? It depends entirely on the math. If raising rent by $100/month risks a turnover that costs you $3,500 in vacancy and make-ready, you'd need 35 months to break even. If the tenant has been reliable and the market hasn't moved dramatically, holding flat for one renewal cycle is often the smarter play. Tenant quality factors in too — a low-maintenance, on-time payer has real dollar value that doesn't show up on the rent line.

How much does tenant turnover actually cost in North Texas? In my experience across our portfolio, a standard turnover on a 3–4 bedroom single-family home in Collin County runs $2,800–$5,500 all-in. That includes vacancy days (roughly $65–$95/day depending on rent), a standard make-ready, and re-leasing costs. A home that sits vacant for 45 days at $2,400/month loses $3,600 in rent alone — before you've painted a wall.

Should I let a tenant go month-to-month, and what rate should I charge? Month-to-month can work when a tenant is transitioning out within a predictable window (buying a home, relocating for work). Charge a premium of $100–$200/month above the renewal rate to compensate for the instability. Never let a lease roll month-to-month at the same rate as an annual renewal — you've given away flexibility for free.

How much notice do I have to give for a rent increase in Texas? Texas law requires at least 30 days' written notice before a rent increase takes effect on a monthly tenancy. For annual leases, the notice needs to be delivered before the lease term ends, giving the tenant time to accept or vacate. I recommend 60 days when possible — it reduces friction, gives tenants time to make a real decision, and results in more accepted renewals in our experience.

Author

Darrell Calhoun Owner DWC Property Group

Darrell Calhoun is the Owner of DWC Property Group and founded the company based on firsthand experience as a real estate investor and rental property owner. After owning and managing several rental properties, Darrell repeatedly encountered a common frustration within the industry: management fees being charged without clear explanations or work being completed. As an owner, it was often unclear what those fees represented, why they were necessary, or how they truly benefited the property or the resident. That experience became the catalyst for creating DWC Property Group. Darrell set out on a mission to build a property management company rooted in transparency, accountability, and clarity—where every fee has a defined purpose, every charge is documented, and all costs make sense to both owners and tenants. This commitment to transparency is the cornerstone of the company's mission. In addition to his real estate and property management background, Darrell is a police officer. His law enforcement experience has heavily influenced how the company operates, emphasizing discipline, risk mitigation, documentation, and calm decision-making under pressure. These principles are embedded into DWC Property Group's culture and daily operations.