Very true. But as appraisals increase, taxes and insurance increase. You have to raise rents sometimes.
What works for me is the following:
I only write 1 year leases. I figure both landlord and tenant need to reevaluate after a year.
After the first year, I have an unwritten rule. If I like the tenant, I will not raise the rent. If I do not like the tenant, I will.
After the second year, I will look at the zillow rent zestimate. I will raise the rent based on the difference between the zestimate and the current rent divided by 2. I figure a good tenant gets a 50% discount on the increase and the place is still below market value.
For new tenants, we start at the zestimate.
Sensible systematic approach that assumes the zEstimate is reasonable. Do you have a way to validate the zEstimate?
I had a similar approach until the last two years and have been more aggressive on raising rents because property taxes and insurance are going up so much. I had one of my rental property taxes double this year and most are up 40% in the last two years. I still keep them below market, though.