With Anthropic’s S-1 now filed with the SEC, over 5,000 workers are about to turn out to be extraordinarily rich. We’re speaking concerning the median worker making $3 million to $10 million inside three years, and certain not less than a thousand individuals making nicely into eight figures or extra.
The numbers behind it are astounding. The submitting exhibits $16.3 billion in income for the primary half of 2026, up from about $1.2 billion a yr earlier. Since Opus 5.5 launched on September 22, 2026, token utilization for Claude has grown roughly 3.6X. The corporate has over $130 billion in money and investments, is already producing an working revenue, and is about to boost $80+ billion extra in its IPO. Fairly darn spectacular.
For workers, making that a lot cash in so little time is like successful the lottery. They picked the suitable ship, and loads of proficient individuals tried and couldn’t get on. With correct monetary administration, they and their youngsters ought to be set for all times.
Profiting From AI As An Outsider
For the remainder of us commoners, luck is more durable to come back by.
We are able to purchase actual property within the cities the place AI corporations are headquartered and hope the wealth trickles into dwelling costs and rents. We are able to spend money on personal and public venture capital and hope the overall companions decide the suitable corporations. However even then, our publicity gained’t come near that of early AI workers who received fairness as a part of their paycheck.
As an unemployed dad with two younger children, I fear about falling into the permanent underclass as AI wealth pulls additional forward. It doesn’t assist that I’m going through a liquidity crunch once more, due to enterprise capital calls that got here in a lot sooner than anticipated.
So I’ve been combing via each revenue stream I’ve, searching for methods to earn extra. And one stream stood out: rental property.
The Temptation To Increase Rents Is Actual
San Francisco rents are surging. My tenants are paying about $1,250 a month beneath what I may possible get at the moment. That’s $15,000 a yr, which might cowl a significant chunk of my subsequent capital name.
Wealthy tenants are rising all over the place in San Francisco proper now. When the individuals renting your own home are immediately price hundreds of thousands, it’s simple to assume: they gained’t even discover just a few hundred additional {dollars} a month. In the meantime, I’d discover it each single month given I am cash strapped at 49.
So naturally, I received to questioning. In case your tenants immediately strike it wealthy, does that change what they owe you? On the very least, ought to they not less than pay market lease?
Loads of landlords would say sure. Being a landlord is a enterprise, not a charity. If the market is scorching and tenants can afford it, why not elevate to market lease if attainable? The reply isn’t so simple as I initially thought.
Growth Instances In San Francisco Housing
After a down interval in 2022 and 2023, the San Francisco housing market is scorching due to the AI growth.
San Francisco now has the strongest housing market within the nation. Citywide rents are up about 27% year over year, with one-bedrooms up 25.4% and two-bedrooms up 26.8% all in accordance with Zumper. That is the most recent lease progress of the 100 largest U.S. cities.
Dwelling costs are surging too. The median San Francisco dwelling (contains condos) bought for about $1.69 million in September, up 14.7% yr over yr, the quickest progress of any main market. For single-family homes, the median is up about 24% (~$2.2 million), with 86% promoting over asking.
So any San Francisco landlord who signed a lease in 2025 or earlier is probably going not charging market lease. Not even shut.
Created A “Schedule Of Rents” In The Lease
I’ve been a San Francisco landlord since 2005, after I rented out the primary property I purchased in 2003. Over time, I’ve developed harmonious relationships with my tenants due to a lease that units expectations clearly.
A kind of expectations is a schedule of rents for the following three years within the lease so each tenants and landlord can funds. The will increase are capped at 3% a yr regardless of not being underneath lease management.
The schedule is meant to offer readability and rewards tenants for following the lease. If tenants are in good standing, I comply with the schedule every year. The longer the tenants keep, the higher low cost they get in comparison with market. If not, I’m free to boost the lease inside the legislation with correct written discover.
Each potential tenant has appreciated this readability. And despite the fact that a landlord often leaves cash on the desk by elevating lease beneath market, the peace that outcomes is often price greater than the additional {dollars}.
In relation to proudly owning bodily actual property as a part of your retirement portfolio, the largest battle is having the endurance to carry for so long as attainable. Proudly owning rental property is a battle of attrition, and my faith in humanity has been examined a pair occasions as a landlord.
Falling Behind Huge Time On Market Hire
In July 2025, my tenants of 1.2 years gave discover. That was disappointing as a result of I believed they’d keep for 3 years. In truth, 2025 was a turbulent yr with three tenant turnovers. That’s life as a landlord. You both promote or discover new tenants, and I’ve discovered just a few methods on how to minimize vacancy.
For this property, the earlier tenants have been paying $9,200 a month. I made a decision to check the market at $9,995. In three weeks, I discovered nice tenants, a pair with no pets who needed the complete five-bedroom, four-bathroom home to themselves. Two dwelling places of work, a gymnasium, and ocean views have been on their want record. Sure, all types of people spend six figures a year on rent.
Since then, the rental market has strengthened. I may almost definitely lease the home for $11,000 to $12,000 a month at the moment. Let’s name it $11,500, to be conservative. However when the one-year anniversary got here on October 1, 2026, the lease solely went as much as $10,250, a 2.5% enhance. True to the lease, I adopted the schedule as a result of the tenants have been in good standing.
The price of following the schedule is about $1,250 a month, or $15,000 a yr. And the longer the tenants keep, the larger the chance price for me, however the higher the profit for them. So assume twice earlier than writing a set lease schedule for brand spanking new tenants. As a substitute of three years, take into account two. And as a substitute of a set 2.5% enhance, take into account a spread for extra flexibility. Both method, setting expectations up entrance is essential.
There Is No Cap On Landlord Prices
Hire management is nice for tenants who profit from it. However for landlords, there’s no such factor as price management. Insurance coverage, upkeep, and labor prices are all rising sooner than inflation.
If a landlord doesn’t cost market lease, revenue margins get squeezed. Mismanage the lease schedule lengthy sufficient and the income disappear, which is why some landlords pull their properties off the market altogether. See what’s occurring NYC.
My preliminary considering was that I used to be testing the market in 2025, and I used to be glad with the consequence. So long as lease rises 2.5% a yr, I ought to not less than cowl 80% of the rising price of insurance coverage and primary upkeep.
My tenants are additionally comparatively younger with loads of choices on their aspect. I don’t anticipate them to remain longer than 5 years. Extra realistically, three. With a lot wealth coming their method, I’d assume they’d need to purchase a property finally, both in San Francisco or again of their hometown.
Bear in mind, I anticipated my earlier tenants to remain three years, they usually left after 1.2 regardless of having a daughter in class.
So on the finish of the day, I’m following the lease I drew up and signed. If my tenants are nonetheless there after their fourth yr, I’ll rethink whether or not to boost the lease to market.
Your Tenant’s Monetary Windfall Is Separate
Again to the unique query. Ought to a tenant’s sudden wealth change something?
Tenants strike it wealthy on a regular basis. One buys a lottery ticket on a whim and hits for $20 million. One other’s startup will get acquired by Huge Tech. One other inherits a fortune from a grandparent they visited twice. One other will get promoted to managing director and begins incomes nicely over $1 million a year in a single day.
Now flip it round. Tenants additionally get laid off, undergo divorces, get sick, and watch their portfolios drop 40%. What number of landlords voluntarily reduce the lease when that occurs? Not many.
You possibly can’t have it each methods. If a tenant’s dangerous luck doesn’t decrease the lease, their good luck shouldn’t elevate it.
A lease is a promise a couple of home, not a royalty in your tenant’s life. If my tenants make $50,000 or $50 million this yr, the lease schedule stays the identical. That’s the entire level of placing it in writing.
There’s additionally a sensible aspect. Tenants who come into cash usually tend to purchase a house than renew. Stress them and you could solely velocity up their exit. One vacant month at $10,250 wipes out roughly eight months of my $1,250 low cost.
When good tenants finally go away, I’ll reset to market lease. Till then, my phrase is price greater than $15,000 a yr.
It’s Exhausting To Increase The Hire As A Mother & Pop Landlord
My downside as a landlord is that I optimize for peace and concord. A property supervisor would possible optimize for max revenue. However I’m not about to surrender 1 to 2 months of lease a yr after I don’t have a day job and have been managing properties since 2005.
Regardless of my expertise, I nonetheless discover elevating the lease deeply uncomfortable. I’ve written about how to raise the rent and extend a lease with out feeling responsible. Clearly, I’m nonetheless a piece in progress.
That discomfort is the principle purpose I hand over a three-year lease schedule up entrance to keep away from any future awkwardness. When a brand new tenant’s enthusiasm is highest, they see the phrases. In the event that they agree, they signal with no surprises. If not, no massive deal.
Honoring The Lease Is The Approach To Go
Despite the fact that the lease goes month-to-month after the primary yr and the schedule isn’t legally binding, honoring my phrase has paid off over 21+ years. Altering the phrases on tenants after a yr isn’t the trail to concord, even whether it is my proper to take action.
In case your tenants have induced no disturbances, at all times paid on time, been sincere about what they’ve damaged, and paid to repair it, it’s merely not price elevating the lease to market when you’re nonetheless money movement optimistic. Extra concord means longer maintain intervals, which is usually higher for constructing wealth.
For income-seeking buyers, it is price noting that rental property income is superior to dividend stock income. In contrast to an organization that pays a dividend, when a home pays you lease each month, its worth doesn’t drop by a commensurate quantity. Put on and tear is actual, nevertheless it’s nothing like a dollar-for-dollar decline.
A Phrase To Tenants
If rents are surging in your metropolis, comply with the lease and provides your landlord zero excuses to boost the lease. To enhance your odds additional, ship a small present on occasion. Even a $25 present goes a great distance. It might sound ridiculous, however this type of emotional intelligence can prevent 1000’s of {dollars}.
Additionally, the extra self-sufficient you might be at fixing issues and the much less you contact your landlord, the extra possible your lease stays affordable. In addition to, who needs to trip with a landlord anyway?
Simply know this leeway principally exists with mom-and-pop landlords. A company landlord’s pricing software program doesn’t care about your present. A human landlord with a conscience may.
Readers, in case your tenants immediately struck it wealthy from an IPO, inheritance, or lottery win, would you elevate the lease to market or honor your authentic phrases? Ought to landlords reduce the lease when tenants fall on laborious occasions, in the event that they’d elevate it when tenants get wealthy? Do multi-year lease schedules make sense, or are they only leaving cash on the desk? And tenants, would you ship your landlord a $25 present to maintain your lease down, or would that really feel like a bribe?
Make investments In Actual Property With out The Tenant Drama
If this publish made you notice being a landlord means leaving cash on the desk, consuming rising prices, and agonizing over lease will increase, there’s one other approach to personal actual property.
Take a look at Fundrise, my favourite personal actual property investing platform. As a substitute of fixing bogs or negotiating leases, you possibly can spend money on a diversified portfolio of residential and industrial actual property, beginning with as little as $10.
No midnight calls about leaky taps or awkward lease conversations. No tenants hanging it wealthy when you honor a three-year lease schedule. 100% passive as a substitute.
I’ve personally invested with Fundrise, they usually’ve been a long-time sponsor of Monetary Samurai.
