My rental is in a location with rental shortages, so vacancy is not a problem. I recently read an article that said overall, rents are up 7% so far in 2016, and we were slightly under market at the start of the year. For other reasons, I want my tenants out, so it's an easy decision. We will raise the rent to market value, and they will have to move out. (They get assistance, market value is less than the assistance will cover, and they are legally not allowed to pay more to make up the difference.) It's a very significant amount-- at least $150 to $200 per month and perhaps more. I can't justify just letting ~$2400/yr slip away. I'd likely be raising the rent at this point even if they were amazing tenants, but probably by somewhat less in order to hopefully keep them. In the past, I've let it go in order to keep a tenant, but those were generally smaller discrepancies I was eating.
The place will probably be vacant for 2-3 weeks, as it needs paint, carpet and a very, very deep cleaning. If the increase is $175 and is vacant 3 weeks, it will take me about a year to break even (when compared to keeping rent the same and not having a vacancy, plus a few other turnover expenses). But that increase will be in effect essentially forever. If I get a good tenant, I would probably not raise the rent on them for at least the first year, and after that I would see how much below market we were, and consider raising the rent, but keeping it below market in order to hopefully entice them to stay.