Rent increase/tenant has been for two years with same rent amount

New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes

Hi all,

I have two tenants in my 3B/3B property. One of the tenant has been there for 2 years with the same rent amount since he moved in we have a month to month lease. When is recomendé to increase the rent and how much is it fair?

TIA

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

I see a lot of replies from people not in San Diego and with questionable knowledge of the market.

For tenants more than 12 months, you need to provide 60 day notice of rent increase

State wide rent control (AB1482) does not apply for rent by room or SFR. However city of San Diego (I am unsure you are city of San Diego and county or other cities do not have local rent control laws) has more extreme rent control (something named like tenant protection act). I suspect it does apply (because it covered virtually everything), but am not positive. You can Google either AB1482 or San Diego tenant protection act (went into affect late J.

The rent control increase amount Is 5% + CPI capped at 10%. Currently the 10% cap is in effect (meaning CPI was at least 5%).

The average 3 BR SFH rent increased $600/month last year in San Diego. This implies your $50 increase is too low. You should raise at least $100 and consider raising rent 10%. Because you have not raised rent in 2 years, even 10% increase will have your rent below market rent.

As others have indicated, it is better to raise rent annually than to wait and have a bigger increase.

good luck

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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
We typically reinspect the unit first, then evaluate local market conditions and timing before determining an increase. We typically discuss our recommendation with our Client Owner before actually offering to the Tenants. Depending on current length of their tenancy, and conditions found at the inspection, as well as overall experiences with the Tenant, we may require updated application and verification of income also before offering a renewal/increase.
You should always try to stay at or near top of market for your specific property conditions and available tenant pool.
Once we decide on the rental rate, we simply send a one page addendum that details the increase in rent (and SD!), and offers three options: Tenant agrees; Tenant rejects and acknowledges they will be vacating within the period required by local law; or, they may request a compromise or other changes, which will be considered and responded to. We also provide a deadline of when this addendum must be returned, usually two weeks prior to the current end of term.
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Michael BraddockBusiness Member
Realtor · Jacksonville, FL · Member since 2021 · 6 posts · 6 votes
3y
The market typically dictates the price, but there is also value in having a good tenant. I would say check the market and try to get close to that without pushing too much of an increase on him. If you are fine with him moving out and replacing another tenant then go ahead and increase it to market rates. Traditionally, anything more than a $50-$100 increase is considered high from my experience, but with rents increasing more than normal over the past few years along with inflation it's not unreasonable to push for more. I am sure your taxes and insurance rates have increased in the past 2 years.
904-580-0330
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Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Thank you, yes my insurance has increased. I am in San Diego, CA and everything is so expensive now. I was thinking $50, when is it a good time to increase it?
can I do it now? Or wait until next year?
1 Reply
Michael BraddockBusiness Member
Realtor · Jacksonville, FL · Member since 2021 · 6 posts · 6 votes
3y
I am not sure what the laws in CA are regarding this but for a month-to-month tenant here in FL we are required to give them at least 15 days of the next rent due date. I would give him at least a 30 days notice, but I highly recommend researching CA laws first and or getting legal advice from a lawyer. If you can find a lawyer who specializes in property management they will likely already have a premade form you can use to serve notice. For instance, we have Harry Heist here in FL who offers free forms https://evict.com/?page=lease_standard&clcd=std
Keep in mind this is FL specific but I am just showing you as an example.

904-580-0330
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Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Great, thank you for the advise!
0 Reply
Katie Balatbat
CPA and Attorney · San Diego, attorney · Member since 2022 · 301 posts · 219 votes
3y
@Maria De La Vega
You will also want to see if your property is subject to the statewide rent control laws that were put in place around ~2019 or so. If so, there may be limits on how much you can increase the rent.
*this post does not create an attorney-client or CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
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Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Thank you Katie,
Where can I find that information in San Diego CA?
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Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
@Maria De La Vega um...what is the rent? What is the market range for the area? Are you above or below the median price? Are you above or below the median condition?
One techinique we have used when we want to stay flat is to say we hope they renew, we are happy with their tenancy and are glad to increase the rent only by the rate of inflation...even if that was 1.5-2%. On 1500 bucks its $25 month. It can keep people used to rent raises while staying mostly flat but not letting rents get behind...
1 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
following up on @Katie Balatbat's good post it is REALLY important to stay on top of regular adjustments in a rent control environment. Almost all rent control allows for some increases but can block sudden large increases in rent or raises at changeover etc. Landlords who are "rewarding" long term tenants with lower than appropriate rent can get WAAAY behind.
Better to keep rent fair and current and earn long term tenancy by being a reasonable, responsive landlord.
1 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Jonathan R McLaughlin:

@Maria De La Vega um...what is the rent? What is the market range for the area? Are you above or below the median price? Are you above or below the median condition?
One techinique we have used when we want to stay flat is to say we hope they renew, we are happy with their tenancy and are glad to increase the rent only by the rate of inflation...even if that was 1.5-2%. On 1500 bucks its $25 month. It can keep people used to rent raises while staying mostly flat but not letting rents get behind...

Hi Jonathan,

That tenant is paying $1400. for a room and its own bathroom, kitchen privileges and utilities included. He has been paying the same since he moved in two years ago. I have a month to month lease.
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Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
I would look on the sites that advertise rooms for rent and see how that stacks up. The own bathroom is a huge plus, yes? It really doesn't matter what you did before or if your insurance went up, its the going rate for what you are offering. All that said, if you are in the general area of normal price, you are probably really good at $50. $100 seems stiff.
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Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Jonathan R McLaughlin:

I would look on the sites that advertise rooms for rent and see how that stacks up. The own bathroom is a huge plus, yes? It really doesn't matter what you did before or if your insurance went up, its the going rate for what you are offering. All that said, if you are in the general area of normal price, you are probably really good at $50. $100 seems stiff.

Ok, Thank you for the input.
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Adam BartomeoBusiness Member
Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
3y
$50!?!?!? I would love to rent from you. We are very fair with our tenants but we also need to be fair to our owners. Over the past 2 years we have seen market rent increase by about 50%, not $50. We just raised a tenant in a 2/2 by $250 which put them under market rent by $150.
You are going to have to check market rents BEFORE you decide on an amount to raise. Once you know that you can decided what a fair amount for you and them should be.
[email protected]239-339-3969
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1 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Adam Bartomeo:

$50!?!?!? I would love to rent from you. We are very fair with our tenants but we also need to be fair to our owners. Over the past 2 years we have seen market rent increase by about 50%, not $50. We just raised a tenant in a 2/2 by $250 which put them under market rent by $150.
You are going to have to check market rents BEFORE you decide on an amount to raise. Once you know that you can decided what a fair amount for you and them should be.

0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
I see a lot of replies from people not in San Diego and with questionable knowledge of the market.
For tenants more than 12 months, you need to provide 60 day notice of rent increase
State wide rent control (AB1482) does not apply for rent by room or SFR. However city of San Diego (I am unsure you are city of San Diego and county or other cities do not have local rent control laws) has more extreme rent control (something named like tenant protection act). I suspect it does apply (because it covered virtually everything), but am not positive. You can Google either AB1482 or San Diego tenant protection act (went into affect late J.
The rent control increase amount Is 5% + CPI capped at 10%. Currently the 10% cap is in effect (meaning CPI was at least 5%).
The average 3 BR SFH rent increased $600/month last year in San Diego. This implies your $50 increase is too low. You should raise at least $100 and consider raising rent 10%. Because you have not raised rent in 2 years, even 10% increase will have your rent below market rent.
As others have indicated, it is better to raise rent annually than to wait and have a bigger increase.

good luck

7 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
California laws are different, there is a rent control law that passed back in 2020. However, I believe I can increase the rent 5%-10%
God Bless Florida!
1 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Dan H.:

I see a lot of replies from people not in San Diego and with questionable knowledge of the market.
For tenants more than 12 months, you need to provide 60 day notice of rent increase
State wide rent control (AB1482) does not apply for rent by room or SFR. However city of San Diego (I am unsure you are city of San Diego and county or other cities do not have local rent control laws) has more extreme rent control (something named like tenant protection act). I suspect it does apply (because it covered virtually everything), but am not positive. You can Google either AB1482 or San Diego tenant protection act (went into affect late J.
The rent control increase amount Is 5% + CPI capped at 10%. Currently the 10% cap is in effect (meaning CPI was at least 5%).
The average 3 BR SFH rent increased $600/month last year in San Diego. This implies your $50 increase is too low. You should raise at least $100 and consider raising rent 10%. Because you have not raised rent in 2 years, even 10% increase will have your rent below market rent.
As others have indicated, it is better to raise rent annually than to wait and have a bigger increase.

good luck

0 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Maria De La Vega:

Quote from @Dan H.:

I see a lot of replies from people not in San Diego and with questionable knowledge of the market.
For tenants more than 12 months, you need to provide 60 day notice of rent increase
State wide rent control (AB1482) does not apply for rent by room or SFR. However city of San Diego (I am unsure you are city of San Diego and county or other cities do not have local rent control laws) has more extreme rent control (something named like tenant protection act). I suspect it does apply (because it covered virtually everything), but am not positive. You can Google either AB1482 or San Diego tenant protection act (went into affect late J.
The rent control increase amount Is 5% + CPI capped at 10%. Currently the 10% cap is in effect (meaning CPI was at least 5%).
The average 3 BR SFH rent increased $600/month last year in San Diego. This implies your $50 increase is too low. You should raise at least $100 and consider raising rent 10%. Because you have not raised rent in 2 years, even 10% increase will have your rent below market rent.
As others have indicated, it is better to raise rent annually than to wait and have a bigger increase.

good luck

0 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Thank you Dan, for your helpful responses since we both in California.
One more thing to ask; The laundry room in the property is inside of the master room on the third floor where I have another tenant, tenant B.
The tenant, who I haven't increased the rent in two years is on the second floor, tenant A; tenant A has been a good tenant and hasn't done his laundry in the property since the laundry room is inside the master room, the other tenant's room, tenant B.
Tenant A is a military guy and has been doing his laundry at the Military base. Therefore he doesn't do his laundry at the property to not bother Tenant B. This situation has contributed on me not been able to raise the rent on tenant A.
Is it fair still increase the rent on the tenant A who has been there with the same rent amount for two years?
Thank you, and I apologize for all the confusion,
0 Reply
Ethan Gidcumb
Lender · San Diego, CA · Member since 2022 · 130 posts · 75 votes
3y
Hey Katie! If you would like to keep the property at market rent, without concerning the tenant with too harsh of an increase, you could also provide a credit back to the tenant each month. This way, the property stays competitive in your market and the tenant is still taken care of.
1 Reply
Matthew Masoud
Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes
3y
Taxes, insurance, and repair costs have all gone up.
When I purchase a building I always raise rent to 80% of market after completing tenant repair requests.
It can be tough especially when the tenants have been there a while or you take over a building and are raising the rent on 10-20 units.
1 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
Quote from @Maria De La Vega:

Hi all,

I have two tenants in my 3B/3B property. One of the tenant has been there for 2 years with the same rent amount since he moved in we have a month to month lease. When is recommended to increase the rent and how much is it fair?

TIA

0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Maria De La Vega:

Thank you Dan, for your helpful responses since we both in California.
One more thing to ask; The laundry room in the property is inside of the master room on the third floor where I have another tenant, tenant B.
The tenant, who I haven't increased the rent in two years is on the second floor, tenant A; tenant A has been a good tenant and hasn't done his laundry in the property since the laundry room is inside the master room, the other tenant's room, tenant B.
Tenant A is a military guy and has been doing his laundry at the Military base. Therefore he doesn't do his laundry at the property to not bother Tenant B. This situation has contributed on me not been able to raise the rent on tenant A.
Is it fair still increase the rent on the tenant A who has been there with the same rent amount for two years?
Thank you, and I apologize for all the confusion,

You should raise rent, but good tenants are worth keeping. If you want you can raise rent less than the $100 I suggested.
In general I let my good tenants pay below market. I view it is worth less income for less effort and no risk of placing a new tenant.
$50/month increase will have this good tenant below market rent. This will virtually guarantee he does not leave for lower rent in the same area.
Good luck

1 Reply
Maria De La Vega
OP
New to Real Estate · San Diego, CA · Member since 2023 · 56 posts · 11 votes
3y
I agree, I think $50-$70 is fair.
Thank you so much for your advise, I appreciate it!
1 Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
3y
@Maria De La Vega I just bought a property where rents were 1/2 of going market rent, or averaging $575 instead of about $1150. After two months I pulled the bandaid off and sent a letter raising rents to $800. I gave about 70 days notice before the first increased rent was due so anyone could choose to move if they wanted to. One tenant stated they were looking for another place then just up and moved one morning with no notice and a second tenant has continued to passively complain about it.
In a separate building where an inherited tenant was $600 below market value I raised the rent by $50 after allowing them to not have a raise for two years and they gave notice and moved which will allow me to go to full market rent.
It all depends on your situation. I feel if you raise your rent by $50, assuming that’s allowable under California law that is reasonable. If your tenants disagree they will move and you can put the rent up to whatever you feel it should be at.
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