Raising the rent and adjusting the contract

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Matthew MorrowBusiness Member
Investor · PA - NY - NJ · Member since 2019 · 503 posts · 177 votes
3y

Not sure on CA laws, but for us in PA-
Check your current lease for any rent adjustment clauses. Research local landlord-tenant laws for raising rent guidelines. Communicate the reasons to your tenant transparently. If both agree, draft a lease addendum detailing the new terms and get it signed by both parties. Always keep records.

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  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 503 posts · 177 votes
    3y

    Not sure on CA laws, but for us in PA-
    Check your current lease for any rent adjustment clauses. Research local landlord-tenant laws for raising rent guidelines. Communicate the reasons to your tenant transparently. If both agree, draft a lease addendum detailing the new terms and get it signed by both parties. Always keep records.

    [email protected]484-791-6200
    CORE Team | Realty ONE Group Supreme547 Reviews
    WebsiteView Page
    1Reply
  • Ingrid Dobbins
    Member since 2023 · 2 posts · 2 votes
    2y

    Adapt an addendum to their original contract with a a 30 day notice to comply. Rent went up along with the cost of living. That's it. I just had to raise the rents in my home. If I have to pay, the bill goes up. Good luck.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y

    You can write an entirely new contract or create an addendum to the original. It doesn't need to be drawn up by an attorney or full of legal jargon, but it should be very clear on the changes.

    I'm curious why their rent would go up? Rental rates are typically higher the shorter the term is so transitioning to a one-year lease would typically lower the price. I highly recommend you study the market to determine market rate, then figure out a fair charge for utilities. You may consider something like this:

    "Rent rate includes utilities up to $250 per month. Should utility costs exceed this amount due to increased utility rates, increased use, abuse, or neglect, Landlord shall bill tenant for the additional cost. Tenant shall have 15 days from the date of invoicing to pay the balance."

    This requires the tenant to take some responsibility for squandering utilities.

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  • Konstantin GinzburgPro Member
    Member since 2021 · 376 posts · 242 votes
    2y

    @Jeffrey Audije

    Once a lease expires, you can provide a new lease agreement that will have your increased rent on it but it is generally not acceptable to raise rent in the middle of an existing lease unless there are specific clauses within the existing lease that would allow that. Many areas also require a written intent to raise rent be given to the tenant prior to this occurring. We do this 30 days prior but different states have different requirements so it is best to check with the requirements in your region to ensure you stay compliant with local laws. If the core reason you want to do this is due to an increase in utility costs, then placing utility costs onto the tenant can also be a good idea. This is usually easily accomplished if the utilities are separately metered. 

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    2y

    @Jeffrey Audije  Was reading this and wondered what you did.  I would have just made them responsible for utilities and lowered rent some. 

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    • Jeffrey Audije
      OP
      Member since 2022 · 18 posts · 7 votes
      1y
      Quote from @Colleen F.:

      @Jeffrey Audije  Was reading this and wondered what you did.  I would have just made them responsible for utilities and lowered rent some. 


       No major strategy used, I just kept rent as is and everything worked out fine. I raised rent for all future tenants after them. Just had to learn from the loss. 

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  • Chase Busick
    Realtor · Oklahoma City · Member since 2020 · 258 posts · 139 votes
    1y

    Usually increasing the rent is a major topic & when to do it.. In many people's leases they factor in month to month leases that they will eventually go up to the market rent, whether immediately after the lease or later on. That is up to you & what you want. 

    Informing the tenants that you may be increasing the rent as early as possible minimum 30 days prior is great, but you can always do it closer to 60 days out or more. This will give them plenty of time in order to properly plan for such increases, especially if they need to prepare for it or consider moving. Springing it onto them last minute may be rude if it is by a large amount. If it is gradual, then it is not as bad. Moving is expensive & a headache. Costs rising is also a very reasonable thing to trigger rent increases. You don't want to make it too large where they may move out, leaving you with turnover, vacancy & leasing costs. 

    Most leases include annual rent increases at a specific percentage of the rent, that way it is known upfront & agreed to. Some give them a one time grace period & emplace a rent increase on the third year, incentivizing them to stay & save.

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  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    This is tricky because they are already in the property. I think it is going to be dependent on how long they are living there.

    Why still include the utilities if they are going to be long term?

    Generally, you would probably just draw up a new lease with terms, etc. But you technically have a lease in place (even if month to month). I would consider contacting an attorney and/or LAHD to get clarity. There are still price gouging laws in effect as well and it can't be more than 10% of what it was previously rented for or advertised. This might include it. 

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