Rent Increase
I have a rental in California that is $1200 below market (no rent control). Initially rented below market by $300. When I look at current market, I realize I could be getting a lot more. I have a tenant I would like to keep however I'm not sure how to do this. Tenant has been renting for 5 years with increase of $60 in year 2 and $60 in year 4, and I would like to increase $100 this May and another $100 in 6 months. Does this seem reasonable?
Thanks.
In the words of one of the great modern day philosophers Kanye West “There’s a thousand you’d and only one of me”. There’s thousands of tenants and this is your business. If your tenant accepts the increase and stays, great, if they leave someone else will fill the vacancy and your business will be better for it. Either way you win the only way you lose is if you do nothing.
With good screening you can always find a good tenant so I would not worry about the current tenants moving. End the lease with the currents tenants as soon as you can and raise the rents.
This needs to be a business decision pure and simple. Although you could talk to the tenant, let me them know you are going to terminate their lease, and offer to re-lease to them at 10% below market value. This way you keep good tenants and they still get a deal . Win, win.
Best of luck .
Thanks for all of the suggestions. What I ended up doing was a 2 part increase for which the tenant was thankful for. Since then, I've continued to increase to a reasonable market range.