Bringing Tenant rent upto the Market value
Hi
I recently bought my first fourplex unit in Fremont CA and excited about it. Currently two unit are vacant and two of the unit has a long term tenant with very low rent almost half the market price which brings me negative cash flow. What are my option here to increase the rent at lease 10 to 15 percent below Market rate ?
Most Popular Reply
Hi Nitin,
You cannot legally raise current rents more than 5% of the current rent + the Consumer Price Index of your region. On January 1st, rent control was enacted state-wide.
Read up on AB 1482 before making any further decisions in regard to your current situation.
I would recommend fixing up and renting out your currently vacant units at market rent and raise the current tenant's rent the maximum cap allowable for this year. Repeat every year until their rents match the markets.
If the tenants wish to move you may also need to pay relocation assistance as well depending on the situation, up to 3 months' worth of their current rent. Again, please review AB 1482, connect with a real estate attorney if required, but do not take my word for it. Do your due diligence.
Good luck and let us know how it goes!