ADU Rental in OC/LA - Rent Too Low?

Question

Hello All,

This is my first post. I found BP after I purchased my first home on the border of LA and OC county. I'm currently house hacking and have been able to save enough money to turn my detached garage into a 440 sq ft apartment. Everything is brand new and modern inside. I live on a corner lot and because of that, we have 2 entrances. I'm able to section off the back portion of the lot with a fence so the apartment has its own private driveway and backyard. I'd say the lot is around 1500 sq ft and it's all theirs to enjoy. I have put the apartment up for rent on several websites and found surprisingly large interest in it. I now have a handful of good potential tenants, but I think I may be pricing it too low.

Is it unethical or illegal to allow the tenants to bid on the apartment? How would I go about this?

What's the best way I can talk to potential tenants about increasing the rent right now?

Should I just keep rent as is and increase it in a year?

Thanks for your help!

- Jimmy

Gregory Murphy · Answer

I agree with Dan, I think you should have took a little more time to do your market research. I would just focus on finding the best possible tenant out of your applications, and not try to bid up the rent. If it happens naturally, then that's fine. Sometimes people will tell you that they could pay a little more if that means they can get accepted for the apartment, but let your applicant bring that topic up, not you.

Dan H. · Answer

Did you collect application fees? You should collect application fees.

You should have done your rent research prior to listing and definitely prior to accepting any applications.

Especially if you charged for applying, but even if you did not, I think you should rent at your advertised rate.

Next time research the market rent prior to listing a unit.

Good luck

Jimmy Chu · Answer

Thanks for your input. I did do market research, but it was hard to compare as most of the apartments were much larger in living space, had a tiny backyard/patio, and did not have a personal driveway with a security gate. I did not ask any of the potential tenants to bid, but I did mention the high volume of interest for the unit and one of the potential tenants actually offered more. Once I had a good idea of who I wanted to move forward with, I then had them spend money for the background/credit/eviction check. Prior to showing the unit, I had the potential tenants apply on avail, which was free.

ADU Rental in OC/LA - Rent Too Low?

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