Lease Renewals and Rent Increases

[Dean Valadez]

Hello. I purchased a quad plex last October of 2023 and inherited 3 leases. One unit was vacant and I was able to fill it fairly quickly. Of the 3 inherited leases, the tenants were not asked to pay a pet rent for their cats, nor a pet deposit. Two units have two cats, and one unit has 1 cat, thus, there are 5 cats total where I am not collecting pet rent. Those 3 tenants have lease renewals coming up. Can I start charging for their cats with the new leases/renewals? Also, can I collect a pet deposit?

Additonally, the rents are very much under market and so I plan on raising the rents $75-100 (and they will still be under market by about $100-150 even after the increase). I also pay for utilities for two units since they are not on separate meters.

My additional question is: can I/should I raise the rents the $75-100 I would like to, ask for a pet rent, possibly ask for a pet deposit, and then also charge a flat fee for utilities for the 2 units I pay electric and gas for? If I did, all the above, 2 tenants will end up paying nearly $200 more per month, not including a possible pet deposit. Is this wise, or should I take a different strategy?

When I use Rentometer, the rents are $250-300 under market. When I look at Zillow, the rents are about $200-300 under market, for comparable quality units. What do you all think?

[Dean Valadez]

Quote from @Nathan Gesner:

As mentioned above, you can change ALL the terms of a lease when the current lease expires. 

When you renew a lease, you can change the dates and some of the terms, all of the terms, or none of the terms. You can give them an entirely new contract. It's called a "renewal" but it doesn't have to be the same agreement.

I do not recommend incremental rents. If the tenants are $200 below market and not paying pet rent, bump them up $200 and add the pet rent. If they don't like it, you can find another tenant willing to pay market rate and pet fees.

 Very succinctly said! Thank you. I like the strong position taken. I may blend it with some of the other input here too!