How to Raise Rent Gracefully Without Angering Tenants

Many landlords don’t feel comfortable when it’s time to raise rent. So, here are six simple ways that may help the uncomfortable process be a little more, well, comfortable.

Remember, you’re a business first
As friendly as you might be with your tenants, remember it’s a business. If you’re losing money on your business, then it may be time to adjust the rent to have better cash flow. If you’re already cash flow positive, then consider leaving less money on the table.

Do your research
Look at rentals in your area to determine fair market value. Remember, adjust rent based on your location, condition, schools, neighbors, curb appeal, etc. Drive by the comparable properties and perhaps use the rent per square foot method to ensure it pencils for your property’s size.

Raise rent incrementally
If a big rent hike will create vacancy, consider breaking down the increase into smaller increments throughout the year. If rent control AB 1482 applies, be sure the increase doesn’t exceed 8.3% (which is 5% rent cap plus Regional CPI of 3.3% for California).

Give a heads up
Give tenants an informal notice that a rent increase is coming in the not too distant future, so you both can plan accordingly.

Automatic rent increase clause
To mitigate the “surprise” factor, some landlords simply have in the lease that there will be a small rent increase every year of 3%. Consider waiving an increase for great tenants as they do deserve a slightly preferred rate.

Send notices with a Certificate of Mailing
A Certificate of Mailing is a post office receipt that documents the date the letter was mailed to a specific addressee. It’s more convenient and less expensive than Certified Mail and it holds up in court

I hope this was helpful and feel free to reply or call me at 949-209-9494 with any questions you may have regarding these topics.