Can you raise rent on units at diffrent amounts?

Question

Hi in October I took over managing 3 homes that I inherited. In November I attempted to switch all of the units over to a new month to month. All but one signed the new terms and returned them to me. This month the one that never signed freaked out on me when I told them I was going to issue a 3 day pay or quit telling me rent wasn't due till the 9th. but the agreement on paper on file is the 1st. they did pay on the 15th. If the one unit I'm having trouble with is the largest 1400sf and also the highest cost to maintain. Can I raise that rent by a larger percentage than the others?

We have found that 2 of the three are well below market value on the rent.

Patricia Steiner · Answer

The short answer is yes.  As long as these are not rent controlled/or other restricted classified properties and/or not currently under a term rental contract, you have the right to change the rent as you see fit.  I recommend:

1.  Document the current market rent for each house, the cost of maintaining the properties and other related expenses without regard or reference to the current tenants.  Basically, you will be analyzing and documenting the criteria to make an informed business decision.

Why Bother?  If any of the current tenants claim discrimination/intimidation/forced eviction or the like, you can quickly dispel any legal claim by showing that a court/landlord-tenant board that a business analysis was completed in the normal course of doing business.  Rents in my market are increasing year over year and my clients and I do this very analysis generally twice a year. It's just a good business practice.

2.  Notify the current tenants of the rent change in writing; I would deliver a notice to the property or send it by returned receipt required.  From realtor.com:  "A landlord can raise the rent only when your lease expires and with the appropriate amount of notice (if you're month-to-month, the landlord could conceivably increase your rent at the end of any month). Unlike rent-controlled areas, there is no cap on the amount a landlord can increase your rent." (End of text).

3.  The tenant who pays on the 15th...if that's unacceptable to you (and it would be to me), I recommend delivering a letter to his/her door (or sending by mail with returned receipt required) that the rent is due on the 1st.  Period. The 1st.

If the rent is not received by the 5th, send a 30-day notice to end the month-to-month lease agreement.  You won't miss his tantrums.

Hope this helps.

Wayne Brooks · Answer

As long as you are not n some rent control district, you can ask anything you like for any unit, they don’t have to all be the same....higher rent is how some owners deal PITA tenanats.

Ramon Mota · Answer

I honestly want to raise the rent about 9% and were in California. From what I found under 10% total in 12 months can be done with 30 days notice. Because they didn't pay till the 15th and I have had some trouble with them I'm not sure how to change the with out seeming like its retaliation? I want to hit them with a new month to month, and an increase at the same time.

Were on month to month because there is a housing shortage in the area and want to be able to get rid of them easily.

The rent increase is because I looked into my mothers paperwork and the rent hasn't been increased since 2015.

Tchaka Owen · Answer

@Ramon Mota - you own the homes, you can do whatever you want for rents as long as you don't violate lease terms. Not sure the reason you want a bunch of month-to-month tenants though.

Jason D. · Answer

@Tchaka Owen month to month gives the landlord more flexibility. Long term leases benefit the tenant more so that the landlord. Many investors ONLY use month to month leases.

Account Closed · Answer

If they are on a month month lease you can give proper notice of rental increase according to your state laws. The current rents on the other homes is not dependent  on each other.

Ramon Mota · Answer

Also thank you all for the information. I really don't have anyone to ask that I know.

Ramon Mota · Answer

ok this is a lot of information.

1. I will document the rent rates in the area and reference comps on a paper that I will file for my safe keeping.

2. It seems ca law is ok with 30 days because of the term and the proposed increase. something like $800.00 going up .09 making  870.00 the new rent. witch is still far below market about $130.00 per month in this area.

3. I have considered longer lease terms but would not want to offer it to a problem tenant. I also want to do 1 year but would like it not to line up with the winter freezing temps and snow. spring time would be perfect I think.

4. They have paid a late fee in December as well for late rent. But I kind of thought its the holydays its ok.

5. Can I add something that says if work is canceled by tenant within a time frame after I have made arrangements for the work, that they would have to pay a fee? Like $30. if they cancel on me within 24 hours or what ever the contractors fee would be?

Tchaka Owen · Answer

Starting out with a 1 year gives you time to build rapport with tenants and you know how things will be. Letting it default to month-to-month isn't so bad at that point. Per the OP, he just took over. He doesn't have rapport built. Yes, different strategies for different investors.

Theresa Harris · Answer

Check out the local laws.  In some areas there is a maximum amount you can increase rent.  Even if you increase by a percentage, the dollar amount for the highest rent will increase more than the others.

As for the tenant who said rent wasn't due until the 9th and then didn't pay until the 15th, did they pay their rent on time for Dec-Feb?  If not, I'd get rid of them.  They need to pay the rent on time.

Can you raise rent on units at diffrent amounts?

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