Raising rents in California

[Aaron Sims]

I just purchase a 4 unit apartment building with no rent control. Here's the problem I'm having the rental market is really strong here in California. Rents for a 1bedroom is going for $1500. I have a tenant who's been there since 1979 and she's only paying $635 a month. How much can we raise rent?

[Dawn Anastasi]

I would go to her, let her know that you just bought the building (which you should be doing anyway) and that you saw that she's paying WAY under market rent which is $1500/month. Let her know she's a long-term tenant, but that financially, you'd be losing money on her unit. She should understand reality.

Look at the amount of money it would take to get her unit rent-ready. Let's say it would be $3000 (considering how long she's been there). If you let her rent for the next year at $1300 then go up to $1500 the year after that, you've saved $600 for that year. (Plus possibly more.)

Unless you ask, you have no way of knowing if she CAN afford the additional rent and just hasn't been ASKED to pay more. If she can pay more, and wants to stay, then you're keeping on someone who obviously doesn't like moving!