Is it OK to increase rent by 12%?

Question

I have had these tenants for the past 6 years, always pay on time and low maintenance folks. I have held off on increasing rents for a couple of years in the past due to COVID but I can't absorb the rising insurance and HOA costs anymore.
I have to increase the rent by 12% to stay on the right side of things financially.

Is that OK to do so?

Thanks!

Is that OK to do so?

Thanks!

Michael Haas · Answer

@Anudeep Pradhan please give the city and state your rental is located - otherwise no one here can give you specific or actionable advice! And the people in that local market will be able to find your post and contribute, or learn from the answers. Everyone is here to help if you give us enough information to!

Sherief Elbassuoni · Answer

@Anudeep Pradhan, yes, you can increase the rent by more than 10%, but you need to serve them proper notice. There are consequences if they decided to move out. For example, you may be liable for their moving costs. You can read more about that in here https://www.rhawa.org/covid-19

Robin Simon · Answer

I agree with a lot of the commenters - if allowed legally, then by all means do it.  This also shows the danger of "being nice" and not raising rents annually in line with market changes, that can lead to situations like this where its a rent shock all at once that leaves everyone upset (if you would have raised gradually over the past years, it wouldn't even be an issue)

Benjamin Aaker · Answer

Agreed with @Sergey A. Petrov. You need to know the local laws and ordinances. Beyond that, you do need to collect rent enough to make it possible to continue to rent the place. If expenses have been going up, you should be able to increase rent commensurate with that. Assuming the tenants are month-to-month, you could soften the blow by increasing small amounts over time. Of course, if you can't pay your mortgage, you'll have to raise rent more quickly. Nice of you to hold of on rent increases, but tenants have a hard time remembering that when the rent increase finally comes. If these are great tenants, then try to make it easy for them to raise the rent and explain why you are doing so.

Anudeep Pradhan · Answer

The city is Chatsworth, CA 91311. Thank you Michael.

Anudeep Pradhan · Answer

Thank you all. Appreciate your responses and inputs.

Tommy Parker · Answer

Yes, I agree with many others on here. Increasing the rent by the following market rate makes the most sense.

Dave Spooner · Answer

Check the laws there but I agree with many of the first couples of commentators here. Following the market rate would help you out a lot. I believe the great tenants you have most likely will understand that as well. Best of luck!

Greg M. · Answer

The laws are changing fast and furious, but as I understand it:

If your unit falls under CA rent control (and most do), increases are capped at CPI + 5% or 10% annually, whichever is lower.

LA City (not county) has a moratorium on rent increases. Last I heard, soonest it will be lifted is August 2023.

Lesson to take away from this is to increase rent any time you can because you may not be able to for many years. Also, make sure you give the proper notice. I believe those have been extended to 90 days in some cases.

Kelly Asmus · Answer

Check your local jurisdiction. Understand what notice you have to provide and if you have any rent controls. If you are unsure, contact a local property manager who is experienced in your area and ask for a consultation. Be willing to pay for their expertise. They will keep you legal and in compliance.

Is it OK to increase rent by 12%?

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