Tips to raise rent when you inherit tenets on m2m lease

[Ron Singh]

Wondering what worked for you guys in raising rent when you inherit low rent tanent on m2m lease

I know cash for key might be one way but might not work for all situations.

another different scenario :

- what about if mf property is on rent control, and current tenants are on way too low rent as compared to market.

- what if you want to move to str rental model and current inherited tanent are on ltr yearly lease. assuming have to honor the lease period and give advance notice to vacate? (intent to no lease renewal )

location : San Francisco city and south bay,

mf res properties 2-4 units

[Lawrence Leung]

@Ron Singh You are on the right track because @Nathan Gesner hit the nail on the head and called out the rent control that exists in San Francisco.  He calls it crazy haha and I call it job security.  All joking aside, the best thing you can do is to negotiate a buyout using an experienced landlord attorney familiar with this process. Don't try to go it alone as there are reporting requirements with the SF Rent Board who tracks buyout data across the City AND you don't want to be at a disadvantage as most Renters will lawyer up.@Nathan Gesner

Even if you were to pursue a buyout, STR would not be possible due to the constraints that San Francisco imposes on short term vacation rentals. You could certainly submit an application with the office of short term rentals and be able to list on Airbnb, VRBO and equivalent sites, but only up until they deny your application because it is not an owner occupied unit.

The alternative is you could try for an ILO (Intermediate Length Occupancy defined as more than 30 days but less than a year), but that also comes with strict restrictions as the City has all but made this illegal for most property types/classes starting in 2020.

What you can certainly do is take advantage of what the SF Rent Board does allow so you don't leave any money on the table.  These include the allowable annual rent increases, bond measure  passthroughs, water revenue passthroughs, capital improvement passthroughs, rent board fees, banked rent, etc.

The other thought is that if you inherited this property in the most "vanilla" situation, you may want to consider selling it because 1) your NOI is going to see a big impact once the assessed value is reset after Prop 19 and 2) you have little to no capital gains as the property's cost basis should have jumped up to current market value.

Just my two cents...