How soon should new landlord sign new rental agreements?

[David Van]

Hi everyone. I'm purchasing a 4plex in Southern California with no rent control and want to know how soon I need to sign new M2M agreements with existing tenants. Of course, I would like to add a rent and security deposit increase to the new lease. Please advise. Thank you.

[Patricia Steiner]

David, congratulations on your new purchase.  I strongly recommend that you do not implement rent increases for the "bad tenants" only.  Tenants who do not meet the lease requirements should be given notice that the month-to-month lease is not being extended.  Done.  Rent increases are not punitive acts; rent prices are market driven. There's no emotion or personal judgement associated with it.  A security deposit of 2 x rent is not supported in any rental market that I know.  If you feel you have to have that, you have the wrong tenants and/or your tolerance for risk needs adjusting.  

Consider extending the leases from month-to-month to a year; that provides you with more control over cash flow by eliminating more transient tenants. It also allows tenants to "weed themselves out" without having the expense and disruption of eviction.  Give adequate notice over the rent increase so tenants can adjust their budgets and meet the price increase.  By operating your 4plex as a business, you will avoid provoking discriminatory claims and be competitively priced in the market to keep your units leased.