Automatic rent increase (new tenant) ins San Jose, CA

[Mark Vesu]

Hello all, my tenant is vacating after about 8 years and I wanted to take this as an opportunity to upgrade the property (~$10k) and fix stuff (new exterior and interior paint, stainless steel dishwasher, etc.).  I would like to add automatic rent increase in the new rent clause (2% santa clara county automatic property tax increase + garbage increase +++).  I am thinking around 5% increase/yr on a $3500/mth rent.

My rental philosophy is to have a good house, rent it to a good "professional" renter (even it is 5-7% below rental rate) and keep them there. That said, what do you all think - is 5% low for the west san jose area?  Also, how do I add this clause in the lease?  

Appreciate your help.