raising rents when you are below market

[Kim T.]

My rental condo is located in a very competitive rental market, just outside San Francisco, Ca.  The town, Albany, does niot have rent control. I have an easy time finding tenants with no vacancy time between them, and also have a good pool of quality tenants.

I recently rented to the great tenants for a year lease, $2950.00, for a 1200 3 bed/3 bath condo.  I expect they will want to renew as they both have jobs in the area.

it is difficult to assess rent as three bedroom homes are very  hard to come by in the area. two bedroom apartments of the sane size as mine, but in a large complex style building rent for 2600-2975. two bedroom single family homes with yards rent for 3000-3500. nicely appointed 3 bedroom houses can exceed $4,000 a month. I feel I underpriced the rent and want to adjust at lease renewal. it is possible I could list and find renters at $3500 in today's market.  I feel uncomfirtable  raising their rent by $550 a month, as if they will subject to "bait and switch"  They can afford it and it is allowable. if they choose to move I can easily find replacements.

is it appropriate to just raise it to market, explaining my error in price? Or is it conisiderec unreasonable, though legal?