I need to increase rent by about 50% !!

[Imran Patel]

Hi All,

I am looking to raise my rent by a significant amount and need some feedback from the community.

Here's the situation:

This is my first investment.  I bought it in Jan 2016, a 2bdrm/1bath condo in Chicago's north side for 75K.   I had to purchase all cash because I am a Canadian on a US work Visa so Banks won't give me loans yet.  I need to build my credit history starting with secured credit cards, work up to unsecured cards over the next few months before trying to qualify for mortgages with US banks later this year.  

Back to the topic at hand: rent increase!

The old landlord had a "long term tenant" who still lives there now month-to-month, but there was no proof of past leases or rent amounts provided at closing.  I was told verbally that the tenant pays $850/month and is willing to stay.  This tenant has been very well behaved and has been making timely payments, usually a week early, possibly because he's getting a great deal.

Due to the fact that I am not financing the property and own it outright, this property would always cash flow until I am ready to refinance.  Obviously, I do want to maximize my returns, so I looked up rent rates in the area on multiple sites, and they are in the 1150 -1500 range depending on the condition of the unit.  Even if I consider bumping up to the $1100  range, that's a 30% increase in rent.  A quick google search indicates that there may not be a limit to how much I can increase the rent:

(50 ILCS 825/5)

Sec. 5. Rent control prohibited.
(a) A unit of local government, as defined in Section 1 of Article VII of the Illinois Constitution, shall not enact, maintain, or enforce an ordinance or resolution that would have the effect of controlling the amount of rent charged for leasing private residential or commercial property.

Excerpt from: http://www.ilga.gov/legislation/ilcs/ilcs3.asp?Act...

I'm looking for feedback from the BP community on how they would approach this...and whether it is true that there is no limit to rent increases in Chicago cook county.

 Possible options I have considered include:

• leave things as they are since things are going smooth
• increase the rent and get sued if my research isn't correct 
• increase the rent and keep the tenant month-to-month, with the risk that tenant may decide to leave and I may get an undesirable new tenant  along with costs to clean/paint and update the unit between tenants
•  increase the rent and have the tenant sign a lease, otherwise move out.  I risk vacancy for a month or two, but this area should allow me to find new tenants fairly quickly if I stay in the 1100-1200/month range

Any feedback and insights you can provide with respect to rent increase limits or how to handle this scenario are very much appreciated.