Raising Rents – Property Management – Quick Tip

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In a past blog post we explored the benefits and disadvantages of keeping a tenant while trying to sell.  As noted in that post, most know that a 60 day notice must be served when  tenant has lived at the property for over a year (12 months), when not on a lease.  If on lease, then the lease trumps all, except cash of course.  This is another discussion, but a tenant can always agree to move if paid to do so – many know the phrase from the bank owned property days, “cash for keys.”  This question was asked recently, “When a tenant is not on a lease, they’ve lived there for over a year, and I want to raise the rent… do I have to give them a 60 day notice?  Or will a 30 day notice do?”

Answer:  If the increase is less then 10% of the rent, then  30 day notice will suffice.  If the increase is more than 10%, then a 60 days notice is needed.

Rents are going up in Sacramento and there is always a decision to be made between keeping up with rents vs. keeping a tenant.  If you do not raise rents a little bit over time, the shock of a one time, big raise will certainly drive a tenant out.  Other would argue that a good tenant is hard to find and is worth keeping, even if it means leaving their rents low.  I find including a note with the rent increase stating how much you love them as tenant… how you want to keep up the maintenance, and how expenses have risen… this seems to take some of the sting away.  I do believe in keeping good tenants, and surely the cost of re-renting, the cost of making the place ready to rent, and potential vacancy may not be worth the extra $30-50/mo.?

What’s your strategy and experience in raising rents?

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Keith Klassen, Real Estate Broker

Klassen & Associates / 916.595.7900

 

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