Have you been considering raising the price on your San Diego rental? This common question needs to be evaluated like any other business decision. With insurance premiums on the rise and all the numerous yearly cost involved in owning a rental, raising your rent is sometimes your only financial option.

San Diego cost of living is already a struggle for many residences so a rent increase is not something any tenants want to here. It’s important to take the appropriate steps to make sure the increase is communicated and in compliance with the strict laws and regulations.

1. Treat this as a business decision

Like any business decision, you need to remove the emotions involved which can be a difficult depending on your relationship with the tenant. A rental increase can understandably be hard for landlords and tenants, especially when a tenant has not received an increase in many years. As a general rule, increasing your rent every year is a wise business decision, even if the rent increase is a percent or two. By communicating this ahead of time will help prepare your tenants when each renewal comes around and will result in the tenant being less likely to move out due to shock.

2. How much to increase the rental price

First, start by accounting for the increased expenses, upgrades making the rental property more desirable, or any costs associated with holding the rental property in order to cover your income stream.

Second, determining the new rental price it’s important to understand the neighborhood comparables at this time since you will be competing with other similar properties that can have rents higher or lower than yours. You don’t want to price yourself out and have the tenant move. The best approach to determine current comparables is by researching rental websites like Zillow and Craigslist.

Third, you need to determine if the tenants are likely to renew. Another cost of doing business is locating a new tenant, so you need to factor that in as you determine your rental increase.  Each day the property is vacant, is a loss of income.

3. Help the tenant understand

Some tenants don’t understand all the costs involved in managing a property, let alone pay attention to the current rental market, so if you have a good tenant, be willing to explain the rent increase by provided them with your neighborhood research.

4. Communicate everything in writing

Make sure to provide notice in writing. We personally notify our tenants in three different ways – leave a copy on the door, mail a copy, and email a copy. As a landlord you are required to provide advance notice as followed:

If you have a month-to-month (or shorter) periodic rental agreement, the landlord must give you at least 30 days’ advance written notice of a rent increase.

  • The landlord must give you at least a 30 days’ advance notice if the rent increase is 10 percent (or less) of the rent charged before the rent increase takes effect.
  • The landlord must give you at least 60 days’ advance notice if the rent increase is greater than 10 percent of the rent charged before the rent increase takes effect.

The notice needs to include several things such as the new rent amount and when it the increase will become effective. If you would like to receive a copy of our template, please don’t hesitate to shoot us an email.

5. Verify your local laws

With the amount of landlord/tenant laws, verify you are in compliance with local and federal Fair Housing and discrimination laws before finalizing a new rental price. Also, your increase should be due to market conditions or well-documented business purposes, and never in retaliation for a tenant who complains. If you are uncertain about certain laws, you can find more information on the California Department of Consumer Affairs website.

This article is for general information purposes only. Laws may have changed since writing this article. Before acting, be sure to receive legal advice from a licensed attorney.