Raising Rents...Is it Legal? - Posted by Derek (NC)

Real Estate Investing
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Posted by Sean on May 06, 1999 at 10:55:13:

Raising rents is not only legal, it’s a moral imperative! You just can’t do it while the lease is active. What was the duration of the lease? I’m betting that it was less than 2 years.

Here in California once a lease expires and money still changes hands the person is switch to a month-to-month tenancy. That means rent can be raised by giving the person a 30-day notice of the new rent.

The questions to ask yourself are:

  1. Is there rent control in my area that prevents me from raising the rent more than a certain amount?
  2. If this tenant suddenly moved out and I had to rent to someone new, how much would I be able to get?

I would say if the person hasn’t had a rent raise in 2 years he needs an 8 percent hit to build his character.
Here in Los Angeles we have to deal with the Rent Stabilization Ordinance which limits us to 3 percent a year.

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Raising Rents…Is it Legal? - Posted by Derek (NC)

Posted by Derek (NC) on May 06, 1999 at 09:22:22:

Is it legal to raise rents during the term of a lease?

I have a homeowner who is tired of the Landlord biz, and is looking to get rid of the home via L/O. However, the homeowner is taking a hit with the monthly rents the PITI is $570, but they have the tenant paying $425…that’s a negative cashflow of $145, and he’s there for 2 more years. I don’t want to take this on unless I can raise the rents.

Is there a way I can do this or do I have to honor the lease agreement already in place?

Thanks in advance,
Derek (NC)

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Re: Raising Rents…Is it Legal? - Posted by Irwin

Posted by Irwin on May 06, 1999 at 21:34:03:

Brad Crouch is right. Perhaps you can turn that bad lease into a negotiating lever to get a sizeable discount on the purchase price. If so, then the “loss” actually turns into a profit down the road. Otherwise, you’re probably going to have to pass.

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Re: Raising Rents…Is it Legal? - Posted by Brad Crouch

Posted by Brad Crouch on May 06, 1999 at 10:55:17:

Derek,

You have to honor the lease that is in effect. You could make the deal contingent on the seller delivering an empty property and let the seller bribe the tenant to move, or whatever he has to do. Change the locks and start out clean with a tenant buyer of YOUR choice.

There’s no way I’d take on a deal with negative cash flow.

Good luck,

Brad