[quote=carlsbadworker]You are justified to raise rents after 3 years. But I wouldn’t do it personally if the rent is still 10% within the market price. The tenant may not move because the 3% increase, but psychologically, they may want to get back their money by calling your more for small issues and delay the needed maintenance.
You can ask them to sign a contract instead. I read that the contract is not really enforceable in CA but at least psychologically you get them more committed to stay.
But I would raise rents even if they are perfect tenants after 5 years (unlike AN)…but I will always price it under the market (e.g. 5-10% if they are perfect tenant). In fact, 10% under market is my threshold. I will try to keep it between 5-10% below market for perfect tenant.[/quote]But flu’s rent is currently only 7-8% under market rent. Time and stress is not free. What you said in your first paragraph is the reason why I wouldn’t raise rent on a good tenant who don’t bother you.

I currently have a tenant who signed a 5 year lease with me. At the signing of the lease, it was market rent, but right now, it’s probably about 10% below market. When the lease is up, I don’t intend to raise the rent, since it has been pretty hassle free. So, I say a few hundred dollar a year is a worthwhile price to pay for having a hassle free tenant. I general rule is, don’t raise rent on good tenants. Raise rent to market price with new tenants and raise rents for bad tenant to get them to move.