As a former tenant I can say that a 3% annual rent increase isn’t much. That’s $60/mo on a $2,000/mo unit. Every big complex in San Diego does small annual increases unless the rental market is truly in the toilet.
There are a few factors that could change things a little. If the tenant is handy and tends to fix things themselves and provides free sweat equity to maintain the property, they may be worth keeping at current rates. Also, if the property realistically will need repairs and upgrades like new carpets or appliances to rent out to new tenants, that can also change the math a little.
The bottom line is one 3% increase in three years is still a pretty good deal, especially if you’ve been actively maintaining it. If it’s a little run down the math might be a little different.
