I think you would be better off acccepting the month to month as long as the tenants have been good tenants. I have been told by our attorney that you can give up to 9% by giving a 30 day written notice and if it is more than the 9% you must give the tenant 60 days notice of a rent increase. If the tenant has been there for over the 5 years you would need to give them a 60 day written notice of a rent increase. I have been a manager of apartments for 23 years. I have gone through our attorney for all of this .

The only thing preventing you from raising your rent - are the other choices available to your tenants. If you are offering a unit that can justify a higher rent, then raise your rent. One way to determine if your rent is the right price is to check comparable units, or go to RentSlicer.com and look at online comparable units for your neighborhood.

You can continue with a month to month. In PA I have to give 30 days notice before the rent increase and the tenants can decide to move if they don't want to pay the increase and they have to give you 30 days notice that they are moving. I don't see why you can't continue to collect in thirds as long as they are paying on schedule. I allow tenants to pay 1/2 their first pay check of the month and the other 1/2 the second paycheck of the month (they get paid bi-weekly). At least I get the rent. Other than the split payments, they are GREAT tenants! Don't want to lose them. Think of it in these terms: accept 1/3 or have a vacant apartment, pay for a newspaper ad, fix-up/clean up etc or get. I don't know about the max you can raise in CA but here in PA it's common to raise the rent 2 to 3 % per year. Hope some of this helps.