I have a tenet that wants to move in a nephew and his family (2 kids and girlfriend). The current tenet is paying $2k, but should be paying $2800. Can I raise the rent to the current market value if I let the other family move it? The house is 3 bedroom/2 baths. It would be a total of 6 ppl in the house if I let them move in.

Also, Do I have to pay them to move once the lease expires?

You need to read up on the NEW California State Wide Rent Control rules set in place January 1, 2020 and expire in 2030.

Also you need to ask a Eviction Attorney to explain the new rules, other rules that govern Pandemic Tenant Protections.

Rent can't be raised more than 5% over the inflation rate. There are exceptions like an owner occupied duplex.

In a normal state, yes you could do this, up the rent, and wouldn't have to worry about paying people to leave. But this is CA, so I would ask a local, experienced, Land lord/tenant attorney's advice rather than random strangers on the internet.

In my humble, Mid-Western opinion, you should be able to demand that to add the new family to the lease, the tenant must terminate their current lease and we sign a brand new lease at whatever market rate you decide is fair. I would have a move out date signed by them, a walk through inspection of the property, etc. Then I would have them sign a NEW lease, a NEW walk through inspection, and collect a NEW deposit. That way it should be 100% clear that you weren't "raising the rent"....you were starting a NEW LEASE.

But this is CA, so... yeah.

If it was in Texas, I'd be able to raise the rent to market rate whether it was a party-of-one or a party-of-five. For a sfh, since utilities aren't included, I generally don't take size-of-party into account when I set the rent. I do month-to-month, so 30 days' notice and I'm all good.

When I have Tenant X want to help out Struggling Family Member Y, I usually like to be aware of their identity, but I usually refrain from putting them on the lease with all rights and responsibilities. A big chunk of that is because in Texas, I can't garnish, so it doesn't make a difference in that regard. Another chunk of that is that people like helping people in theory, but the reality is often a bit messier. So by refraining from putting extras on the lease, it makes it easier for the original tenant to say, "This isn't working out, you gotta go." I let them handle it and stay out of it.

And when I do have Tenant X bring in Roommate Y, and both are going to be on the lease, I give notice to end the previous tenancy, and start a fresh lease with both of them. (I've also done it the reverse way--- I originally sign up with a party-of-2, but it turns out A was just using B to get a good house, and now B wants nothing to do with A, and A is like, "Hahaha, you can't do anything to get me out," and I play my cards.)

But ultimately, what you can do in your area--- it depends on what your agreement is with your tenant, and whether California or your municipality have any opinions about how you ought to run your biz. :)

Some folks who live in commonwealth states used to think we were in communist' states........that has since changed since COVID and California.