Real Estate Broker · Milwaukee, WI · Member since 2021 · 10 posts · 11 votes
Hello! My wife and I are currently in the process of closing on our first duplex in Milwaukee, WI. We are planning on house hacking, and the lower unit currently has a tenant who has been in the place for the last 25 years. Her current rent is $975 MTM for a 3 bedroom 1 bath place. She has taken incredible care for the place considering how long she has been there. However, the market rent is right around $1,500 for the place with the location and size of the unit. We have been trying to figure out the plan to make the numbers work while not making her want to leave. Our current idea is meeting in the middle at $1250-1,300. That said, what is advice do you have for increasing rent while keeping the tenant happy/understanding?
Call me in the minority here but you don't have to buy this particular deal. I found a great 8 plex with all old tenants like this, some had health issues all were on fixed incomes. I couldn't make the numbers work without kicking them out so I simply didn't buy it. Another 8 unit I bought had 1 lady who has been there since before I was born, I could make the numbers work without getting her rent to market so that's what I did. All this it's a business is well and good but if we are supposed to be the best of the best I'm sure we can find a way to build a portfolio without kicking seniors on fixed incomes out right??
Tough situation to tackle, and certainly a conversation to be had. Sometimes educating tenants on market rents, and what it would cost should they decide to move is overlooked and invaluable. After 25 years, they may not know what "market" is. Educate, listen, and go from there. Incremental adjustments probably make the most sense. Best of luck!
Hello! My wife and I are currently in the process of closing on our first duplex in Milwaukee, WI. We are planning on house hacking, and the lower unit currently has a tenant who has been in the place for the last 25 years. Her current rent is $975 MTM for a 3 bedroom 1 bath place. She has taken incredible care for the place considering how long she has been there. However, the market rent is right around $1,500 for the place with the location and size of the unit. We have been trying to figure out the plan to make the numbers work while not making her want to leave. Our current idea is meeting in the middle at $1250-1,300. That said, what is advice do you have for increasing rent while keeping the tenant happy/understanding?
As a business the middle ground does not make sense. This is such a wide leap that I am not sure it will go well. She will resent you on some level. There is a good chance this turns into a long drawn out process and it might turn sour.
Better to rip of the bandaid. Your tenant may not need a 3 BR apartment, or she may not have to live on the North Shore (I am guessing). Communicate your intentions with her to raise rent to fair market and then do it. Your new tenant will have a completely different attitude towards you and they will be greatful to have found a place.