Raise rents of a multi family

[Tom Server]

Hello BP, I'm currently in the process of purchasing a triplex. Offer accepted.

Doing the numbers my net cash flow should be between $500- $700 a month with the current low rents.

Im in New Jersey and the current rents are really low, but the area isn't the greatest.

Current rents are

2br/1 bath-$1050

1br/1 bath-$ 950 (section 8)

back apartment-

2br/1 above a 3 car garage $1050

The 3 car garage is also being used for storage, I believe from all 3 tenants

All tenants have been there for a while, all over 5 years and lease right now are month to month

I was looking at the Hud websites for the area and the FMV rent for a 2br 1 bath is $1471 and for a 1br 1bad $1140

Any suggestions on what to do.. I also would like to charge for the 3 car garage use, or have them remove their stuff, so i could store my personal stuff in there and save me 200 dollars a month for my current storage unit.

Thanks

[Alecia Loveless]

@Tom Server If they’re month to month I’d send them a letter telling them the rent is going up effective December 1 with the new market rents and then they can decide if they want to stay. Obviously with the Section 8 you have to work with their parameters which I’m not familiar with.

But I’ve now raised the rents on 10 existing tenants and only had 1 move out. Some of them have gotten a little snippy about it and I’ve gotten some pushback like “Now I have to work 3 overtime shifts since my rent doubled” obviously rent didn’t double, and things like “surely you can afford that you’re rich you raised our rents so much” But when rents are $600 below market rent you can’t even run an improperly managed building you just purchased.

The most I’ve raised rent was $250 on a rent that was $550 when market rent was $1150.