Investor · New Bedford, MA · Member since 2016 · 43 posts · 24 votes
I'm about to put in an offer on a house in Fall River Massachusetts and there are two long term existing tenants at will that pay 300-400$ less than market rent. I was told that I can only legally raise the rent 100$ at a time. The tenants are two clean single women. I'm not sure if they could afford market rent. My questions are, what's the best way to go about raising the rents closer to market value without losing the tenants? Should I screen the tenants after purchase to see how much they can afford?
Check your state landlord tenant regulations. They will indicate if there are any restrictions on rent increases. If none tell them you will be raising to market rent but allow them 60 days to move and for you to find better tenants without a vacancy.
If you are restricted to $100 then 4 years is way to long to wait to get them to market and you will need to give them both notice to non renew.
Assuming you are investing to make money you must make the proper business decisions and frankly giving up thousands of dollars of income by supplementing tenants rents is not the way to do it. Logic and best business practices dictate moving rents immediately to market by doing what ever is necessary.
On the other hand if your intent is simply to be a hobby landlord and the money is of less importance than being a friendly landlord let them stay and live with the losses.
(after posting I have read through your state laws and there appears to be no restrictions on amount of rent increases at the end of a tenants lease. You should double check but if this is the case I would defiantly give both 60 days notice of a $400/month rent increase and start looking for better quality tenants...tenants that can afford market rent.)
Good luck with your business or hobby plans regardless of your choice.
Check your state landlord tenant regulations. They will indicate if there are any restrictions on rent increases. If none tell them you will be raising to market rent but allow them 60 days to move and for you to find better tenants without a vacancy.
If you are restricted to $100 then 4 years is way to long to wait to get them to market and you will need to give them both notice to non renew.
Assuming you are investing to make money you must make the proper business decisions and frankly giving up thousands of dollars of income by supplementing tenants rents is not the way to do it. Logic and best business practices dictate moving rents immediately to market by doing what ever is necessary.
On the other hand if your intent is simply to be a hobby landlord and the money is of less importance than being a friendly landlord let them stay and live with the losses.
(after posting I have read through your state laws and there appears to be no restrictions on amount of rent increases at the end of a tenants lease. You should double check but if this is the case I would defiantly give both 60 days notice of a $400/month rent increase and start looking for better quality tenants...tenants that can afford market rent.)
Good luck with your business or hobby plans regardless of your choice.
Investor · Georgetown, MA · Member since 2017 · 71 posts · 26 votes
9y
@Thomas S. Fall River is a unique community. It's a large rental community and a very large portion of that is subsidized. Basically, this translates to a significant portion of the residents in the area as a whole being subsidized.
@Russell Lavoie You don't have to answer this question because I don't want you to accidentally violate any MA state confidentiality laws. Are your tenants subsidized? The City of Fall River does seem to have laws regarding rent and rent increases for subsidized housing. The rules read somewhat ambiguous to me though. I could not find the one you mentioned specifically.
If there is any kind of rent control or limitations on what you can do in terms of this, I'd probably stay away from it. There would be too many variables out of your control.
As @Tyler Libby is saying, you have to find out if the city has any sort of rent control and understand your legal options. Would you look to continue to rent to subsidy or focus on market rents?
When do the leases expire? Often, if there are long term tenants they are on a month to month lease. In theory, you can give notice that you are ending the rental agreement, then make some updates before renting the units at market rates. However, you need to ensure this is permissible by the local housing laws.
there is no specific state law preventing you. FYI, there is these two other possible blocks (for future)
The city may not allow it if it is rent control.
The other, does not concern you as they are TAW. It is if the tenant is under Section 8, they will require you give a notice 60 days before their actual lease term is up. Then a section 8 inspector can decide if the raise is warranted or not.
Investor · Fall River, MA · Member since 2014 · 399 posts · 300 votes
9y
@Russell Lavoie I am a landlord, real estate agent and property manager in the beautiful city of Fall River. There is no rent control in the city and assuming the tenants are not subsidized you are able to increase rents to whatever your heart desires. I am more interested to find out what you are basing your assessment of market rent on. Currently in my 1 bedrooms I get $750, My 2beds are ranging from $850-950 and my 3 bedrooms are between $800-1,100. Location, size, floorplan and parking have a lot to do with what an apartment will rent for.
I currently run a real estate investing meetup every second Thursday of the month in Fall River. I would strongly suggest that you join us and we can review your investment in more detail.
Feel free to send me a private message and we can jump on a quick call to answer any other questions you should have.
Investor · New Bedford, MA · Member since 2016 · 43 posts · 24 votes
9y
@Gualter Amarelo Thank you for the invite and I'm looking forward to it. And I would absolutely love to talk and see what my best options are from someone familiar with the city.