Greenwich, CT multifamily - 10+ year teanants - raise rent questi

Greenwich, CT multifamily - 10+ year teanants - raise rent questi

Port Chester, NY · Member since 2016 · 210 posts · 157 votes
We purchased a 3-unit multi-family in 2019 which have two HAP tenants who've been there for 10+ years. We fought to get a rent raise last year since it was about a 120.00 jump per unit, which we finally received. Believe it or not, the HAP rep. was about to throw both tenants out due to the rent request; but decided against it during COVID. We are now having to go through recertification in about a month, but there are two issues. One, the previous owner, the genius that she was, leased both units as two bedroom, when each have three.  The second issue is that we cover the utilities for both units.  The bills for November and December are pretty high. We installed Ecobee thermostats and had the utility company conduct an energy audit, but there's really nothing else we can do.

We are receiving around $2325.00 per unit per month. The utilities for each unit run about $250.00 - $300.00 per unit until around April. It then goes down to $120.00 - $150.00 per month.

It was great to have the HAP contract through the moratorium, but with the increased utility costs, our hands are tied. I do not believe they will agree to another 125.00 a month increase to that helps to level out the utilities. We really need around $200.00 a month increase to cover the utilities in both units. The tenants can sign up for utility assistance and have that covered separately, but do not want to do so.

What do you think the best course of action is? We'd prefer to keep them, but the utility spike in Connecticut has been around 15%.
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    I would not keep rates low to keep a HAP tenant. They've been there for 10+ years. You need another $200 per unit for utility costs, plus the third bedroom should bump rent higher. 

    The HAP tenants won't qualify at market rate. Contact HUD and let them know rent is going up and the renters will have to qualify at the higher rate or move on. I suspect they'll have to move on.

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  • Brandon RushPro Member
    Real Estate Agent · Portland, CT · Member since 2019 · 761 posts · 849 votes
    4y

    I agree with @Nathan Gesner Notify their HAP and tell them to sign a contract for the higher rent and with the tenants paying utilities or they will need to vacate. This is a business and you need to maximize your income on these units. It would not surprise me if they agreed to it as rental demand is still insane in CT.

    Good Luck!

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