New Landlords seeking advice!

[Daryl Martin]

Hello Bigger Pockets Family! My girlfriend and I are in the process of closing on our first rental property in Newark NJ. It is a 3 family house with all 3 units occupied.  3-3-1. We are looking to come in right away, improve on the property and maximize our profit by increasing the rents. Due to the state of the market and the increase on the interest rates the margins are just not where they were when we first started shopping. The unit that is listed as a one bedroom is currently being used as a two. We know that if we add a closet to the other room we will be able to list it as a 2 and there for increase the rent. We also  want to increase the other units because they are considerably below market value. The question is! How do we add the bedroom in order to increase the rent? If they sign a lease will we be able to increase the rent before the end of the lease, after adding the closet to convert it into a 2 bed unit? Any feed back will help. Thanks in advance 

[Theresa Harris]

Are the current tenants on leases?  If so, you have to honor those and won't be able to increase rents or do renos until the lease ends.  In the offer clearly state that existing leases will be honored, but no new leases can be written.

If the tenants are month to month, check your local laws and as soon as you close give them notice of the new rents which will take effect in 30-60 days (whatever the laws say for that area).  If the tenants have been there a while and seem good (you will get an idea when you tour the units), you can offer them a 1 year lease.