Raised Rents Now Tenants Making Demands

[Alecia Loveless]

I bought a mismanaged and neglected property with rents that were 1/2 market value. 4 of the 8 units are month to month so after a month of ownership and being onsite and starting to turn things around I’ve sent a notice to thaws 4 tenants that their rent will be increasing by $250 in 3 months time which allows them enough time to make arrangements to either find more money or another place to live.

Now I’m receiving phone calls about laundry lists of repairs and dream list needs and wants that these four tenants would like in their units or around the property.

I’ve politely deflected over the course of each conversation that perhaps if each one isn’t happy then they should find other housing, and also let them know that going rent for the area is more than $300 more per month to which each has claimed to be shocked by.

Was I totally out of line to have raised the rents by this much? They started out at around $550 with heat included and I raised them to $800. Going rent is at least $1100 plus heat. $550 in my area was the rate 20 years ago and the previous owner just was happy not doing anything to the property of having any tenant headaches.

The two vacant units I’ve had dozens of applications for at $900 because I didn’t feel I could rent them at $1100 with the other units at $700 and $800.

Thanks for your thoughts, I just needed some opinions that weren’t from my local area.

[Nathan Gesner]

And @Bill B. is absolutely right about flushing money down the toilet.

$200 below market is $2,400 a year that you are subsidizing rent on a Tenant that doesn't appreciate it. Multiply that by 8 units and you are losing almost $30,000 in income and that doesn't account for the additional work and stress these tenants are causing.

If the units normally rent for $800 but you hold them vacant for three months of renovations it will only cost you . . . $19,200.

I suspect you could empty them, turn the around, and fill them in less than 90 days per unit. You would be saving yourself stress. You'll gain $11,000 more the first year and $30,000 more the second year. You'll have better-quality renters. It's all up-side!