How to go about raising rent and either charging for additional space used

Question

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

Nathan Gesner · Answer

If there is a written lease agreement, then you have to stick with it.

I suspect there's no written lease, or it's expired. If that's the case, you can just give them a 30-day notice of the rent increase and they can accept it or decide to move out.

I highly recommend you read "The Book On Managing Rental Properties" by Brandon Turner, or "Every Landlord's Legal Guide" by NOLO and start figuring out how to manage your investment before it eats your lunch.

Henry T. · Answer

Do yo u like them? Raise what you think they can handle by incrememnts. Are they month to month? Write a new lease with new rules about garage storage. Give them each an 8 by 6 box with a door they can put their own lock on. Allocate your own personal storage space. Nobody leaves things outside their unit or infringes on the other. etc.

If they're on a fixed lease, you have to wait for your window to open.

If you don't like them there, or want to get with remodels quickly, raise fully to the going rate, and see what happens.

If they're on a fixed lease, you have to wait for your window to open.

If you don't like them there, or want to get with remodels quickly, raise fully to the going rate, and see what happens.

Shawn Mcenteer · Answer

Hi @Tom Server start by checking with existing rent control laws. If it is in a major city like Newark, Paterson, JC etc the laws can be extremely tough on landlords regarding raising rents especially if the tenants are educated with laws. Rents tends to stay low in some of these areas becuase by law it is very tough to evict and very tough to raise rents. Tenant turnover will be your best shot for raising rents. If you are planning to owner occupy this process will be much easier. If you are keeping existing tenants, in most cases the most you'll be able to legally raise rents is 4% in some of the more strict areas its under 2% If section 8 is incorporated with this property I would strongly suggest looking deep into local laws and be prepared to go to work as the landlord, if anyone is saying you simply sit back and collect checks they not telling the full story.

Richard F. · Answer

Aloha,

It will really depend on what their current Rental Agreement states regarding (or not) the garage space. If it is not specified in current agreements, check local laws for proper notice requirements, and post notices on the garage and each unit entry door. Since they have been using the space for so long, I would probably give minimum of 60 days notice, if allowed.

Plan on having to dispose of a lot of crap that no one claims. Hopefully there won't be hazardous materials...

Your options are frame out, or fence off, defined spaces to rent for an additional cost, and with certain rules and consequences for not abiding. Even if they are for parking, on multi-unit properties the parking/storage space agreements are separate from the residential Agreement. In most states, these spaces, if separately contracted, do not fall under the Residential LL/Tenant laws, which makes dealing with slow/no pay or other issues for the space much simpler. It also gives you leverage if the Tenant is causing issues on the Residential side. You can just terminate the storage/parking agreement which may motivate them to vacate the residence as well.

How to go about raising rent and either charging for additional space used

How to go about raising rent and either charging for additional space used

Most Popular Reply

4 Replies