Rental Property question

[Shawn Dandridge]

I just bought a duplex in Memphis. 38109 area code. Currently rents for $200 per side. $400/mo total. After all my expenses. I'm left with about $150 a month in profit. The rent is insanely low. Section 8 is paying closer to $600 for a 1 bedroom efficiency in the area. Tenants have been in the units about 3 years. I will eventually raise the rent. I'm looking to raise the rent to about $375 per side. Should I do it all at once or a gradual increase over a year or two. Any thoughts would be appreciated. I should note that cap rate at current rents is 32%.

[Account Closed]

Shawn Dandridge best thing you can do is increase your cash flow without incurring any cost. Gradually increase rent on your current tenants rather than kicking them out.

If you doubled the rent you would be looking at a potential increase of $2400. But if it takes a month to find a new tenant and your unit needs even minor repairs, the opportunity cost of getting that higher paying tenant gets squeezed and you open yourself to risk.

Maybe it's worth it in your case but I never give up a paying tenant.