Raising Rent for old tenants

[Jason Milko]

We just recently bought a duplex, and are planning to keep the current tenants, but I want to know the right way to approach the rent conversation. The old owner was charging $825 and $850, which is way below market. I want to go up to $950 and $1100, which is what the appraiser recommended and is still below average for the area. At the end of the day, this is a business, but I still want to do right by these tenants. I heard on a podcast about increasing incrementally, but wasn't sure if that was necessary for this increase. 

[Phil Shaffer]

I had a similar situation on both duplexes I bought in Pittsburgh over the past year. Existing renters with a previous lease and rents in place at the time of purchase. I personally ended up keeping and honoring their leases since my numbers still worked with the existing rents (even though of course they could have been better), they seemed like quality tenants, less of a headache and quicker to get revenue coming in, and the timing of their leases were ideal (ended in the summer when it’s easier to get units filled). I took a chance and rolled the dice. Ultimately it worked out! One set of the tenants ended up renewing for another year and I think respected the fact that I didn’t raise rent back when I probably could have, and the other set ended up moving out due to life changes, so I bumped that rent up to what I thought it should be anyway and just recently filled the unit at that rent price. Not sure if right or wrong approach necessarily but thought sharing my actual experience might help in your decision!