What to do?? Inheriting Potential Bad Tenants & Below Market Rent...
Hi!
I am closing on a 4 family I will be going owner occupied on in 1 month. I just received the leases from the seller and the three tenants I'll be inheriting are on a month-to-month lease which is dated back to as early as 2004. Based on everything I've gathered so far, I know the tenants have been late on rent payments more than once over the life of their tenancy. The house is located in an area where young professionals live and is on a nice safe street.
I am trying to develop my strategy before I become the owner.Here are my ideas, let me know what you think!
Inherit potentially bad tenants and...
Idea #1:
-Give them a written notice rents will be rising $25/month in 30 days (for 2 of the tenants) and $50/month (for one of the tenants since this will bring all 3 to the same price) on the day I take over ownership.
-In the written notice for the 30 day increase in rent, also let them know rents will be increasing by $10/month over the next 5 months. Basically, that's another $50/month increase in rent, totaling $100/month increase in rent after 6 months from the rental price when I bought the place.This will bring the rents up to market value.
-Discuss with all tenants if they plan to stay with the new rent and what their plan is for the next coming months when taking over the property.
Idea #2:
-Give them a written notice that rents will raise $100/month in 60 days.
-Discuss with all tenants if they plan to stay with the new rent and what their plan is for the next coming months.
-If tenant does not want to stay, market for new tenants and turn the apartment in one week with it being vacant.
Idea #3:
-Do nothing. Keep rents where they are and enforce late payment fees strictly. If they continue to miss rental payments, break their leases and ask them to leave.
-If they are paying the below market rents on time, keep tenants through the winter and give them a written notice that rents will be increasing by $175/month on 5/1/2016. This will give them plenty of time.
What would you do?Is there something you would do entirely different?
I know there are some other factors to consider, but curious as to what people think.
Thanks!