Raise Rent/Extend Lease ?!

[Richard Beatty]

Hello Everyone,

I will be closing this week  on a 3 family in the Dorchester/Boston Area. The tenants are At Will and pay a few hundred dollars less than market rent. My plan is to reach market rent without  the Tenants bailing out on me.In March I plan on increasing the rent by $ 60. Would you guys keep them TAW so you can raise rent or go up $100 and offer them a yr lease? 

[Nathan Gesner]

I would inspect their units and payment history first to see if I want to keep them. Get rid of anyone that is marginal and raise that unit to market rate for new Tenants. If you want to keep someone, sign a one-year lease with a small raise. Do it again the next year until they are caught up, or close to it.

For example, if a tenant were $200 below market, I would give them 60 days notice of a $100 increase and one-year lease. In that lease I would explain they will be hit with another $50-$100 increase at renewal a gear layer. This rewards them for being good Tenants while giving them plenty of time to adjust. But you MUST verify they are worth the trouble!