Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes
Good morning BP! I'm planning to put a offer in a multi family property. According to the seller the 2nd floor will be vacant at closing and the 1st floor will be occupied by a tenant paying $1,000 rent month to month. The rent is low for the area and I know I could get $1250-$1300. That's about a $300 rent increase and it'd be money I'm losing it if I don't increase the rent. How can I offer the current tenants to stay for a new lease with rent increase? Or should I ask for the entire property to be vacant, but could I even do this? What would you guys recommend me doing? I want to put a some sort of contingency in my offer, how could I word this?
Thanks again in advance!!
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
I doubt seller will accept any type of contingency for this tenant.
I would be happy you have income on the one unit currently occupied,
this gives you chance to upgrade and do work on vacant unit while still having income.
After you have the vacant unit rented. Give current tenant 30 day notice that his rent will be increased to what ever you feel is what you need. He will either decide to stay or go.
Don't rock the boat with contingencies at this stage of game with seller.
I prefer my tenants on month to month it give me more control.
Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
9y
@Carlos Rodrigues Legally, you have to honor the current tenant's existing lease. When it is set to expire, notify them that you are increasing the rents. Asking for the entire property to be vacant is going to cost either you or the seller some money.
Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
9y
yes you can offer them a new lease and if they do not want to sign it just give them a 30 day notice of non-renewal. But remember that if they do not renew then you will have to turn that unit, just make sure you are ready for that cost. Also it may be more profitable in the long run to only bump their rent part way to market if you can get them to stay and save that money that turning the property would cost you.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
9y
Long term I doubt its feasible to bump their rent $300 so suddenly unless its a high demand area and you've got renters ready to move in at that rate. If you do plan to do this and want to avoid as much turn over costs as possible make it clear that they get their deposit back upon inspection once the place is left in broom swept condition.
How long have those tenants been in place? M2m could mean they've been there for a long time and their lease just became that or that the seller quickly wanted to get someone in at least one unit to make it look like a good property. That meant a below market rent on m2m terms which is favorable for the tenant.
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
I doubt seller will accept any type of contingency for this tenant.
I would be happy you have income on the one unit currently occupied,
this gives you chance to upgrade and do work on vacant unit while still having income.
After you have the vacant unit rented. Give current tenant 30 day notice that his rent will be increased to what ever you feel is what you need. He will either decide to stay or go.
Don't rock the boat with contingencies at this stage of game with seller.
I prefer my tenants on month to month it give me more control.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
Unless you're going to put up $5-10k non refundable, a seller is going to kick them out, in case you don't close. Just deal with the tenant once you own it.
They're month to month! You can get rid of them right after you close. Just close, give them their notice, and do your thing
The seller will (most likely) not do anything to remove their tenants. Right now the tenants bring in money and you do not. Deals fall through and then the seller is left with a vacant unit. You can try (it worked for me on an FHA 3-unit purchase), but it is unlikely they would accept, particularly given that it's only a m2m lease