Need advice on how to increase rent!!

[Spencer Wetmore]

Hi BP Community,

I am a new landlord and I need hep!

I purchased my first fourplex about 3 months ago. I inherited one long-standing tenant who was (and still is) paying well under market rent - probably $250 under market. He is a perfect tenant, so far he has paid on the 2nd of every month, takes out the trash, is rarely there, and never bothers anybody. 

Currently, I don't have any rental agreement set up with him nor do I have a security deposit. 

So...my question is, how do I approach him on increasing rent, setting up a rental agreement, and getting a security deposit? Do you think I should address all these items at once or separate over a couple weeks/months? Can I even increase his rent by $250 at once?

I really appreciate all the insight and advice you all have!

[Shawn Ackerman]

@Spencer Wetmore everything about your post screams "nice guy" and you know where they finish...

1. Set up an appointment to meet with tenant(preferably at a professional location)

2. Explain to tenant that since the property is under new management, there will be a change in how the business is conducted.  I'd lay out everything you'd share with a new tenant(Make the meeting real formal)

3. Prepare a new lease which outlines fees/house rules & what the tenants should expect from you as the owner.

4. Make the agreement effective immediately and also inform the tenant that in two months the rent will increase to X dollar amount.  

This tenant is worry free because he is probably getting an excellent deal.  He'll probably stay forever as long as his rent never goes up.  Unfortunately you cannot operate a business effectively giving breaks.  Just keep these words in your mind.  "THIS IS BUSINESS NOT PERSONAL"

Also just make sure that anything you address with him should be addressed the same way with other tenants.  Keep the playing field nice and leveled.