Raising rents on new acquisition.

[Matthew Catanzariti]

I recently purchased a new multi-family unit and the rents are below market by a pretty good amount. They are paying 1100 while market rate in my area is 1400-1500. My question is, is how do I go about raising the rent? Do I just try to have a conversation with the tenants explaining the rate increase? Or do I just send them an official letter stating in 30days the new rent with take effect. Sorry if it's more of an amateur issue this is my first rental property.

[Corby Goade]

I believe you are required to honor the terms of a lease when you inherit tenants, at least in my area. I love the suggestion above by @Joseph Pugliese of fixing up common areas first- it shows you are committed to improving tenant's quality of life and treating them with respect, that goes a long way when having more difficult conversations. That said, we have a standardized renewal letter that we use with two options- one for a one year lease at approx. 7% increase and one for a two year renewal at a 4% increase. Tenants feel empowered to make the choice and we've never had to have a conversation about rental increases since we've started doing this. Obviously, we only offer renewals to good tenants, but that's been a game changer for us.