Im trying to increase the rents of the tenants living in my multi-family. The rents are $300 under market. I just bought my first multi-family and am new to real estate. I was wondering...how do I go about increasing the rent of one of my units? I live in one half. Do I just send them a text that we need to meet up so i can tell them rent is increasing? Do I make a new lease and then tell them they need to sign it? As experienced real estate investors whats the best route that I can go about this process in the most professional way??? i obviously wanna go to market rent but at the same time I have ZERO experience. Do I start out at $50 a month till market or what?
Do you have a lease or are your tenants month to month? You typically cannot raise rent during a lease...month to month is basically short lease. You typically have to give notice in advance to the month to month tenants...typically 30 days. Check your state's laws. It would probably be more polite to 1) let the tenant know what rent you plan to charge and 2) get there gradually maybe an additional $50 a month until you hit your planned rate. Be prepared for some downtime...vacancies and make ready for the next tenants. Good luck.
you cannot change the rent in the middle of a lease term. if they are month to month or nearing the expiration of the lease you can simply send them the proper notice. However, if you are going to increase by a large %, you may want to include a personal letter about the fact that you are simply bringing the rents in line with the rest of the market. And be prepared to lose the tenants and have to replace them.
I recommend the following:
1. Learn your state laws. Look at what you are allowed and not allowed to do. In California, you must give 30 days notice before you increase rent by less than 10%. If you raise it more than 10%, you must give 60 days notice.
2. I personally increase rents by 2-5% annually. In my area this typically keeps stable tenants without too much turnover. Rents in my area have been going up by 5% on average per year.
3. Always put everything in writing. Look at the current lease to see when their lease is up, renew the lease and give them appropriate notice. How you choose to contact them and coordinate is completely up to you and how you communicate with them now.
Originally posted by @Kristina Heimstaedt :
I recommend the following:
1. Learn your state laws.
Best way to do that? Pay a lawyer for a couple hours of his time. The education you receive is well worth the cost.
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