I found a duplex that I plan to house hack, and to get straight to the point. One side is vacant, and the other has been rented for 12 years to an elderly lady for 450 a month. It's a 2 bed 1 bath current market rent is 600-650. First time going into a house hack, and would like opinions on how to go about this situation.
We recently bought a duplex in May. They were getting $610 of rent on each side. The market rent was about 900. We sent out letters and raised the rent $100.00 2 months after we purchased it. Then another $100 the third month after purchase. That gets the rent right now to $810 per unit. Both sides stayed, and they're both paying the higher rent.
@Braden Burnside If the seller really wants to sell they may be willing to deliver the home vacant upon sale. Let them try and figure out a way to get rid of the underpaying tenant. Have your agent write "home to be vacant upon sale" in the contingency section of the contract and see what they come back with.
If the seller balks at getting rid of the tenant and it is a property you still want to pursue then work the numbers and come up with an offer price with the tenant staying.
Give the tenant sufficient notice after closing that the rent will be raised to market. Done right this will allow the tenant plenty of time to find a new place if they should decide to leave. Chances are they will stay and pay the $650. They have had a very easy ride and will now simply live in the real world.
Unlikely they will find a lower priced place which means you have the leverage. Raising the rent in stages simply means you will be paying a portion of their rent out of your own pocket. There is no reason for a investor to pay a tenant rent for them.
Place likely needs a lipstick Reno anyway. Best to get your business on track from the start.
Give the current tenant notice that you will not be renewing the lease term.. don't let current seller sign or renew her lease term. Hopefully she's on month to month..
Download your state landlord tenant laws.. If you purchase building you'll have to give proper notice period to tenant of non-renewal.. notice to vacate..
A rent increase with this tenant might be possible, but the unit probably needs work so make plans on when and how long you expect the work will take and factor that in as to when you give that person notice ..
so get tenant to full market price asap and then decide if you want or when to rehab,, I would absolutely do NO rehab work other than emergency repairs to that unit with current tenant inside if it were me..
Depends on your market and your financial situation. Will it rent quickly or will you have some vacancy if she moves out. How much will it cost to get the unit rent ready for the higher price. If she has been there for 12 years plan on new carpet and paint at a minimum as well as several other cosmetic updates. How much will that cost and how much time will it take to get that money back at $150-200 month increase. Does your side you are living in need improvements? If so why not live in that side and get it ready. When it is ready lease that side and then give other side notice and move in it and make the updates. At least then you are not paying to renovate both sides at the same time with no money coming in to cover payments
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