I'm buying a single family home with an existing tenant. She pays on time, keeps it clean, and has been in this house for several years. I need to increase the rent at least $300 to get close to market value rent prices. I will cash flow immediately but not much so would like to start increasing her rent asap. Can I get some advice on doing this? Should I start immediately? Do you recommend an increment to increase by? I'd hate to lose her as a tenant but I'm confident I can find another if needed. Thanks in advance!
@Justin Weekley I see it is your first post welcome to BP.
There are two issues here. What is the market rent, and what can she afford? The largest cost to a landlord is turnover cost. If you have a known good tenant, I would not want to risk losing her.
Keep in mind if she has an existing lease you must honor that lease. So if she has 6 months left on a year lease you cannot raise the rent until that lease expires.
For you the good new is she is somewhat stuck. If she moves she will have to pay market rent someplace else. She may not have many good options. That helps you in negotiating but not if she simply can't afford more.
Thanks, Ned. That's helpful info. I hadn't really thought about her being "stuck." Have you had any luck negotiating rent prices with an existing tenant like this? Seems like working together would be best for both of us.