Inheriting 5 tenants, rehab, raising rents...HELP!!!

[Jeff Oberts]

Hi guys!

I just got a quad and an additional adjacent SFH under contract. Each unit is occupied, I believe on a month to month lease, or I'm assuming no lease at all (we'll find out more this week). All 5 units could use some rehab if not full renovation. Also, at least 3 of the 5 tenants' rents have not been raised in years (like 15+ years!). My question is, should I:

A) Raise rent on each unit like $100+ and hope they leave so we can begin rehab (units are currently renting from $275-$400)

B) Leave them be, maybe raise rent like $25, and just rehab whenever they move out or get evicted

Any information or suggestions are greatly appreciated!!!

[Alex Craig]

"Hello, my name is Jeff, I am your new landlord. I am going to raise your rent and yes, I understand the place is a dump." :)

Things to consider:

• maybe they are living there because they can't afford to move and since they realize rents have not been raised in 15 years, they accept their place needs a full reno.  I see that type of gentlemen's agreement all the time, in that, tenant does not call in maintenance or complain about the condition of their home and landlord leaves rents alone. I don't agree with it, but it happens.
• Sounds like the bar is low on the tenants if you are waiting on them to get evicted 
• If your goal is to get them to leave, then yes, raise the rent and get them out.  I buy homes frequently with the same scenario you are laying out. I roll with the rent for a while allowing those rents to fix up easy repairs while the tenant is in the house. 
• Tell the tenant you will keep him in place at current rent, but you want to make specific repairs that when complete, you will need to raise rent to X.  The tenant may like that the owner is finally fixing up the place and will be ok with paying $100 more
• That being said, your rents are super low.  $25 is a big deal in this space and you may be overthinking the expectation of the tenant. In other words, avoid over renovating the place. A few cheap vanities, new coutnertop, twin pack brush nickel lights ($25), rolled vinyl, etc go far in this space.
• You mention "when they get evicted", that is a common occurrence in that space. I would try to figure out how to keep your turn cost low--it is burn and turn in this space. That being said, if the 3 of 5 tenants are paying, you may not want to mess with that.