Asheville, NC · Member since 2017 · 385 posts · 274 votes
7y
It sounds like they are on a rolling month to month lease and you can just give them 30 days notice but I have no idea what is allowed in your state. If I were you, I would get to know your states landlord/tenant laws. Google it and it should be easy to find.
Asheville, NC · Member since 2017 · 385 posts · 274 votes
7y
It sounds like they are on a rolling month to month lease and you can just give them 30 days notice but I have no idea what is allowed in your state. If I were you, I would get to know your states landlord/tenant laws. Google it and it should be easy to find.
Asheville, NC · Member since 2017 · 385 posts · 274 votes
7y
First. read up on your state laws. You never said how much of a rent increase it would be to go to $1200. If it is $500 per month than they will probably move anyway. You could always just talk to them and see how they feel about the current situation. Communication is key. Most landlords increase rent a little bit every year so a big jump may just send them packing. If you want to go up in rent a significant amount then see what it would take to accommodate them such as a new appliance, or newer cabinets, etc. Also, keep in mind that they may not qualify if you go up in rent a large amount in one month. They qualified at the lower amount whenever they signed a lease with the previous landlord for the lower amount. Consider a smaller rent increase for 6 months and then do it again in another 6 months. You could also write that into a new lease. Read up on your state laws please because you do not want to do something that could put you at a disadvantage for the future or for negotiating a new lease.
Put yourself in their shoes and try to see it from their perspective.
If these are folks who have been renting for a long time, they may be unable to afford the increase in rent. They also might be better tenants than some random stranger (if they leave).
Since you purchased this as an investment property, isn't the idea to rent it out?
Can you rent the other half of the duplex to make up for a lower rent on the one side?
You say that you don't care if they go or stay, but there may be reasons they have stayed, and reasons their rent hasn't been increased since 2012. Until you know those reasons (legal or otherwise), I'd say it might be a difficult decision.
Rental Property Investor · Winona, MN · Member since 2018 · 87 posts · 90 votes
7y
@Sinil Kim, any info from seller as to what kind of tenants they have been? Have they been there a long time? Do they pay their rent on time? Do they take care of the place?
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@Sinil Kim you really should read up on NJ law before you start pushing unreasonably large rent increases. Just quickly reading information from the link to the NJ website, it states if an increase is unconscionable, the tenant can refuse to pay it. Then it lands in the court to decide what is reasonable.
A better option may just be a letter of non-renewal. Explain that you are doing property rehab and need the unit vacant. That avoids accusations of rent jacking to force people out.
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
You will get multiple opinions....no right or wrong way as long as you follow the state laws on how much you can increase it and when....
Different "camps"
- Leave it at current rent for 6 months or so get a feel for the unit and tenants- don't rock the boat on day 1
- Slow increase over 6-12 months- rapid changes results in turnover and that kills profit
- Jump right to market rent.... if they move then fine....fix it up, get market and YOUR tenant choice
Your choice......
Biggest factor to consider.... the rent may be low but fit the unit...... ie. lots of deferred maintenance, old style/design, Capex coming up etc etc..... so to get market rate on the open market, you may need to sink decent $$ to get it fixed up to compare to the other units on the open market right now at that rate.... You cant expect to compete at market rent if your unit is not in the same shape as the ones you are using to reference for market rate.
Concord, NH · Member since 2016 · 86 posts · 82 votes
7y
Hold over tenants can be very challenging. You often don’t know if they were good or bad tenants under the previous owner, paid their rent on time, and etc. Often the change of ownership, coupled with a change of lease terms can make the transition difficult. They often try to teach you how things have been managed at their home, which is never good.
When deciding on new rental rate, definitely review state laws, but it can be best to raise the rent all at once. It may cause them to move out (which could be a good thing anyway), but if you get caught trying to play catch-up and keep pace with rising rental prices, it may be more than they can handle anyway, better to know that up front.
A couple other tips, get them into your lease as soon as possible and don’t rely on the previous owner’s lease. Also, if you don’t get a thorough application and credit/background from the former owner, make the tenants go through a full application process so you have all their info on file. I typically pickup the screening fee for holdover tenants, but the info will be invaluable if you need to evict later on.
Rental Property Investor · Pearland, TX · Member since 2018 · 35 posts · 12 votes
7y
@Sinil Kim I was faced with this recently. I did some long neglected maintenance on the house then sent a letter 30 days before lease with old owner expired. I explained reminded them of recent repairs and plans for future repairs. They moved out but I was able to get new tenant in pretty quick at the higher rate.
Investor · FL · Member since 2017 · 266 posts · 220 votes
7y
@Sinil Kim
Give them notice as required by your local state laws, maybe even a bit more if it works with your timeline.
I just did this with an 8 unit last year from 950 to 1250. 6 stayed, evicted one and one left before eviction process was completed. I am currently purchasing a fourplex at 900 rents month to month which I will give them notice for remainer of this month and all of next month. If you want to give charity i recommend doing it a diff way you can help someone who truly needs it such as disabled veterans or working with a local battered women’s shelter.
Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes
7y
@Sinil Kim you provided incomplete picture here. What’s the current rent? How much are the deposits?
I bought duplex last year and sent them introduction letter and mentioned that we are reviewing their files and lease will reach out if updates are needed.
Then in a week, we sent new leases if one did not exist. The one that had a lease but deposit was not topped off received a letter to pay the difference and a payment plan offer. The ones that do not have leases were given opportunity to enter into new lease at market rate with option to terminate tenancy in 30 days without penalty.
Rental Property Investor · Cleveland, MN · Member since 2017 · 518 posts · 354 votes
7y
First you should learn your state and local laws. All states and all opinions are different. Are they good tenants? What is their history? If they are good renters then I'd give them the option to stay with the higher rent (provided that's within your laws). One thing to consider though is that time is not on your side. Here in MN I'd have to give notice by the 31st to have them move out at the end of August. Make sure you don't get too far into the year and end up with two empty units for the winter. You didn't mention what they are paying right now, so we don't know how big of a jump the rent would be. Maybe do half of the difference now and then the other half next May 1. That way if they both move out you'll have the whole summer to find new tenants. A lot also depends on your market and how easy it is to fill rentals. Good luck!
@Sinil Kim you provided incomplete picture here. What’s the current rent? How much are the deposits?
I bought duplex last year and sent them introduction letter and mentioned that we are reviewing their files and lease will reach out if updates are needed.
Then in a week, we sent new leases if one did not exist. The one that had a lease but deposit was not topped off received a letter to pay the difference and a payment plan offer. The ones that do not have leases were given opportunity to enter into new lease at market rate with option to terminate tenancy in 30 days without penalty.
How far below market are you?
Current Rent is $825. I saw similar houses near by are around $1300 -$1400. But it's not good condition.
I think I need to send a 30 days notice and update the property little bit and find new tenants
First you should learn your state and local laws. All states and all opinions are different. Are they good tenants? What is their history? If they are good renters then I'd give them the option to stay with the higher rent (provided that's within your laws). One thing to consider though is that time is not on your side. Here in MN I'd have to give notice by the 31st to have them move out at the end of August. Make sure you don't get too far into the year and end up with two empty units for the winter. You didn't mention what they are paying right now, so we don't know how big of a jump the rent would be. Maybe do half of the difference now and then the other half next May 1. That way if they both move out you'll have the whole summer to find new tenants. A lot also depends on your market and how easy it is to fill rentals. Good luck!
Current Rent is $825. I saw similar houses near by are around $1300 -$1400. But it's not good condition.