My wife and I are in the process of purchasing our first mult-family unit. The property has a current tenant at will who has been at the property a long time and is paying well below market rent. Trying to decide whether to keep him as a tenant and how to go about the situation. Please share any advice or resources on managing properties.
Personally, I inherited a long-term tenant on my first multi family. I had the opportunity to kick out them out because their lease had already been converted to month to month. But because it was my first multi-family, I decided to keep them and just raise the rent 2%. Finding a new tenant was one less headache a had to go through and I wanted my first year to go smoothly.
That being said, I use a property manager and its well worth it for me. Even though its just a duplex, I already know that dealing with tenants isnt my forte and I don't wish it to be.
@Michael Hines I just went through this less than a month ago. My wife and I inherited long term tenants and after much debate decided to wait a couple weeks, then give them notice of the rent raise. They had been paying the same rent for 10 years (!!!), so the snap back to current market rates was about 35% increase, and came as a shock to them at first.
Because of the previous owner’s reference, we wanted them to stay and tried to soften the blow of the rent increase by offering to make some improvements to their unit - things like fixtures, appliances, painting, etc. We also gave them some time to consider their options before following up to gauge their interest in staying. So far, it seems likely they’ll agree to the new terms and rent and stick around, but they haven’t made a final decision yet (not have we). They have until end of this month to decide.
Thanks for the feedback. We ended up passing on that one because we just didn't have a good feeling about it but found another one that we are working on now. This is another 3-family except its fully occupied so we will see how it goes.