Tenant Rent Increase in Woonsocket.

2 Replies

Hello BP Family,

I am closing on my first multi shortly, the rents in Woonsocket are as follows 1st Unit 2 bed 2 bath $895. 2nd Unit 3 bed 1 bath $995. 3rd Unit 3 bed and 1 bath $720. The 3rd unit needs to be updated with new appliances, new flooring, paint, new countertop. The tenant is a smoker in the 3rd unit, but the other 2 units are in great clean nicely kept condition.

My question is, how everyone effectively communicate and raise rents. Hoping to hear from everyones experiences. I plan on upgrading the unit and the property with the rent increases.

Please share your experiences.

@Raymond Hill congratulations on closing on your first multi-family property!

I think you need to finish the closing and introduce yourself to the tenants first, then as we're going into winter I would create a plan to raise rents one unit at a time instead of all at once.

You don't want to raise them all at once and find yourself with a building that has 2 or 3 vacant units, in the middle of winter.

Since the third unit needs to be updated and also has a smoker, that would be the #1 unit for a rent raise in my opinion, and I'd kind of hope they'd actually move out (so you can do the upgrades and especially to make it a non-smoking building). But if they don't, then you get a rent raise without having to rehab that unit (yet).

I would at least wait a month until after closing and you've introduced yourself, before raising any rents, and then I'd give each unit you raise rents on, a couple of months to "digest" the rent increase before you move onto the next unit. (Of course, I'm assuming all the tenants are month-to-month - if they're on leases you'll need to wait until the leases are going to expire.)

I also find that tenants are a lot more accepting of rent increases when they see that you improve their units and address any deferred maintenance or outstanding maintenance requests that the previous owner may have neglected. So it's good that you plan on upgrading units with the rent increases!

Generally, if this is your first multi, I'd say take it a bit slow as the tenants will be getting used to you and you'll be getting used to them (and managing a multi). So give them and yourself some time to adjust.

I'd also urge you to be a little conservative about spending a lot of money on big upgrades, at least for the first few months, unless you really have money to throw at the property. I say this because if it's your first multi you may be surprised at some of the oddball expenses that will pop up, that you'd never thought about before. And also you'll be amazed how many things just happen to go kaput within the first month or two after closing (I'm thinking of hot water tanks and boilers in particular).

So depending on your money situation it could be a bit of a delicate balancing act between raising rents, making improvements, and starting to handle some expenses that might come up and surprise you (the previous owner's deferred maintenance coming due for you).

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