Chicago, IL · Member since 2017 · 26 posts · 6 votes
Hiya all;
We're closing on a property in the next few weeks and struggling with balancing the business and the human side of what we do. The property has tenants in place but are between $130-200 / mo under market at the current state of the place. Way more if we revamp it a bit. We realize this is an incredibly hard time to ask for a rent increase, but we don't see how we cannot as a business. One idea is to give them a free month and then start again with the new rents, while also giving them the option to break the lease if they want to. We do want to provide homes for people, but we can't lose money right off the bat!
I can't get a fully straight answer about the rental market at the moment, everything seems too volatile, but it does mean we'd have some time to spruce up the homes and get better rates. We also run the risk of not getting tenants for a while.
Anyone going through something similar in these unprecedented times, or have any suggestions?
You sure you want to take on a project during these times? Sure you want to be on the offensive? If you have a good paying tenant during these times you are already winning. Timing is everything.
We're closing on a property in the next few weeks and struggling with balancing the business and the human side of what we do. The property has tenants in place but are between $130-200 / mo under market at the current state of the place. Way more if we revamp it a bit. We realize this is an incredibly hard time to ask for a rent increase, but we don't see how we cannot as a business. One idea is to give them a free month and then start again with the new rents, while also giving them the option to break the lease if they want to. We do want to provide homes for people, but we can't lose money right off the bat!
I can't get a fully straight answer about the rental market at the moment, everything seems too volatile, but it does mean we'd have some time to spruce up the homes and get better rates. We also run the risk of not getting tenants for a while.
Anyone going through something similar in these unprecedented times, or have any suggestions?
Thanks!
Giving them a month free and raising the rents is basically the same thing as just keeping the rent where its at, no?
Just keep it where its at, remodel the house using sweat equity, and raise the rents when things stabilize. No sense in pissing off the tenants, especially if they have a good history of paying on time.
I'm in the same situation. Closing on a duplex now with $1550 gross rents. Market rent is at least $1800. Previous owner hadn't raised rents in 14 years. My PM said I could notify the tenant on month to month lease there will be a rent increase in 30 days. The tenant with a year lease, I'm bound to the terms for the duration of the lease. I think I'll just keep rents the same for 1-2 months then give notice of increase if/when the virus becomes less of an issue.
You're on a slippery slope and should pull back. Raising rents right now is a bad idea. Nobody has a clue as to how all of this is going to shake out in the economy. Every state has different policies in effect. There are no evictions, no foreclosures, etc. so probably not a good idea to rehab a place and raise the rent. What would you do if they just get pissed off and quit paying altogether?
@Karen Margrave see above. We already decided to not increase. We can’t remodel the interior regardless until the tenants leave....and take their stuff. We’ll do the sweat equity stuff outside and re-frame when the leases are closing to ending.