How to deal with tenants paying under market rent?

[Kyle Marsh]

Hello,

I am interested in a four-family property, but all the tenants are currently paying under market rent. It would still cash flow enough to stay afloat with the financing that I am using, but they are paying roughly 80% of what they should be paying. Has anyone ever bought a property with existing tenants who paid under market rent? If they are tenants at will, how would you deal with this situation? Is it worth the trouble to raise their rent, or potentially pay cash for keys for a replacement tenant who will pay market rent? I'd appreciate any input, thank you.

[Peter M.]

@Kyle Marsh Raise to or right under market rent. Be sure to give plenty of notice so they have time to shop around. Most of the time they realize it would be more expensive to move. They may leave but thats part of the business. If you give enough notice you will also have time to find new tenants before they move out.