Doubling rents without loosing tenants?
Hey everyone!
I'm currently in the process of purchasing my first property. This is a fully occupied 4 unit property in good condition. Each unit is a 2 bed 1 bath around 1,000 SQFT each. The current tenants are paying $400, $470, $630, $630. This area's market rents are around $750-$800. The tenant paying $470 has been there for 30 years, the one paying $400 has been there for 11 years and is a family member of the current owner. (that's why theirs is so low)the other two have been in the units for less than 2 years. 3 of these units are month to month. The 11-year tenant is currently in a 1-year lease.
At the current rents, I will be just above breaking even. How do I get the rents to market value so I can turn this into a good cash-flowing property without portraying myself as a horrible new landlord? There are some small improvements I plan on making, replacing a carpet, fixing a crack in a window but nothing major.
I am thinking about offering each tenant two options. 1 year leases for $700 or month to month for $750. But I fear this may be too big of a jump for the long-term tenants.
Most Popular Reply
@Dwight Cook think about your objective and I believe yours is to bring rents to market. There is no way to achieve the goal and soften the blow. Tenants are easy to replace in most markets and yes there is some expense involved to do a turn over. Tenants also know prevailing rental rates and some will pay more to stay. The job is to make money so don't over think it. All the best!