Hi everyone. So I close on a duplex (I'll be occupying one side) next week in a nice neighborhood where I live here in Wisconsin. I feel like I got a pretty solid deal on this property considering the market. Each side has 3 bedrooms, 1.5 bathrooms, single attached garage, private deck, central air, etc. the place needs nothing and is approximately 1300sq ft per side. Unfortunately, due to my "lack of credit" I kinda had to go through some hoops to get financing and ended up finding a lender that would do an FHA loan. The cost of the property is 192,000.00 And I'm putting approximately 10% down. Since I didn't go with a conventional home loan (20% down) I will have to carry that additional PMI insurance. My approximate monthly payments will be around 1600.00. The current tenant is only paying 750.00/month. His lease is up at the end of August. Ive compared this property with other comparable places in the area and figured 950.00/month would be appropriate. Would you give the current tenant a 30 day notice right away since his lease expires at the end of August? Or would you give 60 days since its quite a bit more money? Also, would you require a year lease right away if they agree to the rent increase? Thanks in advance! I hope someone can relate!
Welcome to BP!
One question: Have you found a new tenant to take the old tenant's place? If so, great! I would tell the current tenant that their lease won't be renewed. If not, be careful in getting rid of a paying tenant. Think about it: If you miss one month of rent, even at only $750, that would set you back quite a bit.
Best of luck! Lots of great info on this site to help you on your way!
Before you give them notice to non renew you should give them notice to raise their rent to $950. Give them a chance to stay or go.
Give them the rent increase notice the day you take ownership.
Hopefully you have studied and learned your state landlord tenant regulations already. Never start a business without knowing the law.
I have been doing my research on wisconsin landlord/tenant rights along with asking this same question to multiple property managers, just to get different perspectives. I’m kinda leaning towards giving the tenant a 60 day notice of notice of the rent increase, that way, like AJ said I wouldn’t take as much of a chance on potentially missing a months rent as I do not currently have anyone lined up for it, cause i haven’t actually taken ownership yet.
I’ve also heard (rule of thumb) to try and get 1% per month of the total value of the home, do you guys support that or does it just depend on the property/situation? Thanks all!
Go by what the current lease says. If you must give 60, give 60. How much notice do you need to give for them to move out? Will the lease go month to month after it expires?
1% rule depends on where you are. It can be a good rule of thumb but you need to do independent analysis.
I am unsure of the current lease. I just know it expires the end of August and would assume to be month to month after that. wisconsin law is 28 or 30 days notice to move out, but that’s not really what I’m trying to accomplish. I’m just trying to figure out the best approach/timeframe, to give the current tenant, that his rent will be going up, either September 1st or October 1st.
200.00/month is quite a jump, so I kinda want to give home the extra time to decide and not ruffle any feathers right off the bat, considering he will be my neighbor.
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