Im thinking about pulling the trigger on this 4-plex with renters paying 550 and 600/m. Market rent seems to be 700-725 for comparable units. If I buy the property, how do I nicely tell the tenants I need more cash now? It doesn't help that one tenant is a little old lady. 3 units are m/m and 1 unit just signed a lease for 24m at 600/m. Also, none of the tenants have deposits.
Much apprech for the advice guys!
You can't do a thing with the 24 month lease, it will transfer across the ownership change.
For the month to months, generally you have to give 30 days notice of the intended increase.
Better be ready for some vacancy's if your going to try to raise rents on $600 dollar units to $700. That's 17% and many tenants won't stand that. I would look at why the tenants don't have deposits?? are the units hard to rent?? what's the turn over? are the renters long term, with leases that have run out and gone to month to month? why is the property below market??
Good ideas thanks!
The agent said they are relatives/friends and the owner felt like deposits weren't necessary. You buy that?
The properties are below market value bc they are great renters with great relationships with the owner.
I keep the good tenants and only up the rent at turnover
Maybe, but that doesn't help you if they tear up the place, or move out right away leaving you with 3 empty units?? after all they are his friends/family not yours. It sounds like the seller doesn't have much landlord experience. I would be checking this one out very thoroughly!
@Reggie Maggard I would check your tenant-landlord laws in Missouri in DC it states For most tenants, the rent can be raise once in a twelve month period no more than 10% of the consumer price index. And there has to be a 30 day notice that even if there is a lease already in place. I would have a conversation with the current tenants and ask if there is anything that needs to be fixed, or if you see anything that needs to be updated do that then raise the rent. Also realize these aren't your friends and family, so you have to evaluate them yourself. I think your stuck with the 24 month lease. Again I'm not sure of the laws there but in DC if they don't already have a deposit you can't go back an ask for a deposit. As long as the numbers work and they pay on time this conversation is moot at this point. Good luck Sir!
Jon, awesome input! I am definitely consulting an attorney! Idk about the notice and the ability to raise rents, but this particular county seems to hate landlords so I have my suspicions. And I love the idea of talking with the tenants before closing as well, maybe I will give them a gift card for their time or something. Again, awesome input and God bless my friend.
@Reggie Maggard If you make an offer, make sure you request a copy of the current lease agreements (if there are any).
Also, if you raise the rent, I would probably do some improvements to the exterior of the duplex to at least show that you are adding value.
Yea, only one unit has a lease agreement, but you did remind me to get a copy of it ASAP. I love the idea of doing the upgrades at that time. Thanks Jordan.
When their leases run out, up the rents. Losing that much money just to have consistent tenants isn't worth it. If it's a decent property in a decent location those spots will get filled.
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