How to raise rents to tenant in multifamily?

Dallas, Texas
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How to raise rents to tenant in multifamily?

Imelda Mendoza
Member since 2018 · 14 posts · 1 vote

We purchased a 5 multifamily in Corsicana, TX last year and have slowly updated a few of the units that have became vacant.  New rents for update ones are $775-$850.  We currently have 2 units that have not been updated and rents are at $550 & $770 both have been living there 3yrs+ with zero rate increase in the past 3 years.  

Do you mail out a letter? If so, any templates you recommend or do you call them?

Thanks in advance!

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y

Yes, send them a letter notifying them of the increase. There's no need to apologize! If you feel guilty, provide them a few comparable properties so they can see you are charing a fair market rate. A notice may look like:

"Dear Tenant,

This letter serves as notice that your rent will increase to $850.00 effective June 1, 2022. We are giving you one week to consider this change and notify us of your intent to renew or to terminate and vacate. If we do not hear back from you by [DATE] then we will serve you with notice of termination and expect you to move out."

One of your tenants would require a 50% increase to catch up. There's a very good chance they can't afford it, so I would not offer them a renewal. I would give them a termination notice, clean the place up, and find a new tenant that you have screened and confirmed they can afford the market rate.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Yes, send them a letter notifying them of the increase. There's no need to apologize! If you feel guilty, provide them a few comparable properties so they can see you are charing a fair market rate. A notice may look like:

    "Dear Tenant,

    This letter serves as notice that your rent will increase to $850.00 effective June 1, 2022. We are giving you one week to consider this change and notify us of your intent to renew or to terminate and vacate. If we do not hear back from you by [DATE] then we will serve you with notice of termination and expect you to move out."

    One of your tenants would require a 50% increase to catch up. There's a very good chance they can't afford it, so I would not offer them a renewal. I would give them a termination notice, clean the place up, and find a new tenant that you have screened and confirmed they can afford the market rate.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
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  • Michael Dumler
    Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
    4y

    @Imelda Mendoza if the tenants are on a fixed lease, unfortunately, there's not much you can do until the agreement expires. Sending a mailer notifying them that rents will be raised to X upon lease renewal is a good way to inform them. They can either renew the lease at current market value rents or vacate the unit allowing you to update and place a new tenant. Hope this helps! 

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  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    4y

    Be sure to comply with the lease, you have to give sufficient notice before a non renewal as well.

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