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Updated 3 months ago on . Most recent reply

Should I keep inherited tenant?
HI BP,
I am currently looking at buying a single family rental property that is currently rented. I personally know the person that owns the property and am close friends with him. He has informed me that the tenant has never missed a payment and has not caused any problems. When I looked at the house they kept it very clean. However, the property currently rents for $850 and market rent calls for at least $1,000. I know that the tenant currently makes $33,144 gross a year which would be $2,762 a month. This would not meet the 3X monthly rent rule at $1,000 a month. Do you think I should not renew the lease when it is up in April and find a new tenant or since it is very close to the 3X monthly rent rule let it slide?
Thank you in advance for everyones help with this decision.
Most Popular Reply

Let's talk about this directly as a business decision. As a new owner, you should confirm if you can raise the pricing on the rent, and do that accordingly to the laws. This does not matter if the tenant is off a bit on rent and income. I would raise the rent.
The first thing prior to this would be to verify this is a good tenant, check the lease, and confirm with the owner with a payment ledger that they have been paying on time since they have been there. Even if you know the owner like a brother, you need to do your checks and balances. Tenant estopple is a great place to start while you are in escrow, if you have closed escrow and did not do this stuff, you cannot backtrack. I would verify as much as possible which is looks like you know income on the tenant and maybe some other stuff too.
- Peter Mckernan
