Raising Rents on Inherited Tenants. What Worked for You?
Most Popular Reply
Lender · Orlando, FL · Member since 2023 · 220 posts · 183 votes
4moHey Minho,
I think a lot of investors make the mistake of treating it as either a business decision or a people decision when it's really both. If I inherit tenants who are paying below market rent but have been taking care of the property and paying on time, I'd rather keep a good tenant at slightly below market than push too hard and end up with vacancy, turnover costs, and uncertainty. That said, I also don't think it's reasonable to leave rents untouched forever.
The approach you mentioned is probably the right one. Come prepared with market data, explain the reasoning behind the increase, and have an honest conversation. Most tenants understand that taxes, insurance, maintenance, and other costs have gone up. I've seen situations where landlords raised rents gradually over a couple of years instead of trying to get to market overnight, and it worked out well for both sides. A good tenant has value, and sometimes the highest return isn't always the highest rent. It's finding the balance between keeping a reliable tenant and making sure the property still performs like an investment.
16 Replies
- Lender · Orlando, FL · Member since 2023 · 220 posts · 183 votes4mo
Hey Minho,
I think a lot of investors make the mistake of treating it as either a business decision or a people decision when it's really both. If I inherit tenants who are paying below market rent but have been taking care of the property and paying on time, I'd rather keep a good tenant at slightly below market than push too hard and end up with vacancy, turnover costs, and uncertainty. That said, I also don't think it's reasonable to leave rents untouched forever.
The approach you mentioned is probably the right one. Come prepared with market data, explain the reasoning behind the increase, and have an honest conversation. Most tenants understand that taxes, insurance, maintenance, and other costs have gone up. I've seen situations where landlords raised rents gradually over a couple of years instead of trying to get to market overnight, and it worked out well for both sides. A good tenant has value, and sometimes the highest return isn't always the highest rent. It's finding the balance between keeping a reliable tenant and making sure the property still performs like an investment.
Quote from @Travis Main:
Hey Minho,
I think a lot of investors make the mistake of treating it as either a business decision or a people decision when it's really both. If I inherit tenants who are paying below market rent but have been taking care of the property and paying on time, I'd rather keep a good tenant at slightly below market than push too hard and end up with vacancy, turnover costs, and uncertainty. That said, I also don't think it's reasonable to leave rents untouched forever.
The approach you mentioned is probably the right one. Come prepared with market data, explain the reasoning behind the increase, and have an honest conversation. Most tenants understand that taxes, insurance, maintenance, and other costs have gone up. I've seen situations where landlords raised rents gradually over a couple of years instead of trying to get to market overnight, and it worked out well for both sides. A good tenant has value, and sometimes the highest return isn't always the highest rent. It's finding the balance between keeping a reliable tenant and making sure the property still performs like an investment.
I appreciate your input, I agree with you that having a good tenant is valuable. What a good reminder to treat it as both business and people decision.
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes4mo
When acquiring an occupied unit, always request, in the purchase offer, copied of current rental agreements, current rent roll, current delinquency report, Security Deposits held, and confirm if there are, or are not, any subsidized (S8) Tenants. Sellers will need to notify S8 of change in ownership and the effective date in advance so they will hold payment and pro-rate appropriately based on actual closing date. Any rents paid to Seller can be very difficult for S8 to get back, and equally so for you to collect. You also need to notify S8 of your new Ownership and submit the appropriate form for approval before they will send ANY rent to you. Security Deposit must be transferred to buyer at closing.
Once your offer is accepted and contingencies cleared, provide the Seller with basic contact info for them to provide to all of their Tenants as a brief introduction. Once they have done so, and closing is imminent, you can then send the Tenants your own letter of introduction with further details for service requests, how and where rent payments are made, and instructions to contact you for scheduling a walk through inspection of their unit, with a deadline for doing so.
At the inspection, you need to thoroughly inspect every room, every closet, every sink base cabinet and other storage areas looking for any signs of water intrusion that you will need to more fully investigate later. Once you have inspected, spend time with the Tenants confirming (by asking, not telling) what their current rent and Security Deposit are; what utils are they paying; what appliances are theirs; what previous maintenance requests were not completed; and, for multi-fam properties, what vehicles are theirs and where do they park?
Ask what their future plans are...do they plan to move in the summer, or first of the year, or, are they happy and plan to stay long term if possible? Do not discuss rent or anticipated renos at this point. Simply advise them you need to study the market, evaluate your findings from all of the inspections and local market, and then make decisions and make offers to approved residents. Provide them a Rental Application for ALL adults to complete in full (I never charged for applications of existing Tenants) and return to your office with a deadline. NOTE- you must follow the existing terms of any valid, written, agreement, although you can change Where and to Whom they make rent payments to. That agreement cannot be terminated prior to the stated end date, but that does not preclude you from informing them you WILL be terminating the prior agreement at it's stated end date, regardless if they plan to stay or move, so their terms will be updated and consistent with your standard practice.
Only when you have all of the data, including a full current background check, and have developed a potential project plan, you should send them either a Notice of Termination (effective at least the minimum required notice period per Local Law, or 60 to 90 days with the promise of 100% Security Deposit return and rent pro-rated to last day of occupancy based on return of keys IF unit is left broom cleaned with all rubbish and personal property removed from the unit and from the exterior/curb) OR a Letter detailing the terms you are offering and providing a copy of your new Rental Agreement and related Policies, with instructions to schedule a meeting to review and sign, again with a deadline to do so.
Then meet, review page by page the critical sections and terms, all additional documents, policies such as either allowing Pets, or No Pets with a separate Assistance Animal Policy; House Rules for multi-fam properties; parking rules; Procedures and pick up days for routine rubbish; Move Out Cleaning Guidelines; Lead Based Paint form and booklet; Info on Mold and cleanup; and anything else relevant to the property or Local Law.
Quote from @Richard F.:
When acquiring an occupied unit, always request, in the purchase offer, copied of current rental agreements, current rent roll, current delinquency report, Security Deposits held, and confirm if there are, or are not, any subsidized (S8) Tenants. Sellers will need to notify S8 of change in ownership and the effective date in advance so they will hold payment and pro-rate appropriately based on actual closing date. Any rents paid to Seller can be very difficult for S8 to get back, and equally so for you to collect. You also need to notify S8 of your new Ownership and submit the appropriate form for approval before they will send ANY rent to you. Security Deposit must be transferred to buyer at closing.
Once your offer is accepted and contingencies cleared, provide the Seller with basic contact info for them to provide to all of their Tenants as a brief introduction. Once they have done so, and closing is imminent, you can then send the Tenants your own letter of introduction with further details for service requests, how and where rent payments are made, and instructions to contact you for scheduling a walk through inspection of their unit, with a deadline for doing so.
At the inspection, you need to thoroughly inspect every room, every closet, every sink base cabinet and other storage areas looking for any signs of water intrusion that you will need to more fully investigate later. Once you have inspected, spend time with the Tenants confirming (by asking, not telling) what their current rent and Security Deposit are; what utils are they paying; what appliances are theirs; what previous maintenance requests were not completed; and, for multi-fam properties, what vehicles are theirs and where do they park?
Ask what their future plans are...do they plan to move in the summer, or first of the year, or, are they happy and plan to stay long term if possible? Do not discuss rent or anticipated renos at this point. Simply advise them you need to study the market, evaluate your findings from all of the inspections and local market, and then make decisions and make offers to approved residents. Provide them a Rental Application for ALL adults to complete in full (I never charged for applications of existing Tenants) and return to your office with a deadline. NOTE- you must follow the existing terms of any valid, written, agreement, although you can change Where and to Whom they make rent payments to. That agreement cannot be terminated prior to the stated end date, but that does not preclude you from informing them you WILL be terminating the prior agreement at it's stated end date, regardless if they plan to stay or move, so their terms will be updated and consistent with your standard practice.
Only when you have all of the data, including a full current background check, and have developed a potential project plan, you should send them either a Notice of Termination (effective at least the minimum required notice period per Local Law, or 60 to 90 days with the promise of 100% Security Deposit return and rent pro-rated to last day of occupancy based on return of keys IF unit is left broom cleaned with all rubbish and personal property removed from the unit and from the exterior/curb) OR a Letter detailing the terms you are offering and providing a copy of your new Rental Agreement and related Policies, with instructions to schedule a meeting to review and sign, again with a deadline to do so.
Then meet, review page by page the critical sections and terms, all additional documents, policies such as either allowing Pets, or No Pets with a separate Assistance Animal Policy; House Rules for multi-fam properties; parking rules; Procedures and pick up days for routine rubbish; Move Out Cleaning Guidelines; Lead Based Paint form and booklet; Info on Mold and cleanup; and anything else relevant to the property or Local Law.
What a detailed response, Richard. I appreciate it! Out of curiosity, how would you go about when the inherited tenants are TAW?
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes4moNot significantly differently, within the requirements of your local LL/Tenant laws. Provide the appropriate written notice of termination prior to their first "due" date as your tenant. In the case of VERY long term residents, that are rational, reasonable, and have maintained to the best that conditions allow, and depending on time of year, I would give an extended period notice, 60, maybe 90 days, and pro-rate rent to last day of occupancy, based on actual return of keys. If I plan to reno, I will also inform them there is no need to go beyond "broom clean", with their personal property and rubbish off the property.
Quote from @Minho Lee:
Quote from @Richard F.:
When acquiring an occupied unit, always request, in the purchase offer, copied of current rental agreements, current rent roll, current delinquency report, Security Deposits held, and confirm if there are, or are not, any subsidized (S8) Tenants. Sellers will need to notify S8 of change in ownership and the effective date in advance so they will hold payment and pro-rate appropriately based on actual closing date. Any rents paid to Seller can be very difficult for S8 to get back, and equally so for you to collect. You also need to notify S8 of your new Ownership and submit the appropriate form for approval before they will send ANY rent to you. Security Deposit must be transferred to buyer at closing.
Once your offer is accepted and contingencies cleared, provide the Seller with basic contact info for them to provide to all of their Tenants as a brief introduction. Once they have done so, and closing is imminent, you can then send the Tenants your own letter of introduction with further details for service requests, how and where rent payments are made, and instructions to contact you for scheduling a walk through inspection of their unit, with a deadline for doing so.
At the inspection, you need to thoroughly inspect every room, every closet, every sink base cabinet and other storage areas looking for any signs of water intrusion that you will need to more fully investigate later. Once you have inspected, spend time with the Tenants confirming (by asking, not telling) what their current rent and Security Deposit are; what utils are they paying; what appliances are theirs; what previous maintenance requests were not completed; and, for multi-fam properties, what vehicles are theirs and where do they park?
Ask what their future plans are...do they plan to move in the summer, or first of the year, or, are they happy and plan to stay long term if possible? Do not discuss rent or anticipated renos at this point. Simply advise them you need to study the market, evaluate your findings from all of the inspections and local market, and then make decisions and make offers to approved residents. Provide them a Rental Application for ALL adults to complete in full (I never charged for applications of existing Tenants) and return to your office with a deadline. NOTE- you must follow the existing terms of any valid, written, agreement, although you can change Where and to Whom they make rent payments to. That agreement cannot be terminated prior to the stated end date, but that does not preclude you from informing them you WILL be terminating the prior agreement at it's stated end date, regardless if they plan to stay or move, so their terms will be updated and consistent with your standard practice.
Only when you have all of the data, including a full current background check, and have developed a potential project plan, you should send them either a Notice of Termination (effective at least the minimum required notice period per Local Law, or 60 to 90 days with the promise of 100% Security Deposit return and rent pro-rated to last day of occupancy based on return of keys IF unit is left broom cleaned with all rubbish and personal property removed from the unit and from the exterior/curb) OR a Letter detailing the terms you are offering and providing a copy of your new Rental Agreement and related Policies, with instructions to schedule a meeting to review and sign, again with a deadline to do so.
Then meet, review page by page the critical sections and terms, all additional documents, policies such as either allowing Pets, or No Pets with a separate Assistance Animal Policy; House Rules for multi-fam properties; parking rules; Procedures and pick up days for routine rubbish; Move Out Cleaning Guidelines; Lead Based Paint form and booklet; Info on Mold and cleanup; and anything else relevant to the property or Local Law.
What a detailed response, Richard. I appreciate it! Out of curiosity, how would you go about when the inherited tenants are TAW?
- I see, thanks for your response. It helps a lot
Quote from @Richard F.:
Not significantly differently, within the requirements of your local LL/Tenant laws. Provide the appropriate written notice of termination prior to their first "due" date as your tenant. In the case of VERY long term residents, that are rational, reasonable, and have maintained to the best that conditions allow, and depending on time of year, I would give an extended period notice, 60, maybe 90 days, and pro-rate rent to last day of occupancy, based on actual return of keys. If I plan to reno, I will also inform them there is no need to go beyond "broom clean", with their personal property and rubbish off the property.Quote from @Minho Lee:
Quote from @Richard F.:
When acquiring an occupied unit, always request, in the purchase offer, copied of current rental agreements, current rent roll, current delinquency report, Security Deposits held, and confirm if there are, or are not, any subsidized (S8) Tenants. Sellers will need to notify S8 of change in ownership and the effective date in advance so they will hold payment and pro-rate appropriately based on actual closing date. Any rents paid to Seller can be very difficult for S8 to get back, and equally so for you to collect. You also need to notify S8 of your new Ownership and submit the appropriate form for approval before they will send ANY rent to you. Security Deposit must be transferred to buyer at closing.
Once your offer is accepted and contingencies cleared, provide the Seller with basic contact info for them to provide to all of their Tenants as a brief introduction. Once they have done so, and closing is imminent, you can then send the Tenants your own letter of introduction with further details for service requests, how and where rent payments are made, and instructions to contact you for scheduling a walk through inspection of their unit, with a deadline for doing so.
At the inspection, you need to thoroughly inspect every room, every closet, every sink base cabinet and other storage areas looking for any signs of water intrusion that you will need to more fully investigate later. Once you have inspected, spend time with the Tenants confirming (by asking, not telling) what their current rent and Security Deposit are; what utils are they paying; what appliances are theirs; what previous maintenance requests were not completed; and, for multi-fam properties, what vehicles are theirs and where do they park?
Ask what their future plans are...do they plan to move in the summer, or first of the year, or, are they happy and plan to stay long term if possible? Do not discuss rent or anticipated renos at this point. Simply advise them you need to study the market, evaluate your findings from all of the inspections and local market, and then make decisions and make offers to approved residents. Provide them a Rental Application for ALL adults to complete in full (I never charged for applications of existing Tenants) and return to your office with a deadline. NOTE- you must follow the existing terms of any valid, written, agreement, although you can change Where and to Whom they make rent payments to. That agreement cannot be terminated prior to the stated end date, but that does not preclude you from informing them you WILL be terminating the prior agreement at it's stated end date, regardless if they plan to stay or move, so their terms will be updated and consistent with your standard practice.
Only when you have all of the data, including a full current background check, and have developed a potential project plan, you should send them either a Notice of Termination (effective at least the minimum required notice period per Local Law, or 60 to 90 days with the promise of 100% Security Deposit return and rent pro-rated to last day of occupancy based on return of keys IF unit is left broom cleaned with all rubbish and personal property removed from the unit and from the exterior/curb) OR a Letter detailing the terms you are offering and providing a copy of your new Rental Agreement and related Policies, with instructions to schedule a meeting to review and sign, again with a deadline to do so.
Then meet, review page by page the critical sections and terms, all additional documents, policies such as either allowing Pets, or No Pets with a separate Assistance Animal Policy; House Rules for multi-fam properties; parking rules; Procedures and pick up days for routine rubbish; Move Out Cleaning Guidelines; Lead Based Paint form and booklet; Info on Mold and cleanup; and anything else relevant to the property or Local Law.
What a detailed response, Richard. I appreciate it! Out of curiosity, how would you go about when the inherited tenants are TAW?
- 4moDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 663 votes
Over the years, I've found that communication goes a long way. Most tenants understand that expenses increase and rents don't stay the same forever, but they generally appreciate being treated with respect and given plenty of notice. I've also found that long-term tenants can be incredibly valuable. Sometimes accepting a slightly lower rent from a resident who pays on time, takes care of the property, and wants to stay can make good business sense. Every situation is different, but approaching the conversation professionally and with supporting market data is usually a good place to start.
Spark Rental Co-Investing Club583 Reviews- Yes, I agree with you. Inflation is real but keeping it real with tenants are also important. Appreciate your input.
Quote from @Denise Supplee:
Over the years, I've found that communication goes a long way. Most tenants understand that expenses increase and rents don't stay the same forever, but they generally appreciate being treated with respect and given plenty of notice. I've also found that long-term tenants can be incredibly valuable. Sometimes accepting a slightly lower rent from a resident who pays on time, takes care of the property, and wants to stay can make good business sense. Every situation is different, but approaching the conversation professionally and with supporting market data is usually a good place to start.
- 4moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
Quote from @Minho Lee:
For those who have house hacked and inherited tenants, how did you approach raising rents, and how did it go?
I’ve been talking to a lot of investors, and one approach I keep hearing is to be open and respectful with tenants, come prepared with 3–4 solid comps to support market rent, and have an honest conversation, asking what number works for them and work from there.
It seems like balancing fairness with bringing rents to market is key, especially when you’re stepping into an existing situation.
Curious to hear real experiences, what worked, what didn’t, and anything you’d do differently?
We’ve found a great way to raise rent is:
- Determine market rent
- Share the proof with the tenant (they can see it on Zillow anyways)
- Tell the tenant, given your rent is $x and market rent is $y, what do you think if a fair increase?
- Often, they may volunteer a higher amount than you were hoping for.
- Those that respond “$0” or something ridiculous, you can request income documentation from them to justify.
- Don’t be afraid to share with them how much your property taxes & Insurance increased and that YOU cannot afford to absorb them.
ALWAYS get an increase or something of value annually when rents are increasing or tenants will start thinking they should never have an increase, making future increases that much more difficult to negotiate.
Logical Property Management4.9462 Reviews- This is great, thanks! I've asked others but how would you go about transitioning TAW to a signed lease tenants?
Quote from @Drew Sygit:
Quote from @Minho Lee:
For those who have house hacked and inherited tenants, how did you approach raising rents, and how did it go?
I’ve been talking to a lot of investors, and one approach I keep hearing is to be open and respectful with tenants, come prepared with 3–4 solid comps to support market rent, and have an honest conversation, asking what number works for them and work from there.
It seems like balancing fairness with bringing rents to market is key, especially when you’re stepping into an existing situation.
Curious to hear real experiences, what worked, what didn’t, and anything you’d do differently?
We’ve found a great way to raise rent is:
- Determine market rent
- Share the proof with the tenant (they can see it on Zillow anyways)
- Tell the tenant, given your rent is $x and market rent is $y, what do you think if a fair increase?
- Often, they may volunteer a higher amount than you were hoping for.
- Those that respond “$0” or something ridiculous, you can request income documentation from them to justify.
- Don’t be afraid to share with them how much your property taxes & Insurance increased and that YOU cannot afford to absorb them.
ALWAYS get an increase or something of value annually when rents are increasing or tenants will start thinking they should never have an increase, making future increases that much more difficult to negotiate.
- Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes4mo
What you are saying makes sense and is the general way of doing it.
There are two other ways to go about it:
1. Have built in rent increases. Some investors like to negotiate each time, I like predictability and setting expectations up front. It avoids an awkward or confrontational conversation when everyone is just following the lease that was signed off.
2. Maybe there are other ways to increase revenue without a rent increase. For example we switched over the cost of utilities. It might be equivalent to what a rent increase would be, but potentially a better presentation.
- Thanks, Rick. I like the option of having a built in rent increases. Out of curiosity, how would you include that in a rent and what percentage makes sense for you?
Quote from @Rick Albert:
What you are saying makes sense and is the general way of doing it.
There are two other ways to go about it:
1. Have built in rent increases. Some investors like to negotiate each time, I like predictability and setting expectations up front. It avoids an awkward or confrontational conversation when everyone is just following the lease that was signed off.
2. Maybe there are other ways to increase revenue without a rent increase. For example we switched over the cost of utilities. It might be equivalent to what a rent increase would be, but potentially a better presentation.
When you say switched over the cost of utilities, do you mean you're now having tenants pay the utility or looking for more affordable options? - Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes4mo
Quote from @Rick Albert:
What you are saying makes sense and is the general way of doing it.
There are two other ways to go about it:
1. Have built in rent increases. Some investors like to negotiate each time, I like predictability and setting expectations up front. It avoids an awkward or confrontational conversation when everyone is just following the lease that was signed off.
2. Maybe there are other ways to increase revenue without a rent increase. For example we switched over the cost of utilities. It might be equivalent to what a rent increase would be, but potentially a better presentation.
The problem with that approach for rent increase is that if the market rents to trend up at the same rate, you either cheat yourself, or drive the tenant out. Tenants these days have easy access to what's available in the market, and many are able and willing to move to save a few bucks and get a more desirable unit. - Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes4mo
Quote from @Minho Lee:
Thanks, Rick. I like the option of having a built in rent increases. Out of curiosity, how would you include that in a rent and what percentage makes sense for you?Quote from @Rick Albert:
What you are saying makes sense and is the general way of doing it.
There are two other ways to go about it:
1. Have built in rent increases. Some investors like to negotiate each time, I like predictability and setting expectations up front. It avoids an awkward or confrontational conversation when everyone is just following the lease that was signed off.
2. Maybe there are other ways to increase revenue without a rent increase. For example we switched over the cost of utilities. It might be equivalent to what a rent increase would be, but potentially a better presentation.
When you say switched over the cost of utilities, do you mean you're now having tenants pay the utility or looking for more affordable options?It depends on the area, I'm fine with 3% but some may want more. I would rather have a good paying tenant than turn over.
I'm saying let's say you cover certain bills (water for example), but now you pass that cost onto the tenant.
- 4moAmit PatelBusiness MemberProperty Manager · Bartlett, IL · Member since 2025 · 177 posts · 68 votes
Hey Minho,
What worked best for me was being direct but human about it. I sat down with each tenant (or called if they preferred) and explained that I was taking over the property and needed to bring rents closer to market to cover the actual costs. I brought 3–4 solid comps from the same neighborhood, showed them the numbers, and then asked what they thought was fair. A lot of times they already knew rents had gone up around them and appreciated being treated like adults instead of just getting a notice in the mail.
I usually gave them options when possible, for example, a smaller increase now with another smaller one in six months, or a slightly higher increase if they wanted to stay long-term. That flexibility went a long way. I also made a point to fix any small issues they’d been living with before asking for more money. It showed I wasn’t just trying to squeeze them.
The times it went sideways were when I tried to be too nice and dragged the conversation out or didn’t have clear comps ready. Tenants respect straightforwardness more than you’d think, especially when you’re living right there with them.
Since you’re house hacking in Worcester, keeping good relationships with the other units will make your own life a lot easier too. A tenant who feels respected is usually more reasonable when something comes up on your side.
Casanomy Property Management561 Reviews- Man, we think alike. I agree with everything you said and fixing some small issues they had prior to increasing the rent is a good way of building that relationship.
Quote from @Amit Patel:
Hey Minho,
What worked best for me was being direct but human about it. I sat down with each tenant (or called if they preferred) and explained that I was taking over the property and needed to bring rents closer to market to cover the actual costs. I brought 3–4 solid comps from the same neighborhood, showed them the numbers, and then asked what they thought was fair. A lot of times they already knew rents had gone up around them and appreciated being treated like adults instead of just getting a notice in the mail.
I usually gave them options when possible, for example, a smaller increase now with another smaller one in six months, or a slightly higher increase if they wanted to stay long-term. That flexibility went a long way. I also made a point to fix any small issues they’d been living with before asking for more money. It showed I wasn’t just trying to squeeze them.
The times it went sideways were when I tried to be too nice and dragged the conversation out or didn’t have clear comps ready. Tenants respect straightforwardness more than you’d think, especially when you’re living right there with them.
Since you’re house hacking in Worcester, keeping good relationships with the other units will make your own life a lot easier too. A tenant who feels respected is usually more reasonable when something comes up on your side.
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