how to tell tenants on increasing rent?

Question

Hi,

My partner and I just purchased a triplex. One of the units is currently occupied by an existing tenant. We would like to increase the rent based on market value. What is the proper way to bring that up to the tenant? I would assume a type of document? How would this doc look like? Please help! Thanks!

Greg Scott · Answer

When you buy the property, you inherit the leases.  What do the existing leases say?   If they are month to month, typically, but not always, you give 30 days notice of rent increases.   If they have a regular lease, you cannot increase rents until the lease term ends.  30 to 60 days before the lease ends, you typically offer them to sign a new lease at $X.

Antonio Cucciniello · Answer

@Vinh Nguyen Put yourself in the tenants shoes. Likely they will not be happy about a rent increase (Especially if its a larger one.) Instead maybe offer to add something of value in return for the rent increase (a nicer kitchen, bathroom, something they want fixed.)

Ken P. · Answer

Rentometer.com, apartments.com, zillow.com, realtor.com, craigslist.com, and Facebook marketplace are some sites you can consult.

Vinh Nguyen · Answer

@ken

@Ken P. thank you! whats a way to check what the rent is worth in the current market? for example, how much would it be for a one unit in my triplex?

Ken P. · Answer

If the current rents are very far below market, you might consider not raising rent all the way to market at one time. That would be a big shock to the current tenant and a reason to move. What we typically do for current tenants in newly purchased properties is increase the rent but give them a discount to the market, and we include a print out with the current market rents. It softens the blow of the rent increase when they know that they are still getting a good deal. When they stay, it means we do not have a drop in revenue right at the beginning of our ownership.

Theresa Harris · Answer

Greg's advice is good.  Also look at what the increase in rent is and realize if it is a big increase, you may have a vacancy on your hands.  Check if there are caps on how much you can increase the rent.

Vinh Nguyen · Answer

@Greg Scott ahh that makes sense. Thank you!

how to tell tenants on increasing rent?

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