HELP! New investor, great deal, existing tenant paying low rent

[Bernard Davis]

So I'm working on my first deal as an investor. It's a condo that's got a tenant paying $400 under market until the end of November 2022.  It's a condo that will net me $700 monthly after all expenses.   Seller has given me all of the scoop, and his bottom line.  I'll be the first view it and if good will make a cash offer.  The tenant is long term and they want to stay and tried finding someone or trying to buy it with no luck.  My worry is that I will run into a problem when I raise the rent. Even if I keep it $100 under market, I'm sure they'll choke. Not sure ofntheir situation,  age, etc., but should I be scared of this deal/could it present problems?

it's 35% current market, needs nothing but paint and maybe flooring.  2br 2ba 1000 Sq feet.

Thanks in advance

[Nathan Gesner]

This question is asked daily, sometimes multiple times a day. 

You need the ability to run this like a business. It's not that you don't care about people. You are offering a product for a certain price so you can make a certain return. The price is driven by the market, not you, and you shouldn't feel guilty for charging what something is worth.

Once you own the property, you notify the tenant immediately that you will not be renewing their lease in November because you need to "do some work" and then get it to market rate. Offer to let him leave early without penalty. Depending on the situation, it may even be worth offering him a full refund without any cleaning or maybe even a little extra cash to help with moving expenses. But those things are usually unnecessary. Most tenants will look for a new rental and move, then you can turn it around and rent it at market rate.