First property Rent increase

[Ian Hutton]

Hey everyone! My dad and I are going in on our first deal, but need to play with some numbers to make it work. (In Lansing Michigan btw) 

This Triplex’s utilities are currently paid for by the owner (approx. $500/month). When paying for utilities our metrics do not work / break even. 

I need to raise $166 per unit to meet my $500 utilities bill. I’m wondering what’s the best way to go about this? 

Property price is @ $135k, if I request 6k off that would buy me 1 years time to increase rent, but ultimately. What’s the best way to increase rent? I’m also not sure if my market could handle this, as the PM thinks we may loose some tents.

current rent for triplex 1bed 1 bath @

- $625 

-$ 765

-$ 695

[Jonathan R McLaughlin]

@Ian Hutton Is there any way you can shift the utility burden to the tenants? This would have a long term benefit for you. Can you make all electric with mini-splits or other individual heating systems? Do this upon purchase and the expenses lower your gain for tax purposes. Thats the most permanent fix that adds the most value to the building and insures you against further increases. Lots of incentives still to do this.

Who is the PM? The one currently managing the building? I wouldn't distrust them, but I would do your own analysis and not take their word as gospel. Can you 'reposition' the units to appeal to a higher paying tenant group. New stuff, amenities, heck even paint. Turnover might not be the worst thing.

If you are paying the utilities for the forseeable future, think efficiency: Insulation, draft limitation replacing shot windows etc.