New owner speaking to old tenant

[Samuel Girouard]

So I'm getting closer to closing on my first multi family in the Worcester area of mass. I've been living here for the last 6 months and it so happend the owner wanted to sell. Long story short the tenant down stairs is a good guy and I'd like to keep him if I could but need to talk to him about changes. He rents a big space in the back that will be needed for more parking. And rent for him is at $800 but should be much higher. What may be the best way of speaking to him?

[Jonathan Bombaci]

@Samuel Girouard what @Andrew Freed described is exactly what we’re doing for rent increases on a 132 unit property we just closed on a few months ago. When you send your welcome letter notifying the tenant of the transfer of ownership, tell them how to contact you in an emergency or to request repairs, when and how to pay rent, and notify them of needing a new lease signed with a modest rent increase. 

For example you can send a letter saying Market rent for a 2 bed in the area are $1200 and you’re paying $800. You have been a great resident and We would love for you to stay but we need to increase rents so we can pay our mortgage and bills. If you want to stay here are your options effective November 1st (more than 30 days notice).

Month to month = $1150

6 month lease = $1050

12 month lease = $1000

Then it’s their decision to stay or leave and if the stay they can pick their rent amount and terms for the new lease. Also ask if there is anything that is broken or needs to be done in their apartment. We just painted 2 rooms and reglazed the bathtub, which was desperately needed, for an inherited tenant and they were very happy and no longer cared about the rent increase.

Also I recommend getting in the habit of saying “we” even if it’s just you making the decisions. By saying we and mentioning you have a business partner, it could be your cat for all I care, it’ll make it easier for you to say no to the odd requests or at least give you time to think about it. As a househack you’re just too close to the tenants and will get cornered frequently. when they ask you to put a trampoline in the backyard you can say let me talk to my business partner then come back and say no and blame your business partner who doesn’t want the extra liability and additional insurance costs. 

Best, and Goodluck with your househack! 

Jon