Raising rent on inherited tenants

[Allyn Becar]

We are closing a deal in Dayton, Ohio in 2 weeks and contractually are obligated to allow the existing tenants to continue occupancy for at least 60 days.  These are long-term renters whom we are told are very good renters.  And indeed the property seems to be well taken care of.  They are currently on a month-to-month lease.   We plan to initially have them sign a month-to-month lease with us.  The current rent for this 3/1 is $1000.00/month.  Market analysis suggests a fair market rent of $1200.00/month.  If they prove to be good renters, we would like to keep them, especially during the winter months.  Any suggestions on whether it would be better to gradually raise the rent over two years to fair market value, or bump it up all at once.  

[Kerri Shaffer]

Hey, Allyn!

Congrats on getting a deal in Dayton! I'm from Ohio originally myself :) 

I would say if you want to keep the tenants, I would try do it gradually over the next year. You can show them your analysis or comparable properties to justify the price increase. You could negotiate a $50 increase per quarter over the next year for example to give them time to adjust. 

Good luck!